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Speculative bubbles - The First financial cricis.

The three bubbles--French, British and Dutch, started at different times but burst at about the same time: September 1720.

The South Sea Bubble, named after the British South Sea Company, lasted from January to September, 1720.
The Mississippi Bubble, after the Mississippi Company in France, had begun a bit earlier, in 1719.
The Dutch bubble started in March 1720 and derived from the other two bubbles.

Het groote tafereel der dwaasheid : vertoonende de opkomst, voortgang en ondergang der actie, bubbel en windnegotie, in Vrankryk, Engeland, en de Nederlanden, gepleegt in den jaare MDCCXX.
is a matter of fact a collection of caricatural plates in prose and verse satirizing the first truly international speculative crisis in the history of financial capitalism, the "Mississippi scheme" (1718-1720) of the French Compagnie d'Occident and the speculations its stock that led to the complete ruin of many of its over-eager French, Dutch and English shareholders.

Jean Law

The South Sea Co. was founded in 1711 nominally to trade in slaves in the Americas (the "South Sea" was the southern Atlantic) but was really a means for the British government to convert its debt to stocks that could be traded on the market. By 1720, debt conversion was the Company's primary business.

The Mississippi Company : John Law (1671-1729), the son of an Edinburgh banker and successful financier who established the "Banque Générale" in France in 1715, founded the Compagnie de l'Occident for the exploitation of the resources of French Louisiana after Antoine Crozat had surrendered his charter in 1717.
Law's reputation caused the stock to sell readily, and the organization soon enlarged the scope of its activities by absorbing other commercial companies, its name than being changed to the 'Company of the Indies'. Enormous profits were anticipated...and the increasing demand for its stock led to wild speculation.
In the summer of 1719, Law began started comparing Louisiana to Ophir (the legendary site of King Solomon's mines). The stock went up from 500 livres per share to a peak of 18,000 in the summer of 1720, then collapsed in September, settling at about 500 in 1721.

In January of 1720, the directors of the South Sea Company similarly hyped a public offering. From 128 pounds per share, South Sea stock peaked at almost 1000 by the summer. Demand was high, but, in order to attract even more buyers, the Company's directors even sold stock on credit. Hundreds of British companies also sprang up, most of them dodgy, to take advantage of the boom.

Dutch investors came late to the party, in the spring and summer of 1720. They mostly ignored Mississippi shares, but eagerly went after South Sea shares when they hit the market. During the boom, some 40 Dutch companies raised capital. Most were legitimate and associated with one city or another. Very few Dutch companies were traded on the Exchange (Beurs), so trading in French, British and Dutch "bubble" companies was carried on in coffehouses.
In the 1600s, Frederik Hendrik, the Stadhouder of the Netherlands, declared that trading in shares one didn't own ("blanco") was legally invalid, but all the cities except Amsterdam, Haarlem and Leiden ignored this. Even in Amsterdam, the trade flourished at Kalverstraat No. 29, the coffeehouse Quincampoix, named after the Paris street where John Law was headquartered (No. 65). The place figures in many of the book's satires, and is recognizeable in some of the engravings.

The Buble
Speculation in shares was known as the Bubble, and the trade was known as "Wind-Handel" and "Wind-Negotie," (both meaning Wind-Trade), because of the trader often didn't own the shares and also tried to talk up the price. Dutch companies formed in the Bubble tended to be local affairs, associated with the cities where they were founded. Stock offerings were often public in name only, with local officials and other insiders buying up most or all of the stock.
It couldn't last, of course. There was no real regulation, and instead there was some government connivance.

The end
The end came in the summer of 1720. John Law, running France's biggest company and its national bank, essentially was the economy. In fact, Law did introduce paper currency to France, which could have worked out all right. However, when trouble hit, Law began issuing financial decrees, such as forcing people to turn in their gold for paper money. He backed off but then made other serious mistakes that killed off confidence in the company and the economy. When Mississippi share prices plummeted, so did its capitalization and the national money supply. Law, abandoned by his protector, the Duc d'Orleans, fled to avoid jail, eventually washing up in Venice, living out his days as an unsuccessful gambler. The French government actually did OK, since Law had used the Company, via the Bank, to buy the government's debt when Company shares were at 10,000 livres.

The British collapse quickly followed the French one, but with less severe consequences. Britain had the Independent Bank of England to manage national finances, and Parliament acted quickly to bring in regulation. The courts tried Company directors, the Chancellor of the Exchequer and the Postmaster General. The latter two were convicted of stock manipulation and insider trading and had their estates confiscated to pay damages. The British government, like the French one, had managed to offload its debt, so it came out all right.

Many Dutch investors were of course ruined also, and the crash took down legitimate companies as well as shady ones, but the Dutch economy wasn't really affected. Dutch involvement was short, and the high price (€1,000 to €10,000, in today's money, was a typical price range) and limited availability of shares (in Dutch companies anyway) also limited the fallout. The economy at the time was easily strong enough to weather the crash.

