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BFC's Bad With Money thread is famously full of stories of horse aficionados drowning in debt, car junkies with modest incomes and outsized automotive dreams, and financial advisers who reject the teachings of Saint Jack in favor of shiny metals. But all of these stories have a decidedly modern bent, and tales of the past are few and far between. Could it be that our forerunners were universally good with money? Hell no! They probably sucked rear end, just like people today do! In this thread, I invite you to put on your historian hat and scour the internet for BWM stories from days gone by. Once a suitable number of stories have been collected, we'll vote for the best one and award a prize* to the winner. Sound fun? I hope so! Here are some ground rules to get us started:
Best of luck to everyone on your journey through Bad With Money history! * I'd love to do a custom gangtag for the winner, but I have no design skills. If you'd like to take a crack at designing one, please post in in this thread. I also have a backup prize set up in case this doesn't work.
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Jun 29, 2017 05:04
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I love this idea! One that jumps to mind is the story of Jeremiah Hamilton, the first black millionaire who died in 1875. Includes incredible wealth, boats, real estate bubbles, and financial fuckery. Yes, he was rich. Yes, he died wealthy. But still, he had some incredible Bad With Money stories. Hoping this doesn't turn into a "but he was rich and made a lot of money so he can't be bwm" slapfight. Some choice quotes from this article. Arguably good with money? Maybe. Insurance fraud? Probably. quote:. . . he quickly acquired a reputation for over-insuring vessels and then arranging for them to be scuttled, which proved quite lucrative (for him, at least). Indeed, it was businessmen such as Hamilton who drove the nascent marine-insurance industry to organize itself. By 1835 all of the New York marine-insurance companies made no secret that they had collectively agreed never to insure any voyage involving Hamilton Gotta buy now while the market's hot! quote:In the mid-1830s, the United States was in the throes of a real-estate boom, and Hamilton jumped headlong into the frenzy. He bought 47 lots of land in what is present-day Astoria. Even more impressively, he invested heavily in property in Poughkeepsie, buying several tracts of land in the town, an iconic local mansion, and a 400-foot-long wharf. In all, he gambled more than $10 million in today's money that the boom would continue. Following the herd turned out to be the worst business decision of Hamilton's life. He had bought at the top of the market, only weeks before what became known as the Panic of 1837. Hamilton dodged his creditors for several years, but, taking adroit advantage of new federal legislation, declared bankruptcy in 1842. Higgy fucked around with this message at 06:04 on Jun 29, 2017 |
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Jun 29, 2017 05:50
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I nominate Didius Julianus.quote:When the emperor Pertinax was killed trying to quell a mutiny, no accepted successor was at hand. Pertinax's father-in-law and urban prefect, Flavius Sulpicianus, entered the praetorian camp and tried to get the troops to proclaim him emperor, but he met with little enthusiasm. Other soldiers scoured the city seeking an alternative, but most senators shut themselves in their homes to wait out the crisis. Didius Julianus, however, allowed himself to be taken to the camp, where one of the most notorious events in Roman history was about to take place. After winning the auction to be Roman emperor, Didius Julianus served as emperor for nine weeks before being assassinated. Single source from Historia Augusta: http://penelope.uchicago.edu/Thayer/E/Roman/Texts/Historia_Augusta/Didius_Julianus*.html Summarized secondary source: http://www.roman-emperors.org/didjul.htm
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Jun 29, 2017 06:07
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I nominate Pope Leo X. Born to one of the richest, most powerful families in Europe, made a Cardinal at 13, and elected Pope in 1513 at age 37, Leo's attitude can be summed up in his famous quote "God has given us the Papacy, let us enjoy it!" He spent most of the funds he had access to in two years, mainly on extravagant ceremonies, funding works of art, setting up a University, giving his relatives and allies well-paid positions, and in 1517, fighting a hugely expensive war to make his nephew the Duke of Urbino. To get more money, he started selling off whatever was available to him in the Vatican and borrowing from whoever would lend him money. He also decided to ramp up the practice of selling indugences, ostensibly to pay for the renovation of St. Peter's Basillica. In response to this some academic named Martin Luther wrote a document called "The Ninety-five Theses" and nail it to a church door, leading to a rather consequential series of events that had permanent consequences for the Catholic Church.
