The First Stock Market Crash The South Sea Company

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In this video:
Building on a long tradition of catastrophic financial market crashes, the economic meltdown caused by the bursting of the housing bubble in 2008 is only the latest in a long line of epic stock market fails. In fact, nearly 300 years ago unscrupulous players, political cronies and laissez-faire government combined to create a “too big to fail” company, and then stood around helpless when it did. This is the story of the South Sea Company Bubble.
Want the text version?: www.todayifoundout.com/index.p...
Sources:
www.pbs.org/wgbh/pages/frontli...
www.thefinanceguy.co.uk/blog/m...
eprints.soton.ac.uk/79226/
en.wikipedia.org/wiki/Robert_W...
en.wikipedia.org/wiki/South_Se...
www.pbs.org/fmc/timeline/estoc...

[@Tru7hiness]

The South Sea Company crisis in three words: It was Walpole.

[@331coolguy]

Thanks extra credits.

[@sECUREij]

Extra credits introducing that to public vernacular

[@ShannonLynn21]

The tulip story kept making me think of the beanie baby craze in the 90s

[@fallingpetunias9046]

Better keep those children's toys away from children! They might maybe be worth something to a collector in the future

[@Mitjitsu]

We have Funko Pop collecting now.

[@AlteryxGaming]

Damn you Robert Walpole!!!

[@SimuLord]

Who decided Simon should cover this topic today? It was Walpole.

[@molly.dog8brooke792]

IT IS ALWAYS WALPOLE!

[@Grauschattierung]

He had a plan

[@SimuLord]

@@Grauschattierung Otto von Walpole.

[@Karash770]

I am expecting quite a few "It was Walpole" comments on this one.

[@LittleLouieLagazza]

It was Powell. It was Yellen =D

[@Magmafrost13]

I wish more people would talk about the story of the South Sea Bubble. Like many others here I first heard about it from Extra History (and I recommend anyone who hasnt see that series do so, it goes into a lot more detail than this video), and suffice to say I have never been angrier at people who have been dead for centuries. But of course, this wasnt a one-off, people can and will and are making the same mistakes, and while history may not repeat itself, it has a tendency to rhyme...

[@chaosdirge4906]

Every time I see people fawn over cryptocurrency I think of the south Sea bubble.

[@slowerandolder]

They're not "mistakes" - this is how a financial industry makes its money: find a new angle; raise money for an exciting business opportunity; get out before the collapse and scandal: repeat. Presumably none of the folks involved can do an honest day's work.

[@Luke-mm4fy]

@@chaosdirge4906 it’s a low liquidity market that has, until now, been mostly owned by retail. There has been a “bubble” every 3 years, triggered by the “Bitcoin halving” starting in around 2011, however it is hard to see this on a regular chart since each time the “bubble” gets so big it dwarfs the previous ones.

[@LittleLouieLagazza]

Excellent! Now check out the Mississippi Bubble which predated this one in France shortly before....

[@TheFrenchMansControl]

Topic: Stock Market Crash Simon: *has business channel* Simon: *posts to fact channel* Simon: *advertises different channel again*

[@igrolfthenord3668]

Who popped the bubble? It was Walpole

[@essidus]

It's always Walpole.

[@L4Z3RF4C3]

Simon you should also do a video on the Missippi company and John Law in France. Crazy story of an english gambler who brought paper wealth to France. He became the most famous and loved man in the country only to become the most hated and vilified once the bubble popped.

[@christopherjablonski2790]

I came here for the... wait, what? No Walpole?

[@Grauschattierung]

He didn´t plan for it.

[@JustMe-um8zp]

So glad to see so many fans of Extra History....... "It Was Walpole"

[@leozao5]

His face on the thumbnail is what I would expect to see on Business Blaze He's a legend Allegedly

[@--enyo--]

I'm actually disappointed this topic isn't a Business Blaze episode.

[@ectior]

“Bonus fact” turned into an extra video

[@lostbutfreesoul]

Yay, one of my favorite moments out of economical history. The fact the guy behind it got away with it all... stunning. I had hoped to see this on Business Blaze though!

[@rustumlaattoe]

No mention of the fact that the colour variations later turned out to be caused by a virus rather than genetics. They didn't know this at the time and the discovery is not what caused the crash, but i would have mentioned it as a bonus fact, because its a very interesting part of how the tulips became so highly prized. The virus that causes the colour variations even makes the bulbs weaker further increasing their rarity and therefore perceived value.

[@wendychavez5348]

Gregory MacGuire's book, Confessions of an Ugly Stepsister," combines the Cinderella story with the great tulip crash in an amazing way. I will always be thrilled that I found this book! Almost as thrilled as Today I Found Out makes me.

