Had occasion today to look up this old one... I appreciated Levenson's massive book when it came out, and wrote pretty favorably about it:
Thomas Levenson of MIT has written a timely book: Money For Nothing: The South Sea Bubble and the Invention of Modern Capitalism. As many assets on the world’s financial markets rise and rise and rise, and many pundits call for an inevitable collapse that never seems to arrive, looking at bubbles of the past provides the very perspective that financial historians are good at.
This pretty massive book is super easy to read, very beginning friendly and though it has tons of intricate, British-specific history, it's well worth one's attention: we get Newton and the Royal Mint, Daniel Defoe and Jonathan Swift.
“Whenever something seems bubbly, accusations of tulips and South Sea bubbles are never far away – even though the proportion of people who could actually explain those iconic episodes of our financial past is frighteningly close to zero"
Levenson skillfully steers clear of the intricate financial analysis that frequent much of that work. He makes the financial mechanisms involved easily accessible for the non-expert, and brings a fairly novel angle to the bubble: literary references. Daniel Defoe’s witty words are everywhere; Archibald Hutcheson’s merciless financial dissection is a great addition; Isaac Newton’s givings and misgivings bring both clarity and human context. The personal stories of Robert Walpole and the Whig-Tory party politics of the 1710s make the story less about financial mania and more about corruption and political power grabs.** A nice niche that brings new life to the South Sea era.**
After the SSC directors and schemers had successfully finished a few rounds of this cleaning-up of government finances, their hubris took over. In early 1720 they petitioned Parliament for their most ambitious scheme yet: converting all of Britain’s outstanding debt into shares in this corporate leviathan. This was the beginning of heavy lobbying, crookedness, insider trader and outright bribery.
That, at least, rings uncomfortably familiar.
Contrary to the misused Tulipmania, this bubbling scheme in 1720 did involve large swathes of the English population, vividly described by literary accounts from people like Daniel Defoe and Jonathan Swift. In contrast to its French counterpart under John Law in the year before, it was not accompanied by a money-printing government bank. Nuance matters.
HATE (or love?!) that the following is true
Levenson’s account of the South Sea Bubble will not, I daresay, be the last time historians find reason to look at this grand event of our financial past.