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Jun 29, 2017 06:44
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Not much of a nomination, but he sticks with me. As I walk along the Bois de Boulogne With an independent air You can hear the girls declare "He must be a Millionaire." You can hear them sigh and wish to die You can see them wink the other eye At the man who broke the bank at Monte Carlo Charles Wells broke the bank at Monte Carlo gambling in 1891, likely cheating doing so, winning would be equivalent now to $4 million. The above lyrics are from a song about him, appropriately titled The Man Who Broke the Bank at Monte Carlo. He went back at some point later and lost 100,000 francs. Dude had a lot of schemes going on and made a lot of money. There are many more people arguably worse at money because they kept giving it to him, though, to his credit, he did use many aliases. But he kept falling into prison and when he died: "Daily Mail posted:Although he remained with Jeannette Pairis until his death from a heart condition in 1922, they were by then living in lodgings in London, and Wells died owing two weeks’ rent. Since Jeannette was unable to afford a headstone, she had no choice but to consign him to an unmarked pauper’s grave. RC and Moon Pie fucked around with this message at 07:27 on Jun 29, 2017 |
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Jun 29, 2017 07:25
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A lot of people know Aaron Burr for literally murdering a rival politician and former Secretary of the Treasury for criticizing him over running for governor while still the Vice President. A lesser but still decent number of people know that he soon after involved himself in a plot to take over part of North America for his own country and narrowly avoided treason charges. What isn't really well-known is exactly what Burr did afterward. Riddled with debt and running out of friends, Burr fled to Europe to....try and gain support for a revolution in Mexico. Somehow he was convinced that the solution to all his woes would be to take over a country and become rich off it. He spent so much money traveling Europe trying to con people into helping him with a coup that he ended up broke, rejected by Napoleon, and kicked out of England. It took him several years from his landing in Europe to make it back home, whereupon he married Eliza Jumel. Mrs. Jumel happened to be the widow of Stephen Jumel, who left her a substantial fortune and their home in New York. Burr set out to prove himself an unchanged man and began spending all of her money on land speculation. Ordinarily a woman filing for divorce in this time was unseemly and disapproved, but Burr had blown through her money so fast and created so much debt for no good reason that nobody really batted an eye when they separated in 4 months and she filed for divorce after a year. The paperwork finalizing the divorce was delivered to Burr on his deathbed in Staten Island, and he died the same day. The Morris-Jumel Mansion still exists in Washington Heights if you want to visit.
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Jun 29, 2017 12:57
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I feel like Mansa Musa is a little obvious, but nobody has talked about him yet, so Musa I of Mali, AKA Mansa Musa. Musa I was a devout Muslim who ruled Mali from 1312 to 1337. During this time period, as faithful Muslims are required, he went on pilgrimage to Mecca, and he brought his gold with him. quote:Musa made his pilgrimage between 1324–1325.[18][19] His procession reportedly included 60,000 men, including 12,000 slaves[20] who each carried 4 lb (1.8 kg) of gold bars and heralds dressed in silks who bore gold staffs, organized horses, and handled bags. Musa provided all necessities for the procession, feeding the entire company of men and animals.[21] Those animals included 80 camels which each carried 50–300 lb (23–136 kg) of gold dust. Musa gave the gold to the poor he met along his route. Musa not only gave to the cities he passed on the way to Mecca, including Cairo and Medina, but also traded gold for souvenirs. It was reported that he built a mosque every Friday. Of course, carrying that much gold across the southern Mediterranean had consequences... quote:But Musa's generous actions inadvertently devastated the economy of the regions through which he passed. In the cities of Cairo, Medina, and Mecca, the sudden influx of gold devalued the metal for the next decade. Prices on goods and wares greatly inflated. To rectify the gold market, on his way back from Mecca, Musa borrowed all the gold he could carry from money-lenders in Cairo, at high interest. This is the only time recorded in history that one man directly controlled the price of gold in the Mediterranean. Of course, there's no indication that doing this actually hurt his wealth long-term, but still. Crashing the economy of precious metals in the mediterranean, trading gold bars for souvenirs from places he went through on the way, taking out high interest loans on more gold to try to fix the economy...all in all, pretty BWM. SpaceViking fucked around with this message at 16:09 on Jun 29, 2017 |
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Jun 29, 2017 16:07
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I got another one for my second entry, this was brought up in an Econ class I was taking in 2008 to contextualize the ongoing banking at the time. The Crisis of 1772. The short story is basically that a single BWM person caused one of the first "modern" era financial crises. Wiki with more details here. quote:He begins by quoting Horace Walpole, who wrote on 22 June 1772: quote:The storm was unleashed by the failure of the Scottish banker Alexander Fordyce in London, and it was in Scotland itself where its effects were most keenly felt, particularly when the big and ambitious Ayr Bank was forced to suspend payments. Aftershocks were felt as far afield as Amsterdam and the North American colonies, the latter then still very much a part of the British Empire.
