South Sea Bubble
« Every mortal that has common sense
or that knows anything of figures
sees that ’tis not possible
by all the arts and tricks upon earth
long to carry £ 400,000,000 of paper credit
with £ 15,000,000 of specie »
Lady Churchill, Duchess of Marlborough
Winston S. Churchill, Marlborough: His Life and Times
(Chicago 2002), vol. II, pp. 1032 f.
Lord Treasurer Robert Harley, 1st Earl of Oxford and Mortimer, together with some merchants formed the South Sea Company, which was granted an although worthless monopoly of the British trade with Spain’s colonies in South America. Worthless, as for once the War of Spanish Succession still went on. Yet even more worthless as actually only one single British ship per year was allowed to enter the Spanish South American harbors. Of which on the Spanish side no secret was made, while at home the Company promised golden castles in Spain.
But for trading – to which later an Asiento, a monopoly for the delivery of slaves, was added – Harley & Co. had not formed the Company anyway. At least not for the trade with colonial produces.
For actually in this special purpose vehicle the national debt risen not least due to the War of Succession were to be parked past the Bank of England – and spread among the people.
Correspondingly the monopolies were not granted for free. On the contrary. In a first slice the Company assumed nearly 10 million pound Sterling in government bonds, for which the creditors received new stock of the Company. At the same time the administration guaranteed a perpetual interest to the Company’s credit and thereby its stockholders. Interest the administration planned to pay from tariffs on the imports to be expected from the trade monopoly. Imports, however, which, as already mentioned, did not exist and would not exist. 1717 further £ 2 million of national debt were assumed by the Company.
The real coup yet happened late 1719 – in the meantime King George I had become governor of the Company – by assuming about 60% – equivalent to about £ 30 million – of the then national debt against payment of £ 7.5 million. Of course the creditors had to be brought to exchange their bonds for new South Sea stock at a high premium. In other words, as many bonds as possible against the least possible stocks. On which behalf an unprecedented speculation was started by both the directors and members of the administration – among these not least John Aislabie, Chancellor of the Exchequer – by spreading rumors which seized all classes and had stock prices rise from £ 128 in January 1720 to £ 550 in late May and ultimately to a bare £ 1000 in July/August.
On which level the bubble burst: in late September 1720 the stock had already fallen down to £ 150 again. Just as some weeks before on the other side of the Channel in France already John Law’s Mississippi Bubble of uncovered promises on the base of uncovered paper money had burst.
« The eurobond is an instrument
by which each country decides herself
about her expenditures and revenues ,
but then leaves it
to the European level of the community
to pay the bills »
President of the German Bundesbank 2004-2011
Washington, September 25, 2011
the European Central Bank buys under breach of law and giving up its political independence in grand style government bonds which have become worthless, while the administrations create “stabilization mechanisms” and “facilities” and prepare eurobonds under the wellknown motto of the “We decide something, put it up in the space and wait some time if something happens … until there is no going back anymore” (Jean-Claude Juncker), to pave the golden path to perpetual wealth & growth by naturally “alternativeless” debt-jobbing.
It goes without mentioning that with such promise propaganda was made for the euro already at its introduction, against any common sense in the belief that economically and financially quite antagonistic cultures could be forced together for the general weal in a common currency. And this even without indeed a – even more illusionary – uniform economic and fiscal policy.
And just as already at the time of its creation the euro was connected in irresponsible thoughtlessness with old clichés of thinking of an encirclement of Germany à la 1913 (François Mitterrand) and of war and peace (Helmut Kohl) supposed to be overcome after half a century of European union and democracy, now again any discussion about the continued debt-jobbing is nipped in the bud with the very same argument by the leaders of administration to reach their aims in such a dictatorship of so-called alternativelessness. Today as then deliberately missing that words, repeated often enough, can become a self-fulfilling prophecy. To carry of then also all that what had been built up arduously in half a century to the real benefit of the general weal.
are no solution for the debt crisis …
And for the foreseeable future
they neither are a model
for the debt financing in the euro region »
chief economist of the European Central Bank
Vienna, September 15, 2011
The South Sea Bubble
« Last week the European Central Bank has bought
government bonds for the record sum of 22 billion euro .
