Great Bubbles of the Past

Evening Post, Volume CXVI, Issue 31, 5 August 1933, Page 16

Great Bubbles of the Past

I suggest we puf into the curriculum of every high school and college an old book which has rc.eently been reissued. It was written by Charles Mackay, I/L.D., and is entitled "Extraordinary Popular.Delusions and the Madness of Crowds."'- Mr. Bernard M. Baruch suggested its republication.' He says that the perusal of it years ago saved him "millions of dollars," states a writer in the New York "Herald-Tribune."' The first two chapters deal in fascinating fashion with the Mississippi scheme of John Law, which almost wrecked France, and with, the South Sea Bubble that shook England to her economic foundations, in the same century. ' | •Paragraph by paragraph it is the etpry of America's own Florida Boom, the story of its stock market in 1928? 29. For instance:— '"Exchange Alley (the stock market) was in a fever of excitement. The company's stock, -which had been at a hundred and thirty the previous day, gradually rose to three hundred, and then continued to rise with-astonishing ijttidity during the whole time that the Sh (chartering the South Sea Company) was under discussion. Mr. Walpole was almost the only statesman •who spoke out boldly against it. It countenanced, he said, 'the dangerous practice of stock-jobbing, and would divert the genius of the nation from trade and industry. It would hold out a dangerous lure to decoy the unwary to their ruin, by making them part with the earnings of their labour for the prospect of imaginary wealth. .. .' If it failed, which he was convinced it would, the result would bring general discontent and ruin upon the country. Suiih would be the delusion that when the evil day came, as come it would, the people would start as from a dream, and ask themselves if these things could have been true. All his eloquence was in vain." Hundreds of different companies were launched during the frenzied days of •the Bubble. Here are the names of a few:— , . "For making looking-glasses, coachgiasses, etc. Capital two millions. "For carrying on a trade in the River Orinoko. TS'or insuring of horses. Capital two millions. , . "For furnishing funerals.to any part of Great Britain." People trampled each other in Exchange Alley to snap up the1 stock in these and similar companies. The final absurdity was reached when a, prac-tical-minded gentleman announced that he would receive subscriptions for shanes in a company "for carrying on an undertaking of great advantage; but nobody to know what it is." This individual opened his office at 10 o'clock one morning,, received £,2000 in cash before 3 o'clock,-closed the office, and rtipped to the Continent. He seems to have been about the only one who made money in the boom and kept it. Rej.ding these chapters makes me ieel a little foolish. I, also, have* some

shares in companies "for carrying on an undertaking of great advantage; but nobody to know what it is." I propose to paste them together and make attractive covers for two copies of Dr. Mackay's book —one for each of my sons. The parallel does not end with the bursting of the boom;, it continues through the bitter period of deflation, investigation, and recovery. Do you imagine, for example, that "hoarding" is a new phenomena? Read these sentences:— ■■ "The first slight alarm was occasioned early in 1720. The Prince) de Conti, offended that Law should have denied him fresh shares in India stock, at his own price, sent to his bank to de^ mand payment in specie of so enormous a quantity of notes that three wagons were required for its transport. Law complained to the Begent, and urged on his attention the harm that would be done, if such an example found many imitators. The Eegent was but too well aware of it, and sending for the Prince de Conti, ordered him, under penalty of his high displeasure, to refund the bank two-thirds of the specie- which he had withdrawn from it. . . . Notwithstanding every effort, the precious metals continued to be conveyed to England and Holland." Do you suppose that the emergency measures enacted at "Washington, in recent weeks are unprecedented? When the Tulipomania collapsed in Holland the bewildered tulip-growers, after holding "public meetings to devise .What measures were best to be taken to restore public credit . . . generally agreed that deputies should be sent ,from all parts of Amsterdam to consult with the Government upon some remedy." It has all happened so many times .before. Again and again—every detail. Including the final chapter, John Law in Paris was almost a god until his scheme collapsed. Men fought for introductions.to him; titled women wore willing to make any sacrifice for his favour. After the collapse every man and woman cried out for his blood. In England, when the bubble burst, Parliament hastened to appoint investigating committees, and Lord Stanhope proclaimed that "every farthing possessed by the criminals (the recent 'leaders' and 'Empire builders') ought to be confiscated, to make- good the public losses." I'hold no brief for those who, during our own boom, should have led us wisely, and, instead, betrayed us by their greed. I merely draw attention to the fact that we are exactly like our ancestors. As Dr. Mackay points out: "Nobody blamed the credulity and avarice of the people—the degrading lust o£ gain, which had swallowed Up every nobler quality in the national character or the infatuation which had made the multitude run their heads with such frantic eagerness into the net held out for them by scheming projectors." We, the victims, never assess any of the fault against ourselves. We merely turn on those whom_we have so recently been acclaiming and raise the cry of "Crucify!" ■