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Jun 29, 2017 18:30
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At home I have a book called 'Devil Take The Hindmost: A History of Financial Speculation'. It's about as :iamafag: as you could imagine, detailing a good number of the 'this time it's different' eras between tulip mania and the dot-com crash. Good read for anyone interested in that sort of thing, but I'll type up some of the passages that made me lol irl. I won't be home for a couple of weeks, but once I am... 
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Jun 29, 2017 19:40
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All of the entries so far are really good!
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Jun 29, 2017 20:04
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Guest2553 posted:At home I have a book called 'Devil Take The Hindmost: A History of Financial Speculation'. It's about as :iamafag: as you could imagine, detailing a good number of the 'this time it's different' eras between tulip mania and the dot-com crash.
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Jun 29, 2017 20:08
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Speaking of financial crises and how some things really haven't changed at all, I present the South Sea Bubble: In the early 1700s, Britain had a huge national debt problem. They were embroiled in two wars, one over Spanish succession and one with the Tsars in Russia who were busy destroying Sweden to become a new major world power. The Chancellor of the Exchequer was having a hard time coming up with the money to pay the British army spread across Europe. Bank of England, then a private company, had previously had a monopoly on lending to the British government and dealing in national debt, but they weren't producing the spectacular results required to fund a bunch of major global wars (probably because the demands of Parliament were literally impossible). After an investigation into the national debt situation led to some really dismal and alarming figures with no income to pay it off, they started looking into ways to consolidate national debt. Enter the creation of the joint-stock South Sea Company in 1711 wherein government debt would be exchanged for company stock. Why would anyone think this company's stock be so valuable? People still dreamed that South America had cities of gold... Shares were sold with great gusto because the company had been promised a monopoly to trade with South America in exchange for consolidating all national debt. Of course, Britain was currently at war with Spain in a huge European conflict that had started after the death of the last Hapsburg king, creating a power vacuum that France was eager to fill, leading to a massive European pissing contest that had to be paid for somehow. Unfortunately for the company, the Treaty of Utrecht in 1713 confirmed Spain's control over all its colonies in South America....leaving the company with a useless trade "monopoly" for colonies Britain actually had no power over. Already tense relationships with Spain continued to worsen over the next several years, so there were no real opportunities to do any trading with South America. Whoops. Left with basically nothing, the company decided to just double down and start dealing in government debt, which was all it really possessed now. In for a penny, in for a pound! Government officials were bribed to allow the conversion of national debt into South Sea Company shares, and in 1719, Parliment allowed the company to assume even more national debt. In 1720, share prices were still rather modest, and directors wanted to further drive up the share prices. They started circulating rumours of incredible South Sea riches because everyone knew the new world colonies were full of gold and treasures beyond imagining, right? People expected vast amounts of wealth from the new world, even though that was never actually going to happen given Spain's control of South America. The company then 1720 became known as the "Bubble Year" because the South Sea Company was far from the only venture people were speculating on. People were increasingly interested in joint-stock investments, leading to the market being flooded with all kinds of new ventures (and often based on the kind of fanciful rumours as the South Sea wealth). One of the companies had the mission statement: "For carrying-on an undertaking of great advantage with no one to know what it is." That should really tell you everything you need to know about these new ventures. This created a domino effect of frenzied speculation, driving up the price of South Sea shares to £550 by mid-year. However, while the company was delighted by the investment boom, it also didn't want the newcomers taking away its potential investors, and it saw a new opportunity. The directors realised they could both curtail competition in the burgeoning joint-stock market and also increase confidence in their own offering, so it pushed Parliament to pass the Bubble Act of 1720, requiring joint-stock companies to receive a royal charter in order to operate. Reaching the height of irony, the South Sea company received a royal charter, which convinced people that they were legit and further drove share prices up to £1050 in June. Of course, this was all based on lies of riches pouring in from South America. As those failed to materialise, investors lost confidence. Quickly. People started dumping shares in July, leading to a spectacular and catastrophic collapse that ruined the fortunes and lives on many investors, not to mention the financial institutions that had also been buying up these shares. By September, the shares were worth £175. A formal investigation the following year revealed widespread deceit, corruption, insider dealing, bribery, scandal, and the kind of financial shenanigans that would make modern Wall Street blush with awe and envy. In a not-so-shocking turn that shouldn't surprise anyone reading this today, the company continued to operate after "restructuring" for more than a century, and the rich men who exploited, manipulated, and profited from the bubble pretty much remained rich and powerful. The national economy of Britain, however, didn't fair so well and completely tanked. Some things never really change...
