Footnotes

Notes

Introduction

¹Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds (London: Richard Bentley, New Burlington Street), p. 95.

Chapter 1—The Greater Fool Theory

¹Charles P. Kindleberger, “Bubbles,” in The New Palgrave: A Dictionary of Economics, John Eatwell, Murray Milgate, and Peter Newman, eds., 4 vols. (New York: The Stockton Press, 1987), p. 281.

²John Maynard Keynes, The General Theory of Employment, Interest, and Money (New York: Harcourt, Brace & World, 1964), pp. 153–58.

³Ibid., pp. 155–56.

⁴Ibid., p. 159.

⁵Quoted in Joseph T. Salerno,”Two Traditions in Modern Monetary Theory: John Law And A.R.J. Turgot,” Journal des Economistes et des Etudes Humaines 2 (June/September 1991): 368–70.

⁶Peter Garber, “Famous First Bubbles,” Journal of Economic Perspectives 4 (Spring 1990): 46–47.

⁷Robert Flood and Robert Hodrick, “On Testing for Speculative Bubbles,” Journal of Economic Perspectives 4 (Spring 1990): 85.

⁸Ibid., p. 86.

⁹Ibid., p. 99.

¹⁰Antoin Murphy, Richard Cantillon: Entrepreneur and Economist (Oxford: Clarendon Press, 1986), pp. 66–67; emphasis in original.

¹¹Murray Rothbard, America’s Great Depression, 4th ed. (New York: Richardson & Snyder,1983), pp. 15–25.

¹²David Hume, Writings on Economics, Eugene Rotwein, ed., 2nd ed. (Madison: The University of Wisconsin Press, 1970), p. 33.

¹³Murray N. Rothbard, What Has Government Done to Our Money?, 4rd ed. (Auburn, Ala.: Ludwig von Mises Institute, 1990), p. 33; emphasis in original.

¹⁴F.A. Hayek, A Free-Market Monetary System and The Pretense of Knowledge (Auburn, Ala.: Ludwig von Mises Institute, 2008), pp. 12–15.

Chapter 2—Tulipmania

¹Guillermo Calvo, “Tulipmania,” in The New Palgrave: A Dictionary of Economics, John Eatwell, Murray Milgate, and Peter Newman, eds., 4 vols. (New York: The Stockton Press, 1987), p. 707

²Peter Garber, “Tulipmania,” Journal of Political Economy 97, no. 3 (1989): 535–60.

³Ibid., pp. 541–42.

⁴Ibid.

⁵Quoted in ibid.

⁶Ibid., pp. 543–45.

⁷Ibid., pp. 546–49.

⁸Ibid., pp. 547–50.

⁹Ibid., pp. 555–56.

¹⁰Ibid., p. 558.

¹¹Ibid., p. 556.

¹²Charles P. Kindleberger, Manias, Panics, and Crashes: A History of Financial Crises (New York: Basic Books, [1978] 1989).

¹³Ibid., p. 7.

¹⁴Charles Kindelberger, A Financial History of Western Europe (London: George Allen and Unwin, 1984), pp. 215, 272.

¹⁵Kindleberger, Manias, Panics, and Crashes, p. 57.

Chapter 3—Free Coinage, the Bank of Amsterdam, and Tulipmania

¹The ratio of silver to gold from 1524 to 1546, based on the average for Europe, fluctuated between approximately 10¹/₂ and 11 (E.E. Rich and C.H. Wilson, eds., The Cambridge Economic History of Europe, vol. 4: The Economy of Expanding Europe in the Sixteenth and Seventeenth Centuries [Cambridge: Cambridge University Press, 1975], p. 459).

²Alexander Del Mar, History of Monetary Systems: A Record of Actual Experiments in Money Made By Various States of the Ancient and Modern World, as Drawn From Their Statutes, Customs, Treaties, Mining Regulations, Jurisprudence, History, Archeology, Coins Nummulary Systems, and Other Sources of Information (New York: Augustus Kelley Publishers, [1895] 1969), p. 345.

³Ibid., p. 348.

⁴Karl Helfferich, Money, Louis Infield, trans. (New York: Augustus M. Kelley, [1927] 1969), p. 370.

⁵Del Mar, History of Monetary Systems, pp. 344–51.

⁶Ibid., p. 351.

⁷Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Random House, [1776] 1965), p. 447.

⁸Herbert I. Bloom, The Economic Activities of the Jews of Amsterdam in the Seventeenth and Eighteenth Centuries (New York/London: Kennikat Press, [1937] 1969), pp. 172–73.

⁹The city of Amsterdam was bound for the coin or bullion’s security while at the Bank, against fire, robbery, or any other accident.

¹⁰Richard Hildreth, The History of Banks: To Which is Added, A Demonstration of the Advantages and Necessity of Free Competition in the Business of Banking (New York: Augustus M. Kelley, [1837] 1968), p. 9.