Damage in Britain was more widespread, mainly because there were more companies to buy into. France, also suffered because the Mississippi Company was inextricably tied up with the paper economy. It recovered, more or less.
The South Sea and Mississippi Companies lasted until the Seven Years War (1756-1763), which resulted in a serious financial crisis throughout Europe. The Rotterdam Lending Bank, later the City Bank of Lending (Stadsbank van Lening), existed until a few years ago, when it was bought by Fortis Bank !
Naturally, the general bubble and its collapse in all three countries were fodder for much satire.

In Britain there are a number of cartoons, including an early one by William Hogarth on the South Sea Bubble, and many satirical songs and broadsides. In France, a few.
But in the Netherlands, the Bubble gets a whole book. The general grotesquerie and the economic pointlessness of many of the Dutch "Bubble-companies" probably offended the Dutch Calvinist soul.
Het groote tafereel der dwaasheid : vertoonende de opkomst, voortgang en ondergang der actie, bubbel en windnegotie, in Vrankryk, Engeland, en de Nederlanden, gepleegt in den jaare MDCCXX.. The book was anonymously published by the French/Dutch publisher and printmaker Bernard Picart. While Picart trained initially in Paris, establishing a studio on Rue St Jacques, au Buste de Monseigneur, in the late 1690s he found more work in the Netherlands.
Picart turned Huguenot and settled in Amsterdam around 1711.
Not only are the plates worth studying as a historical document, it is also notable for examples of the kind of textual and visual language we still use whenever a new "bubble" appears.

Cole, Arthur H. The Great Mirror Of Folly (Der Groote Tafereel Der Dwaasheid), AN Economic-Bibliographical Study). Baker Library, Harvard Graduate School of Business Administration (Boston, 1949).
Gelderblom, Oscar and Jonker, Joost. Mirroring Different Follies: The Character of the 1720 Bubble in the Dutch Republic. Paper 17 April 2008, published at Univ. of Utrecht. (a first draft).
Kees Smit, Pieter Langendijk. Uitgeverij Verloren (2000, Hilversum), pp. 152-155.
Stadsarchief Amsterdam image bank (Beeldbank) for images of the Quincampoix coffeehouse at No. 29 Kalverstraat (just south of the Dam)
Wikipedia; South Sea Bubble, Mississippi Bubble, Windhandel

Romeyn de Hooghe
Many plates in the book are probably etched by Mr. Romeyn de Hooghe.
Romeyn de Hooghe was born in Amsterdam in 1645 and worked there until c.1680-1682, when he moved to Haarlem, where he died in 1708. For several Netherlandish provinces, he created interior architectural paintings and other works. In 1662 De Hooghe was invited by Adam Frans van der Meulen (1632-1690) to Paris, where he etched the baptism of the Dauphin in 1668. There he met King Jan III Sobieski of Poland and was knighted by him in 1675.
De Hooghe painted, engraved, sculpted, designed medals, enameled, taught drawing school, and bought and sold art as a dealer. During the 1690s he made sculptures for the palace of Het Loo (1689-1692), designed and etched triumphal arches and medals for William III's entry into the Hague (1691), and designed the Haarlem market festival decorations for the peace celebration after the capture of Naumur (1695). His political, legal, and economic interests are evident in his writings: Schouburgh der Nederlandsche Veranderingen (1674), Ćsopus in Europa (1701), Spiegel van Staat des Vereenigde Nederlanden (1706), and Hieroglyphica of Merkbeelden der oude Volkeren (1735), all of which he also illustrated. He was well-educated and may have attended law classes at a university in Harderwijk or Leiden.
De Hooghe's earliest print, after Nicolas Berchem, was made around 1662. He created about 3500 images, most after his own designs, some after other artists, for himself and other authors, publishers, and printers. His plates were often retouched and adapted for later events, sometimes by De Hooghe, sometimes by others. He etched allegories and mythological scenes, portraits, caricatures, political satires, historical subjects, landscapes, topographical views (especially of Netherlandish cities), battle scenes, genre scenes, title pages, and book illustrations. From 1667-1691 he illustrated various newspapers: Hollandsche Mercurius, Princelycke almanach, Orangien Wonderspiegel. The first political iconographer of the Netherlands and its first great caricaturist, De Hooghe was closely associated with William of Orange. He repeatedly caricatured James II and Louis XIV, sometimes using pseudonyms on his most audacious images. He was an expressive master of physiognomy; and his original, lively style displayed the baroque fashion for spectacular and allegorical fantasy. Romeyn de Hooghe was the most significant and prolific Netherlandish engraver in the second half of the seventeenth century.

We offer the following original prints from "Het groote tafereel der dwaasheid" :