[@goliathcleric]

My issue with the stock market isn't the obscene amount of money that it prints out of nowhere from seemingly nothing. It's that it has, for some reason, become the benchmark for the economy beyond any other measure. And as the COVID-19 crisis has shown, at least in the US, it doesn't really work that way. "Oh, only 2.5 million people lost their jobs, that's better than the 2.6 million we thought lost their jobs, must mean the economy is turning around, time for the stock market to shoot up and deceive the wealth of Congress into thinking nobody could possibly need anymore help since the economy is doing great."

[@densealloy]

10:18 this reminds me of the housing market circa 2005. Everyday people buying a 2nd and/or 3rd home, in the hope of "flipping it" in a month for a huge profit. People were buying anything and everything. Run down, POS, homes allegedly valued at $300k+ (really valued at $100k or $130k) and people getting loans for a 5-10 year ARM and putting it right back on the market for $50K or $100K higher, with no work done to it, just fingers crossed and hope it sells before the first payment is due in 60 days. Of course by the time the general public got wise to the first people doing this and getting huge profits the bubble had formed and they were only selling to another person(read "sucker")with same hopes and like everyone else no way of paying if it didn't sell. It was akin to a game of musical chairs but with properties overvalued by 200% or 300%, unqualified loan applicants, unscrupulous banks and others wanting to get into the game before the music stopped. But the music did stop and there was the sorry sack who was left holding the property, hopelessly upside down on a mortgage 300% overvalued and an "unconventional" mortgages with astronomical payments, that no one could pay, claiming they didn't understand what they were signing. These practices along with the old myth the home value "never" went down not only destroyed themselves financially but those of us in the neighborhoods saw our home value go up, which meant a unprecedented speedy climb in property taxes and then the banks double (tripled?quadrupled?) dipped by packaging these loans and sold them again and again just exasperating the problem and making bubble upon bubble.... but don't worry we are paying for it because it all went on the balance sheet of the USA. Edit: this rant was much longer than intended and maybe misinterpreted. It is not directed as those folks attempting to buy a home for the first time and because of the "encouragement" of the fed to get people qualified who weren't financially ready to buy a home, found themselves targeted by and victims of predatory bankers. This is for the people who thought they had woke up on a different side of the bed and overnight had been transformed into the guy from Monopoly and were land barons forgetting they only made enough money to cover their first mortgage and where "writing checks your ass can't cash." Edit: the above edit to my above rant was longer than intended.

[@charlestaylor3195]

Look at the reputable people that went to prison, " they weren't at church Sunday, because they went to prison?".

[@kirbymarchbarcena]

When the company says they're too big to fail, it is too good to be true

[@fallingpetunias9046]

"We're too big to fail" is a death knell equivalent to "what could go wrong" and "at least it's not raining"

[@ILikeGuns1992]

YT, Chrome, Google, Twitch, Amazon - there are literal "too big to fail" thing who can do literal anything right here.

[@tonydai782]

@@ILikeGuns1992 Twitch is owned by Amazon and Chrome and KZbin are owned by Google.

[@BunjiKugashira42]

Now that you've covered the south sea bubble, we absolutely need a business blaze on Walpole!

[@jamesbailey4304]

"How much does that flower cost?" The literal $64,000 question

[@Mrjoemill123]

Wow! Another mind opening video. Please keep doing what your doing! Great team, great ideas, very creative. Thank you for taking my boredom away and my brain a little more smart! Thank you, G Bless.

[@lostbutfreesoul]

I still think people have overlooked something quite stunning to behold: the schemes that Blunt put into place before the South Sea Company. For example: That Lottery system guaranteed *every ticket would be a winner,* and yet still managed to make a small fortune for the British government at the time. Blunt knew how to play people, it wasn't just by chance that the South Sea Company existed....

[@dukoth6552]

"this was a good lesson, I hope we learn it some day" - extra hystory

[@anewspinonthings]

I’ve been waiting for a video on this topic. It’s quite fascinating

[@Ciborium]

SPOILER ALERT: It was Walpole.

[@hunting69doehle62]

As to "I kid you not" - I love that the director of the Hollow Sword Blade Company was called Blunt.

[@ShinigamiInuyasha777]

When a private company is backed by a goverment, no trust on trusts

[@stewydoo]

Surely they should have sold the bulbs in the Tulips market, not the fuschias market. I'll grab my coat

[@chris52000]

“Laissez Faire” Yeah a company partially created by the government, granted a monopoly by government, and designed to persue goals of the government went bad because of laissez faire, sure.

[@swunt10]

many companies of that time created by governments and with a government trade monopoly where very successful. this one went bust because of insider trading and illegal financial conduct.

