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The First Crash

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The First Crash

Lessons from the South Sea Bubble

Princeton UP,

15 min read
10 take-aways
Audio & text

What's inside?

The rise and fall of the South Sea Company bubble was the 1700s version of the high-tech burst – from mania to misery.

Editorial Rating



  • Overview
  • Background
  • For Beginners


This is a fascinating book about a fascinating time, the early eighteenth century. You will find greed, corruption, romance, duels, kings, regents and stock-jobbing scoundrels, often described by such astute contemporary chroniclers as Daniel Defoe. But this book rests on a foundation, sometimes a little too evident, of solid and painstaking financial analysis. It is perhaps the first book, certainly the first recent book, to present in great detail the analysis of Archibald Hutcheson. Hutcheson seems to have been a lone voice for sobriety and reason in the mad epoch of the South Sea Bubble. Author Richard Dale carefully draws a remarkable number of clear parallels between the first bubble in history and the most recent - the tech splat of the 1990s. believes that anyone who is involved in the financial markets should read this book. It is particularly timely in bull markets.


How Little Has Changed

The 1720 burst of the South Sea Bubble in London and the almost simultaneous pop of the Mississippi Bubble in Paris have much in common with recent financial bubbles, such as the great dot-com bubble of the 1990s. In the old historic bubbles as in that contemporary bubble, a mix of fraud, questionable accounting, lax or corrupt regulatory oversight, and massive investor irrationality all contributed to an unsustainable run-up in the prices of shares. Although ample evidence indicated that pricing had reached unreasonable, unsustainable levels, in every bubble people ignored the advice of sober analysts. Instead of facing facts, they spoke of a new economic era, a new age and a new dawn.

Archibald Hutcheson was one of the most astute, insightful men in England at the time of the South Sea Bubble. He was a Member of Parliament for Hastings, a lawyer and an economist who certainly earned the right to be called the "father of investment analysis." Regrettably, he is not called that. For centuries, he has hardly been called anything at all. History has ignored him as studiously as his contemporaries did. Hutcheson seems to have been the only man in...

About the Author

Richard Dale is Emeritus Professor of International Banking at Southampton University, U.K. His books include Risk & Regulation in Global Securities Markets, International Banking Deregulation and The Regulation of International Banking. A financial regulatory policy expert, he has advised Parliament and testified before U.S. Congressional committees.

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