It disregards the prohibition of national financing .
The reserve bank has become a beadle of politics …
The dangerously inflated risk balance of the ECB
should be warning enough
of the supposed great success of the eurobonds »
The Fall of the ECB
Frankfurter Allgemeine Zeitung, August 16, 2011
“Who’l Ride ?”
The South Sea Bubble
300 Years National Debt Speculation
William Hogarth (1697 London 1764). An emblematic print on the SOUTH SEA. Memorial sheet on the people’s eagerness to speculate in connection with the worldwide stock market fraud of the South Sea Bubble (1711-1720) and John Law’s concurrent Mississippi Bubble. Engraving by Thomas Cook (ca. 1744 – London 1818). Inscribed: Designed by W. Hogarth. / Engrav’d by T. Cook. / London Published by G. G. & J. Robinson Paternoster Row August 1st. 1800., otherwise as above and in the following. 10⅝ × 13½ in (27 × 34.2 cm).
“ See here ye. Causes why in London, / So many Men are made & undone, / That Arts, & honest Trading drop, / To Swarm about ye. Devils shop, (A) / Who Cuts out (B) Fortunes Golden Haunches,
Trapping their Souls with Lotts & Chances, / Shareing em from Blue Garters down / To all Blue Aprons in the Town. / Here all Religions flock together, / Like Tame & Wild Fowl of a Feather,
Leaving their strife Religious bustle, / Kneel down to play at pitch & Hussle, (C) / Thus when the Sheepherds are at play, / Their flocks must surely go Astray, / The woeful Cause yt. in these times,
(E) Honour, & (D) honesty, are Crimes, / That publickly are punish’d by / (G) Self Interest, and (F) Vilany; / So much for monys magick power / Guess at the Rest you find out more. ”
The rich scenario of human frenzy ,
golden promises , lottery fortunes ,
and the perversion of the values of civilization :
On the left Guildhall with the statue of the Gog or Magog and below Fortune hanged naked by her hair, thrown in slices among the people by the devil with the scythe (“the Devil cutting Fortune into collops”, Walpole), on the right the monumental base of the Monument to the Great Fire of London together with fighting foxes, while the inscription is adjusted to the occasion:
“ This Monument was erected
in Memory of the Destruction of this City
by the South Sea in 1720 ”.
At the center, however, following Callot’s hanging tree from the Grandes misères de la guerre the wheel of fortune surmounted by a goat and the inscription “Who’l Ride” as merry-go-round with wooden horses on which representatives of all classes – whore, clergyman, boot black, hag, nobleman – chase after their supposedly certain luck. Counterpart to this the ladies of society queuing behind Guildhall below deer antlers for a raffle of husbands with lottery fortunes. In the background finally the dome of St. Paul’s. On the ground before the Wheel of Fortune stripped Honesty is broken on the wheel by Self-interest in the presence of an Anglican priest, on the right at the pillory in front of the memorial Villainy – the mask is fallen, the pistol of the highwayman peers out of the pocket – scourges Honor, whose cloak is appropriated by a monkey with bicorne and sword standing on the side as allegory of pretending. Far left finally, unaffected by the general tumult, one Catholic, Jew, and Puritan each attend to their own game of chance. The trade as source of real wealth, however, resting unnoticed front right or already passed away.
The crowd in Hogarth’s study of 1721 in the Royal Library, Windsor, barely indicated by the way and elaborated in the print only as
“ a first glimpse of Hogarth’s
vivid characterisation of current life ”
(Lawrence Gowing in the 1972 exhibition catalog of Tate Gallery, no. 2).
The wiser among the contemporaries of course recognized the dishonesty of the shifting of government bonds placed only with difficulty and at high interest anymore to the South Sea Company formed solely for this purpose – the trade monopoly with the Spanish colonies in South America promising immense gains, actually granting but one ship per year, was just a front for the paying audience – from the beginning.
