Detroit evening times., 1945-06-28

Wallace 10 historic economic deluons past fooled large
numbers Of misled persons.
By MERRYLE STANLEY RUKEYsER
HENRY AGARD WALLACEs naive reliance federal
deficit spending Golconda for producing un-
limited wealth and prosperity recalls the dramatic eighteenth
century episode in the annals of the British known as the
South Sea Bubble.
The South Sea Co. was launched in iii by Harley
of Oxford who motivaed by desire public
which had suffered by dismissal of the Whg ministry
He specifically desired to retire floating debt amounting to
10000 900 pounds sterling about S50,000000)
Accordingly, private company of merchants formed
to take this debt
The government arranged provide the
debt by aocating to the company import duties wines
vinegar. silks. tobacco and whale fms
In addition, with cartel philosophy the government
the company monopoly OF trade with the South Seas
NOR years company the popular
i Imagination which fed by urid tales the effect
that natives of Peru and Mexico with neXhausbe
of gold and silver. would pay IN precious ngos for imported
merchandise at a ratio of 100 times its domestic value
One spurious which promoted speculation that
Philip of Spain intended admit the English
the ports of Latin America.
Finally the English promoter exacted the right to trade
South America condition the king of Spain should
oneourh of the profits and should the remainder al the
rate of per
One voyage of an annual shipment was made-n l7l7--
and in the following year the trade discontinued
result of a break with Spain
ia make up fer shfihkaec trade
the company developed grandose schemes for financial man
Hatien after the pattern of John Law
i off the national debt.
WINE bill for this purpose was under conside, ton
DELUs0Ns- OF GRANDEUR seized the public mind In
single day companys 130 sterling 300
Sir Robert Wapole historical counterpart of Senators
Bailey and George sensed the inherent BLUE SKY characters
of the plan In the history Of human foresight his remarks
are outstanding.
while there was still time for prudence that
based the dangerotGs stock
obbng and would divert the genius Of the nation from trade
and industry
He added
hold I'm to he
10 their ruin by making them part with the earnings o their
labor for prospect of imaginary wealth The great principle
of the project e, of hrstrae magnitude; was to
raise artifcay the value of stock by exciting and keeping
up general nfauaon and by promising dividends out of
funds which could never be adequate to the purpose
THE similarity between the philosophy behind the South
i Sea Bubble and Mr.. Walaces get rich quick scheme
should be missed because Mr. Wallace seductlvey dresses
up old delusions in political clothing.
He pays lip free enterprise yet his hopes rest
proposed funds be guarantee local invest
the equity stock Of new promotions.
HE HOLDS OUT THE OVERALL LURE OF NON
STOP BOOM, WITH UNINTERRUPTED FILL EMPLOY
MENT AND WITH FOREIGN TRADE THREE TINES THE
VOLUME EVER BEFORE ATTAINED. PERHAPS 1T
ECoSoMC PROGRAM AS "WlILACE's BUBBLE"
In with the historic South Sea venture rara-
menary discussion created climate for manpuave activity
FAeporocrs promised every ff0o invested The
stockholders would earn hundreds every year.
After passage of the bill the stock to $3.50 sterling
amidst renzed public speculation. Many other companies
hoated to take advantage Of the fervor.
It eventually climbed to fl 900
Then reported that the chairman and other insiders
had sold
COMPANY propaganda failed to the tide Of selling
- and back f400 dashed toward worth
! lessness.
In chroncng the rapid rise and fall Of popular eco
delHsion, the parliamentary history recorded:
"And thus in the space of eight months, the
rise progress and fall of that mighty fabric which, being
mysterious springs TO wonderful height, had
the and expectations of all Europe but whose oun
daon being Illusion creduity and inatuaton, fell to
ground the arfu of its directors
discovered
In commenting on effort in Parliament and out,
Mackay his notable book titled Extraordinary
Popular Deusons and the Madness Of Crowds assessed
of the blame the gulibe
Nobody" he pointed Seemed TO imagine that the
nation itself cupabe the South Sea Co. Nobody
blamed the creduy avarce of the peopethe degrading
which had wal0Mcd nOber quality
national character the nfauaOn which had made the
multitude their heads with such frantic eagerness into the
held them by schemng projects. These things