Reasons to invest in the South Sea Company
The gambling mania approach to the Bubble overlooks a number of good reasons to invest in the South Sea Company. The company was not uninterested in slave trading, as has sometimes been stated. It promptly began discussions with the Royal African Company and the Royal Navy to make preparations. It was able to draw upon their expertise and resources. The Royal African Company assisted in the business of buying slaves at the coast and put its infrastructure of forts and protected harbours at the South Sea’s disposal. The Royal Navy provided convoy protection, amongst other services. There were lulls in the trade during conflict with Spain. One of these stoppages occurred just before the Bubble, which has puzzled many. The spike in share prices occurred when the trade was halted. This has been seen as proof that the investors were fools. A temporary stop in trade might not worry investors who were considering a long-term investment. There were other reasons, besides the slave trade, to invest in the South Sea. It was a quasi-public company with a guaranteed income from the state. It was also one of the few key joint-stock companies. Investors had more limited choices in order to build their investment portfolios than they do today. The chapter discusses some of the individual and institutional investors in the company. There has been a bias towards the claims of those who lost in the Bubble. The gainers kept a lower profile, especially as there were calls for their assets to be seized. One notable gainer was the bookseller, Thomas Guy. His posthumous reputation as a miser was undeserved. Guy was not a speculator who entered the market at the last minute. Rather, he had the sense to realise his gains rather than being greedy. Another famous person associated with the Bubble was Isaac Newton. It has often been thought that he got his fingers burned in the crash. There is no real evidence for this. It seems to be another myth of the Bubble.