¹¹Shepard B. Clough, European Economic History: The Economic Development of Western Civilization (New York: McGraw-Hill, 1968), p. 199.

¹²Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, pp. 447–48.

¹³Ibid., pp. 448–49.

¹⁴Ibid., p. 450.

¹⁵Ibid., p. 451.

¹⁶Ibid., p. 451.

¹⁷Ibid., p. 454.

¹⁸Charles Arthur Conant, History of Modern Banks of Issue (New York: Augustus M. Kelley Publishers, [1927] 1969), p. 289.

¹⁹Hamilton, Earl J. “Imports of American Gold and Silver into Spain, 1503–1660,” Quarterly Journal of Economics 43 (1929): 436–43.

²⁰Alexander Del Mar, A History of the Precious Metals, from the Earliest Times to the Present (New York: Augustus M. Kelley, [1902] 1969), pp. 307–08.

²¹Dennis O. Flynn, “Sixteenth-Century Inflation from a Production Point of View,” in Inflation Through The Ages: Economic, Social, Psychological and Historical Aspects, Nathan Schmukler and Edward Marcus, eds. (New York: Brooklyn College Press, 1983), p. 162, 164.

²²Francis Amasa Walker, Money (New York: Augustus M. Kelley, [1881] 1968), p. 135.

²³Ibid.

²⁴Violet Barbour, Capitalism in Amsterdam in the 17th Century (Ann Arbor: University of Michigan Press, 1963), pp. 49–50.

²⁵Del Mar, A History of the Precious Metals, pp. 326–27.

²⁶Del Mar, History of Monetary Systems, p. 351.

²⁷Ibid., p. 352.

²⁸Simon Schama, The Embarrassment of Riches (New York: Alfred A. Knopf, 1987), pp. 361–62.

²⁹Jan A. Van Houtte and Leon Van Buyten, “The Low Countries” in An Introduction to the Sources of European Economic History 1500–1800 (Ithaca, N.Y.: Cornell University Press, 1977), p. 102.

Chapter 4—John Law, Genius or Swindler

¹Earl J. Hamilton, “Law, John” in International Encyclopedia of the Social Sciences, David L. Sills, ed. (New York: Macmillan and The Free Press,1968), p. 80.

²Hamilton indicates that Law’s father died when John was age 13, Mackay indicates that Law was 17. See Charles Mackay, Memoirs of Extraordinary Popular Delusions and the Madness of Crowds (London: Richard Bentley, New Burlington Street, [1841] 1963), p. 3.

³Later she became the Countess of Orkney.

⁴Mackay, Memoirs of Extraordinary Popular Delusions, pp. 3–4.

⁵Ibid., pp. 2–4.

⁶Both Mackay and Hamilton make reference to this religious bigotry. Mackay, Memoirs of Extraordinary Popular Delusions, p. 5, relates, “The reason given for the refusal is quite consistent with the character of that bigoted and tyrannical monarch.” He also indicates that it has appeared in the correspondence of the Duchess of Orléans, Madame de Baviere, and the mother of the Regent.

⁷Hamilton, “Law, John,” p. 79.

⁸Ibid., p. 79.

⁹Mackay, Memoirs of Extraordinary Popular Delusions, pp. 5–6.

¹⁰Hamilton indicates the 2nd of May, Mackay the 5th.

¹¹Hamilton, “Law, John,” p. 79.

Chapter 5—John Law’s Monetary Theories

¹John Law, Money and Trade Considered With A Proposal For Supplying The Nation With Money (New York: Augustus M. Kelley, [1705] 1966), p. 37.

²Ibid.

³Ibid., p. 41.

⁴Ibid., p. 51.

⁵Ibid., p. 89.

⁶Ibid., p. 93.

⁷Murray Rothbard, “History of Economic Thought,” lecture at the University of Nevada at Las Vegas (Fall 1990).

⁸“The Evolution of John Law’s Theories and Policies 1707–1715,” European Economic Review 34 (August 1991): 1113.

⁹Ibid., p. 1114.

¹⁰Ibid., p. 1115.

¹¹Ibid., p. 1116.

¹²Unpublished manuscript in the Archivio di Stato in Turin, Italy. Mazzo J3 2a Categoria, p. 62. Quoted in ibid., p. 1117.

¹³Ibid., pp. 1118–19.

¹⁴Ibid., p. 1120.

¹⁵Law was not referring to metallic specie, but to the new type of “credit.”

¹⁶Ibid., p. 1121.

¹⁷Ibid., p. 1123.

¹⁸Ibid., pp. 1122–23.

Chapter 6—The Mississippi Bubble

¹Hamilton describes these financial instruments as equivalent to treasury bills.

