Debt: The First 5000 Years - autonomous learning

342 DEBT
such bubbles hit the London markets in the 169os, in almost every
case built around a new joint-stock corporation formed, in imitation
of the East India Company, around some prospective colonial venture.
The famous South Sea Bubble in q2o-in which a newly formed trading
company, granted a monopoly of trade with the Spanish colonies,
bought up a considerable portion of the British national debt and saw
its shares briefly skyrocket before collapsing in ignominy-was only
the culmination. Its collapse was followed the next year by the collapse
of John Law's famous Banque Royale in France, another central-bank
experiment-similar to the Bank of England-that grew so quickly
that within a few years it had absorbed all the French colonial trading
companies, and most of the French crown's own debt, issuing its own
paper money, before crashing into nothingness in 1721, sending its chief
executive fleeing for his life. In each case, this was followed by legislation:
in Britain, to forbid the creation of new joint-stock companies
(other than for the building of turnpikes and canals), and in France, to
eliminate paper money based in government debt entirely.
It's unsurprising, then, that Newtonian economics (if we may call
it that)-the assumption that one cannot simply create money, or even,
really, tinker with it-came to be accepted by almost everyone. There
had to be some solid, material foundation to all this, or the entire system
would go insane. True, economists were to spend centuries arguing
about what that foundation might be (was it really gold, or was it land,
human labor, the utility or desirability of commodities in general) but
almost no one returned to anything like the Aristotelian view.
I I I I I
Another way to look at this might be to say that the new age came
to be increasingly uncomfortable with the political nature of money.
Politics, after all, is the art of persuasion; the political is that dimension
of social life in which things really do become true if enough people
believe them. The problem is that in order to play the game effectively,
one can never acknowledge this: it may be true that, if I could convince
everyone in the world that I was the King of France, I would in
fact become the King of France; but it would never work if I were to
admit that this was the only basis of my claim. In this sense, politics
is very similar to magic-one reason both politics and magic tend, just
about everywhere, to be surrounded by a certain halo of fraud. These
suspicions were widely vaunted at the time. In 17II, the satirical essayist
Joseph Addison penned a little fantasy about the Bank of England'sand
as a result, the British monetary system's-dependence on public