John Law, the South Sea Bubble, and Dutch Satire

Abstract

This chapter examines the financial history behind the Bubbles of 1720, with a special focus on their effects in the Netherlands, by offering a number of observations and speculations concerning two economic comedies penned by Pieter Langendijk in 1720, collected in Het groote Tafereel der dwaasheid [The Great Mirror of Folly], and now published in this volume in English translation. As well as examining what the plays can tell us about the financial knowledge of Langendijk’s audiences, this essay explores how literary critic and historian C.F.P. Meijer attempted to explain economic history to a new readership in his 1892 edition of the plays. Dutch familiarity with finance and share trading is evidenced in Langendijk’s use of sophisticated financial language, indicating that his audience understood the world he was satirising. That Langendijk could, or thought he could count on a certain familiarity with finance on the part of his Dutch viewers stands in contrast, for example, to what we may extrapolate from English plays of the same period, which merely caricature stock market activity, likening it to gambling. This chapter shows that Langendijk painted a more nuanced view of finance than his English contemporaries, and argues that, while Quincampoix and Harlequin Stock-Jobber share some common themes with English plays (such as anti-Semitism and the humbling of the nouveau riche), Langendijk, like many in his Dutch audience, was no financial neophyte.

Bitcoin’s bubbly behaviors: does it resemble other financial bubbles of the past?

“…As a result of all this, the stock went from 150 to 500 livres de tournois between 1717 and May 1719 and from 500 to 10,000 livres de tournois from June 1719 to January 1720. Doubts about the company's profitability and the Royal Bank's liquidity problems resulted in a bursting of this price bubble during 1720 (Bruner and Miller, 2018;Paul, 2020). In this case, the behavior was very similar to that for Bitcoin, where, many times, people invested simply out of confidence in the technology, as argued by Balutel et al (2023), or as a means of speculation, due to its high growth potential and the volatility of returns, according to Vasudeva (2023), or for short-term gains, as described by Zhang et al (2021).…”

“…The first occurred in France with the speculation of the Mississippi Company's shares. The Scottish financier John Law (1671-1729) proposed to Regent Philip of Orleans the creation, in May 1716, of a private bank, the General Bank, to expand the money supply and thus revive economic activity (Bruner and Miller, 2018;Paul, 2020;Silvia, 2021).…”