# Paper 1: After the Fall

Due Date: Class 8.

Length: 900–1,200 words, double-spaced with standard margins (1in) and font (12pt).

Grade: 10% of your final course grade.

## Setting The Scene

In early 1720, the British Parliament approved an innovative project by the South Sea Company to restructure Britain's mounting National Debt. The South Sea Company, founded in 1711, was a large joint-stock company that was involved in two main lines of business: Lending money to the British government and overseas trade with Spanish America—in particular, the trade in African slaves. In 1720, the Company proposed to buy up roughly three-quarters of all of the outstanding "annuities" that constituted Britain's National Debt, and exchange those annuities for new South Sea Company stock. This "South Sea Scheme" gave the Company access to an unprecedented amount of new capital; many in the British public believed the Company was going to generate previously unimaginable profits. The Scheme went into effect in the spring of 1720, and over the ensuing months investors clamored to buy the enchanting stock. Prices for South Sea Stock surged to over £1,000 per share by mid-summer, about 7 times the price of the stock at the beginning of the year. Beginning in September, though, the price began to sag. By the end of the year, it had collapsed completely, to under £200 per share, or more than 80% below its peak.

This "South Sea Bubble" was the first major crisis that had transpired in the young London stock market. It was a profoundly unsettling event for many in Britain, who struggled to understand how the price of a paper object like South Sea stock could rise and fall so dramatically. The Bubble shook the public's faith in the new financial innovations that had arisen in Britain over the previous half-century and in the government that approved the fateful scheme. Many Britons lost tremendous fortunes when the Bubble popped. In the wake of the Bubble, they demanded answers and demanded justice. Starting in late 1720, many different observers tried to explain what went wrong, offering those explanations in newspaper articles, pamphlets, Parliamentary speeches, poems, books—even playing cards.

## Assignment

For this assignment, you will read excerpts from five different primary sources written by people who experienced the South Sea Bubble firsthand. Your objective in this paper is to draw upon these primary sources in order to answer the following question: How did people who lived through the South Sea Bubble explain that bizarre financial event?

In crafting your argument, you should draw upon at least two different primary sources, including at least one of the three texts that we did not read and discuss directly in recitation. (So: At least one of the "Secret History," Timothy Telltruth, or Adam Anderson texts). You may draw upon as many of the five texts as you wish, but you are not required to use more than two. In addition, you can use any of the other course readings or material from lectures in order to inform your discussion. You should not do any outside research for this paper. Your paper should be grounded in your own analysis of the five selected primary sources.

This paper is fundamentally an exercise in historical analysis. Your goal is to explain how people in 1720 thought about what went wrong. Using the primary source text, try to put yourself in the position of someone living in 1720, who had never experienced a "bubble" before, and for whom the stock market itself was a new and strange thing. What did they think went wrong in 1720? Were they angry about it? Why? What upset them the most? Who or what did they think was responsible? What did they think should be done in response to the crisis? Note: Your goal is not to explain what happens during financial crises in general. Your paper should not discuss what you think "really happened" in 1720, only what people who lived at the time thought happened.

## Primary Source Texts

The five primary source texts that you will use in this paper are as follows.

1. Swift, Jonathan. The Bubble: A Poem (PDF). Printed by Benj. Tooke, 1721.
2. Trenchard, John, and Thomas Gordon. Cato's Letters or Essays on Liberty, Civil and Religious, and Other Important Subjects : Four Volumes in Two Vol. 1. Edited by Ronald Hamowy. Liberty Fund, 1995, pp. 40–63. ISBN: 9780865971295.
3. Telltruth, Timothy. Matter of Fact, or, The Arraignment and Tryal of the Di—rs of the S—S—Company (PDF). Printed for John Applebee, W. Boreham, and A. Dodd, 1720. (selections)
4. "The Secret History of the South Sea Scheme." (PDF) In A Collection of Several Pieces of Mr. John Toland, Now First Publish'd from His Original Manuscripts…, Vol. 1. Printed for J. Peele, 1726, pp. 404–47. (selections)
5. Anderson, Adam. An Historical and Chronological Deduction of the Origin of Commerce, from the Earliest Accounts to the Present Time (PDF - 1.2MB), vol. 1. Printed for A. Millar et al., 1764, pp. 284–97.