The 2008 financial crisis not only spawned the Great Recession, it also sparked a flurry of historical accounts of financial crises. While the historical record is full of examples of financial turmoil, much of the recent emphasis has been on the 1720 stock market bubbles (South Sea Bubble in England and Mississippi Bubble in France). A variety of historians – economic, political, cultural, religious, and intellectual – trained their focus on the formation of a new culture of credit around the turn of the eighteenth century, the frenzy leading up to the bubbles of 1720, and the chaos and uneven recovery during the aftermath of the financial meltdown. Apart from the new financial instruments introduced, historians investigated how the Financial Revolution was intertwined with domestic political debates, imperial pursuits, the Atlantic slave economy, natural philosophy, ideological and moral conflicts, fictional representations, women investors and gender relations, rhetoric and epistemology, trust-formation and corruption. Most of this historical work focused on London and Paris, the epicenters of the Financial Revolution and the 1720 bubbles.
In their excellent volume Boom, Bust, and Beyond, Stefano Condorelli and Daniel Menning have assembled twelve essays that contribute to the development of recent themes in financial history, but with one major difference: many of the essays expand the geographical frame by exploring the world of finance beyond Paris and London. The underlying factors that triggered the Financial Revolution – massive expansion in trade and drastic increases in government spending on state-formation, war, and empire-building – were experienced by most European nations, so it should come as no surprise that financial capitalism was already globalized by the start of the eighteenth century. In some instances, the global connections were forged by the circulation of securities and funds, while in other circumstances it was merchants, diplomats, or so-called go-betweens who made the connections. A vivid example of this trend was the lottery scheme authorized by the Duke of Braunschweig. It was drawn up in the northwest German principality, but all of the lottery tickets were sold in London. The lottery project was soon followed by a proposal for a joint-stock bank, in which lottery ticket holders would be offered shares (Rosenhaft). Another fascinating example of the transnational pattern of early eighteenth-century finance examined in this volume is the story of Georg Heinrich von Görtz, a diplomat in the service of the Swedish king Charles XII, who travelled to Paris on more than one occasion to meet with the architect of France’s Financial Revolution, John Law. Görtz also travelled to Amsterdam to arrange for a bond issuance that would bring much needed hard currency to the aid of the ailing Swedish fiscal and financial systems. Once the king died, Görtz was arrested and executed for his involvement in the unpopular actions taken by the previous regime to prop up Sweden’s military (Ericson and Winton). In perhaps the finest essays of this volume, we learn more about the relationship between John Law’s scheme and the French public-private slaving enterprise; additionally, we receive a preview of the author’s forthcoming argument about the role that slave revolts in Haiti played in bringing the Indies Company to its knees (Ghachem).
The other defining theme of this volume is the focus on the aftermath of the bubbles. While the great economic historian Julian Hoppit challenged received wisdom by pointing out that neither trade nor industry was dramatically upset by the bursting of the South Sea Bubble, many of the essays in this volume show how the bubbles nevertheless left a deep imprint on Europe, in a variety of ways. While the bursting of the bubble might not have had a significant effect on all measurable variables, there were certainly some statistics that showed a great deal of sensitivity. The Baltic Sea trade was one such example. With a brief time-lag, the record indicates that trade from England and Wales to the Baltic declined by almost half between 1720 and 1721 (Menning). Although England recovered its credit rather swiftly, strong reverberations of the 1720 bubbles were still felt in the financial sector for the rest of the century. The financial failure that was most linked and compared to the South Sea Bubble was the Charitable Corporation scandal of 1732 (Froide). The bubbles also had a deep impact on politics. The demise of the South Sea Company signaled the start of a renewed fear of Jacobitism – the restoration of the Stuart monarchy and Catholicism. The Whig party exploited these fears in order to maintain their majority in Parliament, reminding the voting public of the Tories’ failure to support public credit by opposing the bail-out of the South Sea Company. While it is possible that the chaos unleashed by the bursting of the bubble opened up an opportunity for Jacobite conspirators, it was undoubtedly the case that the Whigs stoked the fears to gain political advantage (Swingen).
The bubble also had an effect on how the stability and order of society was perceived. The loci of finance – rue Quincampoix in Paris and Exchange Alley in London – had become sources of political, economic, social, and epistemological disorder (Grenier). The randomness and whimsicalness of the stock-market was perceived as spreading throughout society, turning previously stable relations of cause and effect into haphazard and accidental occurrences, which were next to impossible to predict, much less manage. Chance and accident thus challenged people’s confidence in the stability of the social order. One response to this despair was to gender irrational buying and selling as feminine and, as such, depict credit as something that strong men could master (Murphy). Another response came from a set of voices arguing that what appeared as chaotic and non-linear on the surface actually took on a higher-level order in the aggregate. Complex systems, such as the stock-market, when left to their own devices produced order and stability, even in the absence of external direction (Wahrman). Even the term speculation was rehabilitated and became known as a practice that not only incorporated available empirical knowledge, but also provided access to deeper underlying forces (Zabel).
Ironically, the most obvious weakness of this volume is that it lacks a strong essay on the actual bubbles. The one essay that covers this terrain seeks to replace the traditional narrative of the South Sea Bubble with a new one, but it is far from convincing. It is, of course, difficult to rewrite the history of the bubble and figure out the actual sequence of events, given that the South Sea Company’s account books from the bubble-years were destroyed, but this particular effort, grounded mostly in speculation, is far from helpful (Kleer). Fortunately, the volume contains a fascinating essay that examines, not the inner workings of the Mississippi Bubble, but how it was experienced and navigated by one specific trader through the lens of his correspondence with an investor (Kessler). The reader is treated to a rich discussion of how the relatively unknown financier, Jean Vercour, made his trades, evaluated opportunities, and imagined the future value of the securities he traded in. Among the many intriguing bits of information revealed in the letters, Vercour reflects on the epistemological instability of the stock-market, suggesting that “it is impossible for any man on earth to give advice in this undertaking. John Law, who is the author of this great machine, cannot tell anything about it either; when he believes he is generating a variation of 10 %, the variation happens to be 100 %” (p. 225). Although there is still plenty we need to learn about the Financial Revolution, the 1720 bubbles, and their respective global contexts, Boom, Bust, and Beyond goes a long way towards enriching our understanding of early modern global financial capitalism.