GREAT “BUBBLES” OF THE PAST

Hawera Star, Volume LIII, 26 August 1933, Page 14

GREAT “BUBBLES” OF THE PAST

J SUGGEST we put into the curriculum of every high school and college an old book which has recently been reissued. It was written by Charles Mackay, LLD., and is entitled “Extraordinary Popular Delusions and the Madness of Crowds.” Mr Bernard M. Baruch suggested its republicatidn. He says that the perusal of it years ago saved l\im “millions of dollars,” states a writer in the New York ‘ ‘ Herald-Tribune. 1 ’ 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 story of America’s own Florida Boom, the story of its stock market in 192829. 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 rapidity during the whole time that the Bill (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 tiade 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. Such 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 elocpienee was in vain.” Hundreds of different companies were launched during the frenzied days lof the Bubble. Hero are the names of a few: “For making looking-glasses, coarchglasses, etc. Capital two millions. “For carrying on a trade in the River Orinoko. “For insuring of horses, Capital two millions. _ “For furnishing funerals to any part of Great Britain.” People tramped each other in Exchange Alley to snap up the stock in I these and similar companies. The final absurdity was reached when a prac-tical-minded gentleman announced that he would receive srubsdriptions for shares in a company “for carrying on an undertaking of great advantage; but nobody to know what it is.” This individual opened his office , at TO o 'clock one morning, received £2OOO in cash before 3 o’clock, closed the office, and skipped to the Continent. He -seems to have been about the only one who made money in the boom and kept it. Reading these chapters makes me feel a little foolish. I, also, have some shares in companies “for carrying on

Lures Which Decoyed Unwary Public

gu 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 tho bursting of the boom; it continues through the bitter period of deflation, investigation and rocovery. 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 Contin, offended that Law should have denied him fresh shares in India stock, at his own price, sent to his bank to demand payment in specie of so enormous a quantity of notes that thiee wagons were required for its transport. Law complained to the Regent, and urged on his attention the harm that would be done, if such an example found many imitators. The Regent 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 lie had withdrawn from it. . . ‘Not withstanding 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 are 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 remcdv. ”,

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 introduction to him; titled women were 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 Stan- ! hope proclaimed that “every farthing possessed by the criminals (the recent ‘leaders’ and ‘Empire builders') ought to bo confiscated, to make good the i public losses." I hold no belief for those who, dur- | ing our own boom, should have led i 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 of gain, which swallowed up every nobler quality in the national character or the infatuation which had made the multitude run their neads with such frantic eagerness Into the net held out for them br r 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!"