[@neeneko]

welcome to laissez faire in the real world. kinda like communism, it only really 'works' in toy systems where no other institutions or pressures exist. when implemented as a real system, this is how it tends to look.

[@EthelredHardrede-nz8yv]

That is how laissez faire really works. Libertarians are as delusional as communist in regards to the wonders of their economic delusions.

[@robertt9342]

@Chris52000 . None of those things have anything to do with "laissez faire", you might want to look up how Laissez Faire system works. A government can exist as an entity within the market and can even have their goals fulfilled by the market, they exist as a participatory member and not as a method of regulation.

[@philastley8040]

Love your videos, where can I send suggestions for you and your team to research? :)

[@jfoster1]

It is great that you referenced average wages when comparing the value back then to today. This is much better for these comparisons than the CPI

[@Yvolve]

There's two houses on the canals in Amsterdam that were supposedly traded for three bulbs in one case, and a single tulip bulb in the other. They have a plaque over the door showing a single flower, or three. Those houses cost a fortune back then and still do now. You'd be insane to trade it for a flower, which I guess they were at the time.

[@MikeJBeebe]

See also: BitCoin

[@Yvolve]

@@MikeJBeebe Yeah, it's putting exorbitant value on something that doesn't have that value, or something to back it up.

[@Yvolve]

@EmperorJuliusCaesar Mining BitCoin is doing calculation, which has no limit.

[@primoroy]

Current U.S. stock market on Wall Street? Imaginary value of nonexistent products?

[@helenFX]

oh an epic length business blaze about this would be wonderful :)

[@blueoceanvalley45465]

Yes I know and you need to post more podcasts! Please! I love them so much!!!

[@gaeshows1938]

a shoeshine boy predicted one of the biggest stock market crash in 1929

[@christophermerlot3366]

Ottawa has a tulip festival every year and Holland gives us 1000s of b/c we housed the royal family during WW2. They're givin' 'em away!

[@nick4506]

the same thing happened in france a few years earlier, john law started it. and the south sea company wasint the first. and 100 years earlier was tulip mania.

[@Not-Great-at-Gaming]

So, I'm guessing "tulipmania" was the inspiration for the tulip trading in Animal Crossing?

[@thebigsad9463]

One of the greatest bamboozles of all times

[@neeneko]

heh, and it was not even the only one going on at the time. there was a similar thing going on in france.

[@brightstarlastname2812]

Every one knows that the only item really worth any thing. Is Simon's personality. It's priceless.

[@dimitrijejovanovic5939]

It was Walpole

[@andljoy]

Just FYI this debt was still being paid off a few short years ago .

[@merpius]

In the US post-secondary education and post-highschool education are synonymous. From the context, I assume what you're looking for is trade school or apprenticeship education, sometimes called "learning a trade."

[@slossboss]

It was Walpole...

[@r7goodman]

*** immediately sells all BitCoin for tulips ***

[@thomasfholland]

Today I found out Ghislaine Maxwell was arrested by the FBI👍👍👍👍👍😂

[@567Kriss]

We're getting there, next, Hillary, Obama, Ellen, and Hanks. Stay woke man

[@Uldihaa]

What, no Walpole? Awww.

[@lafregaste]

How long did it last I wonder... the house bubble I saw in my home country lasted for more than 5 years, every year after the 3rd we worried its bursting... finally a year and a half ago it did. Fortunately it didn't affect the economy as much because the government was kind of preparing for it.

[@DomyTheMad420]

glad you finally did a piece of my favorite story in history, ever. but sadly you didn't do it enough justice. for anyone interested, check out Extra History's short-series on this *amazing* story. You won't regret it!

[@jariklieropvan8942]

Great video, but the Tulip mania bubble and the mississippi bubble actually came before the south sea bubble

[@thearabianmage]

That’s a mighty beard Simon.

[@thebigsad9463]

A pretty clever scheme if you ask me

[@franklinkz2451]

It really is a good podcast

[@nicks8505]

Nobody: 17th century Dutch traders on a free trade server: "SELLING TULIPS 100K EACH"

[@AsbestosMuffins]

not even the postmaster general was incorruptable

[@Captain-Cardboard]

The South Sea Bubble was a large Goldfish.

[@markvicferrer]

Is this what the turnip stock market in Animal Crossing referencing?

[@mitchellguerrerio9909]

IT WAS WALWOPLE

[@QuestionEverythingButWHY]

“When we are no longer able to change a situation, we are challenged to change ourselves.” ― Viktor E. Frankl

[@paws4thought449]

You are turning into the Wikipedia of KZbin

[@heatherhutchinson3625]

Once there was tulipmania. Nowadays people just trade sneakers.