« The resignation
is a torch »
Risk Central Bank
Frankfurter Allgemeine Zeitung, September 10, 2011
So then Robert Walpole, who as First Lord of the Treasury of many years led England back to prosperity after the bursting of the speculation bubble, was an outspoken opponent of the manipulations. What, however, did not keep him from taking part in the speculation and profiting from it by timely selling, and later to protect some of the primarily responsible from punishment – the debtors’ prison was, as always, reserved largely for the little debtors. And also Lady Churchill, Duchess of Marlborough, was not deceived:
“ In 1720 the amazing episode of the South Sea Bubble inflamed, scorched, and seared London society. Sarah, with her almost repellent common sense, forced the Duke out of the market before the collapse, and added £100,000 to the fortune which he and she had gathered. Nor was this feminine intuition. In a blistering letter she wrote, while all England was bewitched by speculation,
‘ Every mortal that has common sense
or that knows anything of figures
sees that ’tis not possible by all the arts and tricks upon earth
long to carry £ 400,000,000 of paper credit with £ 15,000,000 of specie .
This makes me think
that this project must burst in a little while
and fall to nothing ’ ”
(Winston S. Churchill, Marlborough: His Life and Times [Chicago 2002], vol. II, pp. 1032 f.)
Just as three centuries later the far-sighted again were not beguiled by the siren songs of immense growth and realized in time that a currency neither can be put upon a base of quite contrary financial and economical cultures nor this could be saved then by ever so faster galloping government bond-jobbing, which – no different than after the bursting of South Sea, Mississippi and other bubbles – ultimately has to be paid for by the masses.
« The … Euro safety net
is not even yet blessed by the national parliaments
when there is talk already about a gigantic raise …
Cardinal point of this financial trick
shall be the European Central Bank (ECB) …
The EFSF buys bonds of bankrupt states …
and deposits these as ‹securities›
for further credits with the ECB .
With these credits it again buys government bonds
which it deposits at the central bank
as securities for fresh loans …
And the path into
would be open »
Politicians risk Hyperinflation
Die Presse, September 25, 2011
Hogarth’ South Sea Scheme besides – so Paulson – not only
“ the one original Bubble print by an English artist ”
but generally marking the beginning of satiric prints in England :
“ English graphic satire really begins with
Hogarth’s Emblematical Print on the South Sea Scheme ”
(John J. Richetti, in The Cambridge History of English Literature, 1660-1780, p. 85).
In the rich palette of events & allusions yet already a full Hogarth
as so not matched by the compositionally yet less energetic companion piece The Lottery produced some years later. – Cook “made his mark as Hogarth engraver, too, whose complete work he has engraved in copy” (Thieme-Becker) and whose original format he maintained contrary to all later Hogarth editions in his first, earlier edition. For some sheets not published by Hogarth himself Cook became their first engraver, just as he also gained approval of a contemporary connoisseur as Maximilian Speck von Sternburg. – Trimmed in the above platemark.
Offer no. 7,608 / sold
– – – The same in Cook’s popular later, smaller version. Inscribed: Emblematical Print of the South Sea. / Hogarth pinxt. / T. Cook sculp. / Published by Longman, Hurst, Rees & Orme, Aug 1st. 1809. Subject size 5¾ × 7½ in (14.5 × 19 cm). – Without the explanatory verses. – Trimmed within the wide white platemark which is slightly stained especially on the right.
Offer no. 8,728 / EUR 176. (c. US$ 213.) + shipping
« It is easy to duplicate
that by a communitarization
of national debt in the euro region
incentives for budget discipline
chief economist of the European Central Bank
Vienna, September 15, 2011
Then there still were Debtors’ Prisons
in which one could ponder excellently on the
National Provision of Funds
Of course only the small debtors turned up there …
William Hogarth (1697 London 1764). Prison Scene. The new inevitable station in Rakewell’s life, interesting here, however, his two co-detainees. So in the background unperturbed in search for gold the alchemist at the live stove of his fully functional laboratory, yet foremost the outside left, whose
“ New Proposition to pay the National Debt ”
slipping from his hand should be just as welcome by higher authority as his smelling-bottle to the fainted Sarah Young, Rakewell’s guardian angel. And on the canopy of the bedstead above him by no means an exhausted vulture, rather, so Lichtenberg, “the skinning of a third. For this
the myths of the art of finance and chemistry were too low ,
on the ode’s eagle wings he rushed to the Olympus, yet got, just as often his example, jammed between the canopy … and the ceiling of the room; with the head downwards.” Engraving by Thomas Cook (c. 1744 – London 1818). Inscribed: Designed by Wm. Hogarth / Engraved by T. Cook / Published Aprl. 1st. 1797, by G. G. & J. Robinson, Pater-noster Row, London. / Pl. VII. 14⅛ × 16½ in (35.8 × 42 cm).