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Jun 29, 2017 20:23
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One of the South Sea Company's more notable victims:Jason Zweig, The Intelligent Investor posted:Back in the spring of 1720, Sir Isaac Newton owned shares in the South Sea Company, the hottest stock in England. Sensing that the market was getting out of hand, the great physicist muttered that he 'could calculate the motions of the heavenly bodies, but not the madness of the people.' Newton dumped his South Sea shares, pocketing a 100% profit totaling £7,000. But just months later, swept up in the wild enthusiasm of the market, Newton jumped back in at a much higher price — and lost £20,000 (or more than $3 million in [2002-2003's] money. For the rest of his life, he forbade anyone to speak the words 'South Sea' in his presence.
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Jun 29, 2017 22:40
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This story is pretty well known around the oil industry. It all started with H.L. Hunt. The owner of a cotton plantation in the early 1900s, he lost pretty much everything due to his cotton plantation flooding. He then proceeds to take his last $100 and then gambles it up to $100,000 in New Orleans. He uses this money to buy various oil fields in Arkansas, and then proceeds to use that money to buy the east texas oil field. He becomes possibly the richest man in America at one point. In comes in his sons: Herbert and Lamar. Inflation was rampant in the 70s, and the Hunt brothers had a keen eye on silver. They never admitted to it, but they tried to corner the market in the late 70s by buying around 20 million dollars worth a day, as well as most future contracts. They were also storing large amount in Europe. At one point they were in control of almost 70% of them, and caused silver to go from $6 to $50 in a year. At the top of the market, they owned $6 billion worth of silver (they leveraged heavily and had taken out loans for around 90% of it). Unfortunately for the Hunts, it ended up there was a lot more silver out there than they thought. Instead of being able to gouge the people on the other end of their silver contracts, they managed to deliver on them forcing the Hunts to buy all the silver. The increase of supply cause the price to go down, which started a catastrophic chain reaction of margin calls on the brothers. One bank did a final margin call, and when the Hunts couldn't cover they started sell the previous silver they got as collateral. Silver crashed to $10. 20 banks had lent the Hunts a billion each, nearly bankrupting all of them and nearly dragging down the entire financial system. Thanks to the various oil crashes in the 80's, they were bankrupt by 1990, virtually penniless. Harry fucked around with this message at 00:04 on Jun 30, 2017 |
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Jun 30, 2017 00:01
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Harry posted:This story is pretty well known around the oil industry. Holy poo poo. Is this what Trading Places was based on?
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Jun 30, 2017 00:03
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Shaddak posted:Holy poo poo. Is this what Trading Places was based on?
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Jun 30, 2017 00:10
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Harry posted:This story is pretty well known around the oil industry. You'll notice that modern 'invest in silver' scam commericals will use the peak 70s prices of silver as a reference for how valuable the metal is.
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Jun 30, 2017 01:16
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I nominate the Diamond Hoax of 1872, where two con men tricked San Francisco's business elite into believing a diamond mine had been discovered in America. quote:Arnold and Slack’s story begins in 1870 in California. The Gold Rush was winding down, but the state was still filled with hopeful prospectors. Arnold and Slack, their heads filled with tales of men striking it rich in South Africa’s diamond fields, set out to unearth American diamonds. Finding none, they settled for the next best thing: If they couldn’t get rich by discovering diamonds, they would get rich by making people think they had discovered diamonds. If you like comedy podcasts, the Dollop did an episode on it.