²Earl J. Hamilton, “The Political Economy of France at the Time of John Law,” History of Political Economy 1 (1969): 125.

³Ibid., pp. 123–26.

⁴Earl J. Hamilton, “Prices And Wages At Paris Under John Law’s System,” Quarterly Journal of Economics 51 (November 1936): 51; “Prices And Wages in Southern France Under John Law’s System,” Economic History Supplement to the Economic Journal 3, no. 12 (February 1937): 444.

⁵Agency in charge of cancellation or repudiation of debt.

⁶Antoin Murphy, Richard Cantillon: Entrepreneur and Economist (Oxford: Clarendon Press, 1986), pp. 56–57.

⁷Ibid., pp. 54–57.

⁸Hamilton, “The Political Economy of France at the Time of John Law,” p. 145.

⁹Andrew McFarland Davis, “An Historical Study of Law’s System I & II,” Quarterly Journal of Economics 1 (April, July 1887): 298–99.

¹⁰Murphy, Richard Cantillon, pp. 70-71.

¹¹Ibid., pp. 71–73.

¹²Hamilton, “The Political Economy of France at the Time of John Law,” p.145.

¹³Davis, “An Historical Study of Law’s System,” pp. 303–05.

¹⁴Hamilton, “The Political Economy of France at the Time of John Law,” p. 145.

¹⁵Murphy, Richard Cantillon, pp. 77–78.

¹⁶Ibid., p. 78.

¹⁷Piossens, Mémoires de la régence de S.A.R. le Duc d’Orléans Durant la minorité de Louis XV roide France (1729), p. ii.; Dutot, Réflextions politiques sur les finances et le commerce (1738); Giraudeau, Bibliothèque de l’Arsenal (Paris), MS 4061. This manuscript is also to be found in the Bibliothèque Mazarine (MS 2820) and the BN (MS 14092); cited in ibid.

¹⁸Ibid., pp. 130–31.

¹⁹Davis, “An Historical Study,” p. 434.

²⁰Ibid., p. 439.

²¹Ibid., pp. 436–41.

²²Murphy, Richard Cantillon, p. 132.

²³Ibid., pp. 137.

²⁴Davis, “An Historical Study,” p. 440.

²⁵Ibid., p. 444.

²⁶Ibid., p. 443.

²⁷Murphy, Richard Cantillon, p. 138.

²⁸Davis, “An Historical Study,” pp. 445–46.

²⁹Murphy, Richard Cantillon, p. 156.

³⁰John Law, The Present State of the French Finances (London, 1720), p. 105; Quoted in ibid., p. 149.

³¹Ibid., p. 152.

³²Hamilton,“Prices And Wages At Paris Under John Law’s System,” pp. 50–54.

³³Ibid., pp. 65–66.

³⁴Hamilton, “Prices And Wages In Southern France Under John Law’s System,” pp. 441–61.

³⁵Ibid., pp. 455–56.

³⁶Ibid., p. 459.

³⁷“Ibid., p. 461.

³⁸John Law, Euvres complètes, P. Harsin, ed. (Paris, 1934); reprint Vaduz, 1980), II, p. 307; ‘Mémoire sur les banques’ (translation); quoted in Murphy, Richard Cantillon, p. 129.

³⁹Murphy, Richard Cantillon, p. 129.

⁴⁰Charles Rist, History of Monetary and Credit Theory: From John Law to the Present Day (New York: Augustus M. Kelley Publishers, [1940] 1966), p. 65; quoted in Salerno, “Two Traditions in Modern Monetary Theory: John Law And A.R.J. Turgot,” Journal et des Etudes Economistes 2, no. 2/3 (191): 15.

Chapter 7—The South Sea Bubble

¹The hearth tax was a tax on all dwellings except cottages, and was levied based upon the number of hearths or stoves that were in a given dwelling. The tax was very unpopular and as can easily be imagined, hard to collect.

²Andreas M. Andréadès, History of the Bank of England 1640–1903 (New York: Augustus M. Kelley, [1909] 1966), pp. 55–56.

³Keith J. Horsefield, “The ‘Stop of the Exchequer’ Revisited,” The Economic History Review 15, no. 4 (November 1982): 513.

⁴Ibid., p. 514.

⁵Ibid., pp. 511–28.

⁶John Giuseppi, The Bank of England: A History from its Foundation in 1694 (Chicago: Henry Regency, 1966), p. 9.

⁷Sir John Clapham, The Bank of England: A History, vol. I: 1694–1797 (London: Cambridge at the University Press,1966), p. 16.

⁸Ibid., p. 17.

⁹Ibid.

¹⁰The £300,000 difference was to be raised by annuities.

¹¹£10,000 was the maximum subscription allowable. Ten other contributors besides the King and Queen contributed the maximum amount.

¹²Giuseppi, The Bank of England, pp. 11–12.