« With these resolutions
( enlargement of the safety net EFSF )
another big step follows
in the direction of joint liability
and less disciplining by the capital markets ,
without that in turn the options for controlling and influence
on the national fiscal policies are distinctly strengthened »
President of the German Bundesbank
before the budget committee of the German Bundestag
September 19, 2011
The Rake’s Progress VII. – With multi-verse caption. – Cook “made his mark as Hogarth engraver, too” (Thieme-Becker) whose original folio size he kept contrary to all later Hogarth editions. Worth mentioning fine the chiaroscuro of his sheet here.
Hogarth’s grandiose depiction
of the execution of a sentence at insolvents
full of charming details. It is a beerless, a horrible time. And experienced by the master himself indirectly or directly. Since according to Meyers Konversations-Lexikon, 4th ed., VIII, 624, his landlady brought him into the notorious Fleet prison for unpaid debts – and received her appropriate memorial in due time. The catalogue Zurich of 1983 nevertheless just mentions the father’s imprisonment.
Yet in spite of all also a time of unbroken hopes as embodied not only by the said falling memorandum, but far more so by the alchemist untouched by the rest of the lively company:
“ … who has a pot on the fire not just for the best of the nation, but whole mankind. The philosophical patience in the man’s face and whole bearing has something really agreeable indeed; one sees he has learned waiting, an art which is so necessary with any other business in the world than in making gold … The friendship between the man and his stove is touching indeed if one considers that both sit here just because of their relation, and each probably could have been something much better without the other. Nevertheless they stick together, like from one piece … and feed each other with hopes and coals until the day of the answer to the great problem. Far this day can be impossibly. The escape pipe through the barred window is installed too well, — it cannot fail; whereas the installation by which the great product shall be conducted into the bottle not much — it must fail … the circulus in destillando is unmistakable here, the condenser is closer to the fire than the retort, and while both quarrel about the possession of the tincture the infinite vastness outside has it all,
and so happens the dissolution of the problem ”
Offer no. 7,518 / EUR 496. / export price EUR 471. (c. US$ 569.) + shipping
– – – The same in Cook’s smaller repetition worked together with his son without the caption here replaced by the series title. Inscribed: Pl. VIII. / Hogarth pinxt. / T. Cook & Son sc. / Published by Longman, Hurst, Rees, & Orme, Septr. 1st. 1808. Subject size 5¾ × 6¾ in (14.5 × 17.2 cm). – Trimmed within the wide white platemark.
Offer no. 8,729 / EUR 84. (c. US$ 102.) + shipping
– – – The same in steel engraving about 1840. 5 × 6 in (12.8 × 15.1 cm). – With the title in German.
Offer no. 5,804 / EUR 43. (c. US$ 52.) + shipping
« The price fluctuations at the financial markets
are distinct because of widespread uncertainty .
It is the result of political mismanagement
and the bursting of most varied asset price bubbles
to which it led because of distinct misguided incentives …
Hopes to be able to adjust corresponding problems
by interventions of a command economy
are an illusion …
The problems will only be solved truly by
making distorted markets efficient again .
This is only possible if there is sufficient transparency and
if those take all the risks who took them »
Irrational Hopes for Command Economy
Frankfurter Allgemeine Zeitung, September 14, 2011
… for the Big Debt-Jobbers
could also then further go about their business
elsewhere just as excellently
William Hogarth (1697 London 1764). Some of the Principal Inhabitants of ye Moon, as they Were Perfectly Discover’d by a Telescope brought to ye: Greatest Perfection since ye. last Eclipse; Exactly Engraved from the Objects, whereby ye: Curious may Guess at their Religion Manners, &c. (Royalty, Episcopacy and Law.) Engraving. Inscribed with text before. 10⅝ × 12 in (27.1 × 30.4 cm; subject size 9⅝ × 7⅜ in [24.5 × 18.6 cm]).