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Jun 30, 2017 02:43
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For my second entry, I present ‘Mad’ King Ludwig II of Bavaria and his fairy-tale castles: Ludwig II is one of the more eccentric and bizarre historical figures, and like most eccentric powerful people in history, it can be difficult to sort through fact and fiction. He is often called the Mad King or the Fairytale King due to his increasing obsession with building incredibly elaborate castles, the kind you would expect to see in a fairy-tale world, all while going deeper into debt and ignoring the affairs of state. He was eventually declared insane by those who wanted the reclusive, opera-loving king out of power, deposed, and died in mysterious circumstances - suicide? murder? poison? drowning? He bankrupted his family and borrowed vast sums of money from other countries against his family name and title to build architectural wonders like this though:   Ludwig was a loner growing up. Unfortunately for him, he was the eldest son of King Maximilian of Bavaria and Princess Marie of Prussia, two people who really hated each other. At one point, one of the king's advisers suggested that he take his son and future heir with him on his daily walks. This seemed to baffle the king, who asked what he would even say to his first born child. Ludwig didn't have a better relationship with his mother, whom he referred to as "his predecessor's consort." The only family member he was close to was his namesake, his grandfather Ludwig I, who was another incredibly eccentric king from an eccentric family who had to advocate his throne to Maximilian after the Bavarian Beer Riots and other civil unrest. Ludwig I was a lavish sponsor of the arts and a fanatical art collector, and he continued to fund his projects from the Bavarian treasury after his abdication until his son forced him to start funding them from the family fortune instead. This may have had a strong influence on little Ludwig II... Ludwig didn't really care about politics or high office. He mainly cared about hanging out with his best bromance pal, Prince Paul, whom he spent all his time with riding horses, reading poetry together, and enacting scenes from Wagner's romantic operas. At least until Paul got engaged and he quit speaking to him. So Ludwig wasn't hugely interested in power or in ruling, which was unfortunate for him as shortly after his 18th birthday, his father became suddenly ill and died, and he was thrust onto the throne. Even his mother was pretty doubtful that her strange loner son who preferred to read books rather than spend time with people would make a good leader.This was him just after his accession to the throne, looking pleased as punch to be the new king:  He immediately took advantage of his new king powers to summon Wagner to his court. Ludwig was obsessed with Wagner and probably would have liked nothing more than to spend his days as a Wagner groupie. He was expected to have lots of public functions, spend most of his time in Munich handling government affairs with state ministers, and general politicking. Instead, he threw one banquet, went to one military parade, and then avoided Munich and all state functions and minsters as much as possible. He was pretty popular with common people though as he really enjoyed touring the countryside and chatting with farmers. Being a young king, he was expected to produce an heir, and he became engaged to his cousin Sophie, who also loved Wagner's operas. It wasn't exactly a romantic affair, even given political relationships of the time, as he admitted to her that "The main substance of our relationship has always been Richard Wagner's remarkable and deeply moving destiny." He postponed the wedding repeatedly before eventually calling it off, and he never married or even had any known mistresses, probably because he was gay as Christmas, which is a bummer when you're meant to be a devoutly Catholic king. Ludwig largely withdrew from political life, much to the fury of his family and ministers, and instead became a patron of the arts and especially of Wagner. We owe Wagner's operas and career largely to Ludwig, as Wagner was previously a heavily indebted philanderer constantly on the run from creditors before Ludwig summoned him. Their relationship doesn't sound exactly platonic, as Wagner described Ludwig: "Alas, he is so handsome and wise, soulful and lovely, that I fear that his life must melt away in this vulgar world like a fleeting dream of the gods." Ludwig also considered abdicating the throne to follow Wagner around creating beautiful operas together, but Wagner convinced his patron to stay in a rich and powerful position... His obsession with Wagner lead to some rather BWM and BWL decisions though. He started by building incredible music halls just to honour Wagner's works. Fascinated by the German mythology in many of Wagner's works, Ludwig wanted to create a world where Wagner's performances could truly belong, a fairy tale world of immense castles on the edges of cliffs, architectural wonders fit for the genius of such a musical god. He wanted to live in the fairy tale world of the operas, and he started dressing himself as characters from the opera, sleeping during the day, only venturing out at night. He also remained a loner. His personal palace, Linderhof, was designed for one person to be in residence (with a bunch of servants, but you know, he was a king), with a dining table that only seated one person. This was his "one person" palace:  He started building other "one person" palace retreats, including Herrenchiemsee, build on an island on Germany's largest lake. Private palaces like these wouldn't have been such a financial undertaking if he hadn't also wanted to re-create the full grandeur of the Palace of Versailles within his backyard. The most famous of his fairy tale castles is Neuschwanstein, a massive clifftop refuge designed to pay homage to the works of Wagner (see the first pictures above). He became increasingly obsessed with designing and building