6/19/2023 0 Comments Greed strongboxBut, in the earlier part of the reign of William the Third, all the greatest writers on currency were of opinion that a very considerable mass of gold and silver was hidden in secret drawers and behind wainscots. At present the quantity of coin which is hoarded by private persons is so small that it would, if brought forth, make no perceptible addition to the circulation. We are told that the father of Pope the poet, who retired from business in the City about the time of the Revolution, carried to a retreat in the country a strongbox containing near twenty thousand pounds, and took out from time to time what was required for household expenses and it is highly probable that this was not a solitary case. So great was that difficulty that the practice of hoarding was common. Indeed the cry for a new East India Company was chiefly raised by persons who had found difficulty in placing their savings at interest on good security. There were a few joint-stock companies, among which the East India Company held the foremost place but the demand for the stock of such companies was far greater than the supply. A capitalist might lend on bottomry or on personal security: but, if he did so, he ran a great risk of losing interest and principal. Many too wished to put their money where they could find it at an hour’s notice, and looked about for some species of property which could be more readily transferred than a house or a field. But the number of acres in the kingdom had remained the same and the value of those acres, though it had greatly increased, had by no means increased so fast as the quantity of capital which was seeking for employment. Three generations earlier, a man who had accumulated wealth in a trade or a profession generally purchased real property or lent his savings on mortgage. But, in the seventeenth century, a lawyer, a physician, a retired merchant, who had saved some thousands and who wished to place them safely and profitably, was often greatly embarrassed. In our time, to invest such a surplus, at something more than three percent, on the best security that has ever been known in the world, is the work of a few minutes. Thousands of busy men found every Christmas that, after the expenses of the year’s housekeeping had been defrayed out of the year’s income, a surplus remained and how that surplus was to be employed was a question of some difficulty. The bubble that began in 1688 was mostly forgotten until Lord Macaulay retold the tale almost 200 years after it popped (added paragraph spacing for easier reading):ĭuring the interval between the Restoration and the Revolution the riches of the nation had been rapidly increasing. And that’s just the next market bubble, in a long list of bubbles that mirror it. Twenty-eight years later the South Sea Bubble would birth (and wipe out) a similar list of companies. It would fuel the mania until something - supply for shares exceeded demand - caused the collapse. What started as a need to earn a decent return, morphed into a get-rich-quick greed as the price action and large gains took hold. Stories would be woven about the future prosperity of each endeavor.Īnd like all bubbles, investors ate it up. The demand for shares needed to be supplied…Ībout 100 new joint-stock companies schemes would be born over the next four years - insurance, fisheries, tanning, swords, diving, and more. Few people were willing to part with their East India shares since they were so lucrative and the company refused to issue more. The East India Company was one of a handful of joint-stock companies trading at the time. People were flush with cash and had few places to put it.
0 Comments
Leave a Reply. |