Abstract

This paper traces the emergence of the concept of ‘bubbles’ in the financial market during the early eighteenth century. The South Sea Bubble of 1720 was Britain’s first modern financial crisis. Different from the Dutch Tulip Mania of the mid-1630s, which had a limited international reach and few consequences for state finance, the South Sea Bubble shared many of the characteristics of the Compagnie des Indes’s Mississippi Bubble (1719–20), thanks to the reciprocal borrowing of plans to nationalise state debt and to increase nominal capital. When the phrase ‘South Sea Bubble’ is used today, it is almost always in reference to the dramatic rise and fall in the price South Sea Company stock. There is little evidence that investors engaging in the financial market at the time would have had recourse to the same vocabulary to describe a crash in the market: advertisements for investments in ‘bubbles’ abound in publications from before August 1720, and experienced investors describe placing money into explicitly named ‘bu[b]ble’ funds.

In this talk, I will explain how the concept of a ‘bubble’ gained a foothold in the public imaginary. Using the Cambridge Concept Lab’s ‘Shared Lexis’ tool, I analyse the emergence of the phrase ‘South Sea Bubble’ in the years after the 1720 crisis. Finally, I argue that the conceptual framework underpinning how we describe financial crisis today has its origins in the latency of the words used, at the time, to describe the interlinked crises of 1719–20.