13.9 economy rambling

I’ve gotten bored of those posts where I just go on and on about how I haven’t done much since last time, so I am sure everyone else must have as well. Instead then, how about more of the comments on random things that I’ve found out about?

I mentioned a while back, though chances are noone actually read it, that I have been trying to write a series of books on world history. It is going reasonably well so far, two written out, first draft at least, just need to go back, make sure I haven’t missed anything, trim down those parts where I go on and on about stuff noone cares about, try and make it actually worth reading, and then illustrate them and try to find a publisher.
Anyways, point is I have been researching something called the South Sea Bubble, and I thought it was interestingly relevant to recent news stories. The South Sea Company was a trading company formed after the war of the Spanish Succession, back in 1715. Originally the Company was to trade with Spanish American colonies, as part of the peace agreement, but the British government of the time came up with a plan, they would sell a large portion of the national debt to the company, which would then sell it on to investors as shares in the Company, and recieve an annual income equal to 6% interest on the debt, which apparently made some economic sense at the time.
Anyway, with the promise of profitable American trade and this garuanteed income from the government itself, the South Sea Company share price started to rise, interesting a number of new investors, and here the company directors saw an opportunity. They started advertising just how profitable the company would be, trying to induce the price to rise even higher, leant money for people that wanted to buy shares but couldn’t afford them, and then sold effectively virtual shares to senior politicians, with the agreement that when the share price rose, they could sell the shares back to the company for a profit. The result of this, of course, was that the politicians put a lot of effort into ensuring that the price did rise.
Seeing this, other businessmen started forming their own companies with vague aims and wild promises of great profits in an attempt to gain investors. And of course, with so many people seeing the success of the South Sea Company, many were willing to invest in other business ventures as well. So came a frenzy of share buying and of borrowing money to buy more, and of wild price rises, until the value of a single share of South Sea Company stock was ten times what it had been two years before.
Then, the results of the first year’s trading were due to be announced, and with the share price so high, many investors decided that was just the time to get out and grab their profits. Vast numbers of shares were sold then, causing their value to plummet, leaving many other investors in serious debt, including many influential politicians. Meanwhile, of course, the annual profits of the company were nowhere near what had been predicted, barely enough for them to stay in business at all. at the same time, whilst investors, businessmen, banks and other money lenders were finding themselves suddenly in serious debt, similar schemes were falling apart elsewhere in Europe, causing a widespread banking and money lending crisis.
It was not over yet, though, the interesting part is just begining. Over the following months, investigations were undertaken into the fraud and corruption that had allowed this whole mess to continue, and particularly the role played by various trusted politicians. as a result of these trials, the Chancellor of the Exchequer himself, John Aislabie, was arrested and imprisoned, whilst many other ministers were forced to resign.
With these sudden vacancies, one Robert Walpole managed to rise quickly through the ranks, becoming rather suddenly both Chancellor and also First Lord of the Treasury, as well as attaining a position from which he could insist on all the other government minsiters following his advice, gaining him so much authority he was granted the appellation ‘prime minister’ by journalists and the opposition party. He then started trying to fix the mess caused by the collapse of the bubble company, and to restore confidence in the government and banks. Numerous schemes for this were proposed over the following weeks, most infamously amongst them the motion raised that the directors responsible be tied into sacks with snakes and thrown in the river. Unfortunately this did not go ahead, and neither did most of the other similar suggestions, but Walpole did forcibly confiscate the assets of the directors and redistribute them amongst those that had lost the most money, which helped rather a lot.

Anyway, I just thought it interesting, and something other people around the internet might be interested in reading about. Meanwhile, just so you know, my work is not going very well, I am struggling to get anywhere near as much written as I am used to, I am disappointed with how badly I am writing and with many of my old ideas, whilst my new ideas are not yet detailed enough for me to start work on what I really want to do, and meanwhile I am repeatedly putting off working on redrafting and editing anything, so everything I did before is still not very good either.