¹³Clapham, The Bank of England, p. 20.

¹⁴Ibid., p. 21.

¹⁵Ibid., p. 22.

¹⁶Andréadès, History of the Bank of England 1640–1903, p. 99.

¹⁷This quote is taken from Locke’s pamphlet entitled, Further considerations concerning raising the value of money. Andréadès indicates that this pamphlet has been reprinted at the end of McCulloch’s Principles of Political Economy; quoted in Andréadès, History of the Bank of England 1640–1903, p. 101.

¹⁸Andréadès, History of the Bank of England 1640–1903, pp. 90–102.

¹⁹Ibid., pp. 104.

²⁰John Carswell, The South Sea Bubble (London: The Cresset Press, 1960), p.18.

²¹Andréadès, History of the Bank of England 1640–1903, pp. 107–10.

²²Ibid., pp. 111–12.

²³Ibid.

²⁴The Malt lottery was to issue 140,000 £10 tickets, raising £1,400,000. Only 1,763 tickets were sold, the rest of the tickets were used by the Exchequer as cash. P.G.M. Dickson, The Financial Revolution in England: A Study in the Development of Public Credit 1688–1756 (New York: St. Martin’s Press, 1967), p. 49.

²⁵Ibid., p. 57.

²⁶Ibid., p. 59.

²⁷Ibid., pp. 59–64.

²⁸Carswell, The South Sea Bubble, p. 34.

²⁹Ibid., pp. 34–37.

³⁰Andréadès, History of the Bank of England 1640–1903, p. 122.

³¹Carswell, The South Sea Bubble, p. 43.

³²Ibid., p. 124.

³³Dickson, The Financial Revolution in England, p. 66.

³⁴Ibid., pp. 59–75.

³⁵Carswell, The South Sea Bubble, pp. 103–04.

³⁶Ibid., p. 108.

³⁷Ibid., pp. 98–113.

³⁸Ibid., p. 127.

³⁹Dickson, The Financial Revolution in England, p. 129.

⁴⁰Ibid., pp. 134, 136.

⁴¹Letter Books of John Hervey, first Earl of Bristol (Wells, 1894), II, p. 126; Bristol to Astell August 4, 1720; quoted in Dickson, The Financial Revolution in England, p. 147.

⁴²Dickson, The Financial Revolution in England, pp. 122–53.

⁴³Carswell, The South Sea Bubble, pp. 238–39.

⁴⁴Shepard B. Clough, European Economic History: The Economic Development of Western Civilization (New York: McGraw-Hill, 1968), p. 217.

⁴⁵Andréadès, History of the Bank of England 1640–1903, pp. 143–44.

⁴⁶Giuseppi, The Bank of England, p. 44.

Chapter 8—Increases in the Supply of Money, Speculative Bubbles, and the Austrian Malinvestment Theory

¹John Maynard Keynes, The General Theory of Employment, Interest, and Money (New York: Harcourt, Brace & World, 1964), p. 161.

²Alexander Del Mar, History of Monetary Systems: A Record of Actual Experiments in Money Made by Various States of the Ancient and Modern World, as Drawn From Their Statutes, Customs, Treaties, Mining Regulations, Jurisprudence, History, Archeology, Coins Nummulary Systems, and Other Sources of Information (New York: Augustus M. Kelley, [1895] 1969), p. 351.

³Ludwig von Mises,“The Austrian Theory of the Trade Cycle,” in The Austrian Theory of the Trade Cycle and Other Essays, David O’Mahony and J. Huston McCulloch, trans. (Auburn, Ala.: Ludwig von Mises Institute, 1983), p. 1.

⁴ Gottfried Haberler, “Money and the Business Cycle,” in ibid., p. 9.

⁵Ludwig von Mises, On the Manipulation of Money and Credit, Bettina Bien Greaves, trans. (Dobbs Ferry, N.Y.: Free Market Books, 1978), p. 161.

⁶Murray Rothbard, America’s Great Depression, 4th ed. (New York: Richardson & Snyder, 1983), p. 21.

⁷Mises, On the Manipulation of Money and Credit, p. 183.

⁸Antoin Murphy, Richard Cantillon: Entrepreneur and Economist (Oxford: Clarendon Press, 1986), p. 73.

⁹Richard E. Wagner, “Boom and Bust: The Political Economy of Economic Disorder,” The Journal of Libertarian Studies 4, no. 1 (Winter 1980): 13.

¹⁰Mises, On the Manipulation of Money and Credit, p. 142.

¹¹See James McGregor, “China Cancels Its Red-Hot Stamp Market, But Traders Hope Crackdown Will Pass,” Wall Street Journal (December 19, 1991), p. C1.

¹²China has two stock exchanges, one in Shanghai, the other in Shenzhen; ibid.