ABSTRACT
Adam Smith characterized John Law's Mississippi scheme as "the most extravagant project of both banking and stock-jobbing that, perhaps, the world ever saw". As Adam Smith recognized, what made John Law's project particularly destructive was the notion of combining joint-stock distributions with bank note issues. The Sword Blade Bank could not sustain the large loans that the South Sea Company was incurring to support the high price of the stock. John Blunt is an oddity in the South Sea affair. He has, ultimately, been singled out as the kingpin of the manipulations that produced the South Sea bubble, yet his initial involvement was by request of the government. In the case of the South Sea bubble, the bank involved was the Sword Blade Bank and the minister was John Aislabie. The quote from Adam Smith implicitly recognizes the role of accounting in the valuation of joint-stock shares.