[@marcbeebee6969]

10:50 what kind of weed? Haze or regular green

[@mitchellguerrerio9909]

This topic had EPIC BLAZE written all over it

[@millardwashington6216]

Very enlightening, how strange people are!

[@reddog-ex4dx]

I'd rather have two lips than tulips.

[@briancaster2876]

What's the origin of the phrase "take it with a grain of salt"?

[@headcrab4090]

Pliny’s Naturalis Historia, 77 A.D. translates into modern English thus: After the defeat of that mighty monarch, Mithridates, Gnaeus Pompeius found in his private cabinet a recipe for an antidote in his own handwriting; it was to the following effect: Take two dried walnuts, two figs, and twenty leaves of rue; pound them all together, with the addition of a grain of salt; if a person takes this mixture fasting, he will be proof against all poisons for that day.

[@Koel_Hellion]

Bruh the bonus fact was better than the actual vid

[@allonzehe9135]

This could have been a Business Blaze video. Where was out boy with the blaze?

[@BadThingsInHistory]

So insider trading clearly isn't the oldest profession. But I would say it has to be in the top five at least.

[@jenniferlawrence8533]

In the U.S. we hear a lot about small businesses in major trouble because is Covid19. How is it impacting business in U K.Would make interesting program.

[@567Kriss]

I'm up 22% so far since the market. Destined 🚀🚀🚀🚀

[@Roycesraphim1]

Robert Wapole is everywhere

[@LeftyFunkenstein]

nice shirt.

[@JMarg1]

This is the coolest scam of all time, the OG pyramid scheme

[@SimuLord]

Ancient Egypt was the OG pyramid scheme.

[@JMarg1]

Fox D, Haha, true

[@jonathanwest6564]

They were Dutch artist who lost their money and became very prolific painters to pay the bills an upside to the top tulip crash.

[@auro1986]

you should go for 5 year planning

[@bluecasanova372]

Been a while since I watched 1 of your videos, did the beard get bigger

[@darkmatter8650]

Keep these kinds video's for U r Business Blaze

[@user-oz9yj5to7m]

There are tonnes of research been made on the topics by Yale School of Business together with British and Dutch historians. Mackay verses is not even an anecdotal evidence itself, but a story fiction based on anecdotal evidence of the long gone events.

[@tabcat]

So, by the end people were only pretending to buy tulips? Was this really just a country-sized game of Monopoly?

[@cspaceinfinity0116]

This shows you that something is only as valuable as someone make it, nothing has real value including gold if someone said gold was worthless it would be overnight just a bunch of people playing banker in real life

[@spacealienrissley]

I learned Roosevelt was shot.in Milwaukee ive lived in the same house in milwaukee county for my.life 24 years n you told me. No one else ever said anything even in school

[@hazel8043]

Why do I imagine myself in third person? Why do some people imagine themselves in first person?

[@nunyobidniz]

Extra Credits did the first of these stories better, for anyone interested

[@footynutguy]

This should be a blaze video.

[@ben_clifford]

Holy beard!

[@virginiathomasakaicedragon6579]

Please tell me that a hogs head of wine isn't actually in a hogs head

[@meatykeyboard8399]

Just realised matthias is trying to steal ur look.

[@charlestaylor3195]

It's funny but sad to see how man can easily be swayed to do something he knows is wrong, but when everybody does it they justify it because of monetary gain. When he read all that stuff, the TONS of butter alone, really, for a flower. It makes you wonder, especially when you see crappy artwork selling for millions, you gotta ask, "how does this have any value?".

[@yungstallion2201]

Calvin Klein are just happy the sock market will recover eventually

[@InitialDIYmods]

I do thoroughly enjoy these videos, but I have one request. Can you not end by saying "soooo I really hoped you enjoyed watching" cause that sooooo undermines the tone and feel of the entire video up to that point. Perhaps it's the public speaking part of me that hates it, but if you cut out the so (which you did in another video recently), it gives a much more polished and smooth transition between your closing remarks on the subject and your comments about commenting, like, subscribing, etc.

[@twocvbloke]

If only tulips sold for that much now, I've got some in the garden that I've no idea where they came from, they pop up in yellow & red, so, quids in there... :P

[@bentoth9555]

WALPOLE!!!

[@brianmolstad1255]

That is a nice blue shirt. Is it your only one or do you have 20 thereof.

[@jessicaevans7847]

Hai! Imma Legend. Hehehe

[@franklefebver3900]

Redrum

[@Tariqslo]

Fool this was not the first crash the first crash occured in Netherlands with the tulip bubble in the first stock market in history Amsterdam

[@gaius100bc]

So you're saying tulip mania is like bitcoin mania, as long as government and banks aren't involved, whatever happens on the street with all the pumps and dumps and the scams, none of it will have any real effect on the general economy of the nation or the world?