Financial History Issue 132 (Winter 2020) | Page 20

and there were some sound reasons for
expecting growth in that area.
The “permit” process visible in the
Daily Post ads was indeed how pro-
motions of that period were started.
Investors would put down very minor
amounts for a permit, often the £0.05
of the ads. This permit would entitle
them to become shareholders later.
It was only at that later subscription
stage, typically weeks afterwards, that
the more substantial amounts, such as
the £2 per £100 share of the Oldmixon/
Mackay fable, were asked for. That stage,
reached by very few of the South Sea
Bubble projects, made them more con-
crete. It involved shareholder meetings,
elections of management, and participa-
tion of known bankers as collectors and
custodians of the money being invested.
A week after the nature of the spoof was
unveiled—on January 2, 1720—another
paper, the Weekly Packet, carried a para-
graph about it. It treated the event as a
humorous and praiseworthy joke, express-
ing the hope it would “prove a means of
preventing many innocent people being
gulled of their money for the future.” A
week later, Mist’s Weekly Journal had a
much more detailed account. But this
article also seemed to embellish the story,
perhaps part of the common trend by
which the fable grew and acquired its
more colorful aspects as time went on.
In spite of the ads that revealed the
nature of the joke, and the publicity in the
Weekly Packet and Mist’s Weekly Journal,
speculative excitement continued grow-
ing, and many investors were “gulled of
their money.” It should be said that the
British press during the South Sea Bubble
was somewhat split in its coverage of the
South Sea scheme itself, where the really
big money went. However, this press was
almost uniformly scornful of the myriad
new projects, the “bubbles” in the language
of the time. With a few exceptions, they
were presented as frauds, designed just to
fleece the public. But such publicity did not
have much effect. Ads similar to the hoax
from December 1719 proliferated as the
Bubble was inflating in early 1720. Almost
all were for well-defined purposes, even
if those seemed to skeptical minds to be
chimerical. But several featured elements
of the “nobody to know what it is” mystery.
For example, the May 21, 1720 issue of the
Daily Post carried an ad for raising £6 mil-
lion (so comparable, relative to GDP, to
“The Bubblers bubbled, or the Devil take the hindmost.”  This cartoon
was printed in June 1720, at the height of the South Sea Bubble.
£200 billion for the UK, and $2 trillion for
the U.S. today). It was “carry on a design
of more general advantage to Great- Brit-
ain and Ireland, &c. and of more certain
profit to the encouragers thereof, than any
undertaking yet set on foot: Of which
further notice will be given in this paper.”
Soon the atmosphere became even more
frenzied, largely because of the impending
passage of the Bubble Act, which outlawed
most new companies. For example, on June
8, the Daily Post had an ad for a company
“for carrying on a thing that will turn to
the advantage of the concerned” with no
indications what that “thing” was. But we
should note that this was just the newspa-
per ad, and it is quite possible that when
prospective investors showed up in the
indicated place for purchasing “permits,”
they did receive at least some outlines of a
business plan. If so, it would be similar to
modern venture capital funds, where inves-
tors typically are told in advance that it is
to concentrate in the biomedical area, say.
It is possible that there was even a
project that did advertise itself literally as
“an undertaking of great advantage, but
nobody to know what it is,” since Mercu-
rius Politicus for June 1720 listed it, and
Political State of Great Britain for July 1720
reprinted that listing.
There were also contemporary reports
18    FINANCIAL HISTORY  |  Winter 2020  | www.MoAF.org
of promoters simply absconding with
investors’ initial payments, as in the other
element of the anecdote. For example, the
London Journal of June 11, 1720, the day
that the Bubble Act became law, noted:
About the middle of this week two or
three of our famous projectors took
care to put themselves out of the reach
of the new Act of Parliament for sup-
pressing of bubbles; for having got
their subscriptions full, they closed
their books, shut up their offices, and
fairly marched off with five or six hun-
dred pounds a-piece in their pockets, in
order to secure to themselves the sole
benefit of such laudable undertakings.
We don’t have any statistics on how fre-
quent such occurrences were. This might
be partly because, in Oldmixon’s words
cited before, in the atmosphere at the peak
of the Bubble, when “people were [not]
in their senses,” such events were “only a
matter of laughter.”
A likely reason that it was “only a matter
of laughter” when some promoters made
off with initial deposits is that much greater
sums were being abstracted from investors’
pockets by more elaborate maneuvers. A
venture that proved popular would see the
value of the permits soar, and any held back
by the promoters in the initial stage could