The greatest financial scandal in history was not the collapse of Enron or WorldCom, not a piece of insider trading from the 1980s, not a hedge fund leveraged to a trillion dollars or a crooked offshore account. It was bigger than all of them combined. The fraud entangled royalty, politicians, professional classes, gamblers and con-men. It effects were so widespread, finally, that it became easier to cover it up thanpublicly to point the finger of blame. A fewyears later, the only sign that it had happenedat all was a phrase that entered the language to describe unsound financial speculation, a "bubble".

The South Sea Bubble was a share schemeallowed to run crazily out of control. It was masterminded by an unscrupulous Englishman who saw a route to untold riches selling shares in a valueless company. The South Sea Company was supposed to establish a lucrative trade in silver and spices between England and the Americas. But there was a problem hidden from investors: for almost the entire duration of its sorry history the Company didn't own a boat.

For the first time Malcolm Balen tells the dramatic full story of how the fraud was carried out and covered up. The pipe dream of wealth in the Americas and Mississippi is the mother of all share scandals that follow. Every time a company falsifies its accounts, misstates its business strategy, attempts to corrupt public officials, and, above all else, lies about its level of indebtedness, it is following the story of the South Sea Company.

In the early 18th century, the South Sea Company was incorporated with the purpose of exploiting the wealth of Louisiana and the Caribbean. Investors flocked to the company with the encouragement of English politicians. Unfortunately for the investors, the company never owned a single trip or financed a single journey and the whole scheme eventually imploded. Journalist Balen narrates the story of the company, paying particular attention to the motivations of the various company officers and implicated government officials, which are often remarkably similar to those driving the Enron, Worldcom, and other current financial scandals.
Annotation ©2004 Book News, Inc., Portland, OR (booknews.com)

In this history of the world's first great financial scandal in the 1720s, Balen tells the dramatic full story of how the fraud of the South Sea Bubble was carried out and covered up.

Includes bibliographical references (p. 234-236) and index.

The early years of the eighteenth-century produced two great monuments: one, Christopher Wren’s new cathedral of St Paul’s, an enduring testament to principled craft and masterful construction. The other an empty fraud of such magnitude that its collapse threatened to overturn monarchies and governments. Its failure delayed the introduction of modern market economies by two generations. Yet the full scale of this monumental deceit was quietly covered up and hidden, its enduring legacy a poorly understood colloquialism: the South Sea Bubble. It was all planned by one ambitious promoter, who had decided to launch ‘a company for carrying on an undertaking of great advantage, but nobody to know what it is’. This eighteenth-century mission statement has now acquired an almost uncanny resonance: these words could aptly have been applied to the bursting of the Internet bubble and the collapse of Enron. With the financial scandals that have beset global companies recently, such as Rank Xerox and Worldcom, this tale is all the more relevant today. Balen reveals the full story of corruption and scandal that attended the birth of the first shareholder economy, and with it uncovers a parable for our times.

Malcolm Balen is a journalist and author. He is a former executive editor of BBC television and currently head of news for ITV in London.