On a platform above the clouds as raised center figure the pope who lets the money machine spit by means of a prayer book – and thus demonstrating how even words can be turned into riches. At his right the monarch – his head being either a crown-piece or a guinea – receiving the moon ball as fief, additionally with symbols of fine arts. Enthroned on the left as the third of the alliance the law as the personified sword, not least a protector of prosperity figuring at its feet. Further two warriors and servants of the Lord. All by the way faceless.
« One doesn’t have to be able to repeat blindfolded
the instruments of the ‹Euro Financing Facilities›
where the fighting of the national debt crisis
with even more national debt will lead to :
even deeper into the debt mire »
Europe is more than «Euroland 17»
Frankfurter Allgemeine Zeitung, September 18, 2011
Impression on strong paper from the plate retouched by the royal engraver James Heath (1757 London 1834) about 1822 (“Even these impressions have become relatively rare today though”, Art Gallery Esslingen 1970; and Meyers Konv.-Lex., 4th ed., VIII , 625: “A fine edition”, esteemed also already by contemporary collectors of the rank of for instance an A. T. Stewart [Catalog of the Stewart Collection, New York 1887, 1221, “fine plates”]). – Trimmed below in the extremely wide platemark.
Offer no. 7,881 / EUR 118. (c. US$ 143.) + shipping
– – – The same. Engraving by Thomas Cook (c. 1744 – London 1818). (1806-09.) Inscribed with the text above. Sheet size 10¾ × 8¼ in (27.3 × 21 cm). – Trimmed within the somewhat foxing or time-stained wide white platemark.
Offer no. 8,905 / EUR 202. (c. US$ 244.) + shipping
The Companion Piece to the South Sea Scheme
William Hogarth (1697 London 1764). The Lottery. Engraving by Thomas Cook (c. 1744 – London 1818). Inscribed: Painted by W. Hogarth. / Engrav’d by T. Cook. / Pubd.. Feb. 1-1803 by G. & I. Robinson, Paternoster-row, London., otherwise as above. 14½ × 13½ in (36.9 × 34.4 cm).
Instructive representation , not omitting the calculability of luck. Otherwise that lottery “in which the March to Finchley (against the rebels under Charles Edward Stuart commonly known as Bonnie Prince Charlie or The Young Pretender and dedicated by Hogarth to Frederick II of Prussia) was disposed of as already mentioned in the explanation to that sheet …”. The painting was won by Captain Coram, founder of the Foundling Hospital. – Explanatory caption. – Impression of very fine chiaroscuro on buff paper. In its downright luxurious wide white margin right outside two feeble water marks. – Cook “made his mark as Hogarth engraver, too, whose complete work he has engraved in copy” (Thieme-Becker) and whose original format he maintained contrary to all later Hogarth editions in his first, earlier edition. For some sheets not published by Hogarth himself Cook became their first engraver, just as he also gained approval of a contemporary connoisseur as Maximilian Speck von Sternburg.
Offer no. 7,601 / EUR 445. / export price EUR 423. (c. US$ 511.) + shipping
– – – The same in Cook’s popular later, smaller version. Inscribed: Hogarth pinxt. / T. Cook sculpt. / Published by Longman, Hurst, Rees, & Orme, March 1st. 1808., otherwise as above. Subject size 5⅛ × 6¾ in (13 × 17.2 cm). – Slightly time-marked impression trimmed within the wide white platemark.
Offer no. 8,903 / EUR 118. (c. US$ 143.) + shipping
Know History — Learn from History . Indeed .
“ Received the 2 parcels yesterday in A. M. I am very pleased with the books as well as the condition of them. Thank you again … I hope we can do business again in the near future ”
(Mr. L. A. F., March 11 and 1 resp., 2001)