Neptune & the South Sea Bubble JOHN W. GROSS, JR.
M
Y SHORT LIST of favorite all-time books has to include Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay1. Witch manias, investment manias, religious manias, crusades, and swindles are lumped together with odd follies, dueling, thieving, poisonings and other delusional behavior like prophesy and… astrology! This classic history of mass-hysteria and rapture was published in 1841; five years shy of o’s discovery. This no doubt explains why Mackay’s table of contents reads like a rulership listing for o. Certainly the book’s 19th century writing style is part of its charm. Quaint, dated and sometimes vaguely tongue-in-cheek, it may leave the reader with the impression that human folly is a feature of our dusty past. This feeling jibes with our western cultural bias that equates the passage of time with progress. Sophistication, we feel, resides in the present and future. The rational has gradually circumscribed the irrational, or so we hope. Smug within his modernity at the end of the 20th Century a reader might have been forgiven for believing that sheer passage of time counted as protection from similar outbreaks of delusion and mania. Had not history itself ended with the collapse of our foes in 1989? And hadn’t the economists and technocrats fine tuned economic progress to perfection? Such hubris is a product of linear thinking, a mistake that those sensitive to nature’s cycles are less prone. For all our study of history, we do indeed seem condemned to repeat it. In just the past three years alone we have witnessed yet another investment mania and the start of a new crusade cycle between Islam and the West! The recent bursting of our own high tech/dot-com bubble is but the latest addition to the gallery of famous money manias. Our own just-popped bubble is a distant cousin to history’s first modern-style investment bubble detailed at length in Extraordinary Popular Delusions. The astrology of history’s first bubble is profound. Unsurprisingly, o looms large in this story. The first modern-style bubble and crash that was international in scope swept through Europe early in the 18th century. The French chapter of this financial crisis, known as the Mississippi Bubble, began in 1719. From there it jumped the Channel to help spark an English version 1
Charles Mackay, LL.D. Extraordinary Popular Delusions and the Madness of Crowds. New York: Harmony Books, 1980.
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