even more outlandish and spectacular castles, ignoring all his royal duties to spend his time drawing new designs. One of the myths of the "Mad King" is that he bankrupted Bavaria to build these castles. He didn't bankrupt the country, instead choosing rather more generously for a king to bankrupt himself and his family. He racked up vast debts, borrowing phenomenal amounts of money against his family name. He did waste a lot of government time and money as well though, as he was constantly sending his staff all over the globe to find new architectural designs and ideas. He became unable to reign in his personal spending, borrowing from foreign governments across Europe. The designs became increasingly fanciful, in part because the artists and architects knew that there was no money to actually build any more castles, so they could create whatever made Ludwig happy without having to worry about the practicality of trying to build them. Despite his popularity with the people (in part because of his generosity towards them), his advisors wanted him out of power. The only way to depose him without violence and an uprising (difficult given his common popularity) was to have him declared legally insane and unfit to rule. Four government sanctioned psychiatrists declared him insane in 1886 after his 22 year reign. He was also forced to vacate Neuschwanstein. Just one day after he was deposed he went for a walk with one of his psychiatrists, and his body was found floating in a lake along with the psychiatrist. His death was ruled a suicide by drowning, but the official autopsy revealed no water in his lungs. It seems unlikely that Ludwig, a strong swimmer, somehow drowned in waist deep water without any water in his lungs. There are all kinds of rumours and speculation about how he really died, but we don't actually know. His brother Otto succeeded him, but unfortunately Otto was also declared mentally unfit by psychiatrists, so their uncle Luitpold ruled as regent, and Luitpold's son eventually deposed Otto to become Ludwig III, so make of that what you will. Anyway, here's to a romance that could never be, and to the Swan King who lost his family's fortune, throne, and reputation to build a fairy tale world for the musical love of his life:  quote:My one Friend, my ardently beloved! More details here Enfys fucked around with this message at 13:45 on Jun 30, 2017 |
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Jun 30, 2017 13:40
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This looks like it slowed down over the 4th of July holiday. I'll give it a couple more days and close it by the end of the week unless we get a flurry of entries. Thanks to everyone for the great submissions so far!
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Jul 5, 2017 07:15
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Looks like this hasn't closed yet so I would like to submit my favourite old timey economist as being bad with money. He is in fact so bad with money that he created paper money and invented the stock market bubble. He's so bad with money he would fit in perfectly with the Federal Reserve. On 9 April 1694, John Law fought a duel with another British Dandy, Edward "Beau" Wilson in Bloomsbury Square in London. Wilson had challenged Law over the affections of Elizabeth Villiers. Law killed Wilson with a single pass and thrust of his sword. He was arrested, charged with murder and stood trial at the Old Bailey. He appeared before the infamously sadistic 'hanging-judge', Salathiel Lovell and was found guilty of murder, and sentenced to death. He was initially incarcerated in Newgate Prison to await execution. His sentence was later commuted to a fine, upon the ground that the offence only amounted to manslaughter. Wilson's brother appealed and had Law imprisoned, but he managed to escape to Amsterdam. Law urged the establishment of a national bank to create and increase instruments of credit and the issue of banknotes backed by land, gold, or silver. The first manifestation of Law's system came when he had returned to Scotland and contributed to the debates leading to the Treaty of Union 1707. He published a text entitled Money and Trade Considered: with a Proposal for Supplying the Nation with Money (1705). Law's propositions of creating a national bank in Scotland were ultimately rejected, and he left to pursue his ambitions abroad. He spent ten years moving between France and the Netherlands, dealing in financial speculations. Problems with the French economy presented the opportunity to put his system into practice. Basically France was in economic ruin due to war and it was receptive to any crazy idea that might kickstart the economy again. The wars waged by Louis XIV left the country completely wasted, both economically and financially. The resultant shortage of precious metals led to a shortage of coins in circulation, which in turn limited the production of new coins. With the death of Louis XIV seventeen months after Law's arrival, the Duke of Orleans finally presented Law with the opportunity to showcase his ingenuity. On May 1, 1716, Law presented a modified version of his centralized bank plan to the Banque Generale which approved a private bank that allowed investors to supply one-fourth of an investment in currency and the other parts in defunct government bonds. The second key feature of the proposal centered on the premise that this private bank was able to issue its own currency backed by Louis of gold. This enabled the currency to be redeemed by the weight of silver from the original deposit instead of the fluctuation of livres which had been devaluing rapidly. From this new banking platform, Law was able to pursue the monopoly companies he envisioned by having France bankroll the endeavor with 100 million livres’ in the form of company stock. The foundation of the Mississippi Company, which was later renamed the Occident Company and eventually became a part of the Company of the Indies, was financed in the same way as the bank. It was in this context that the regent, Philippe d'Orléans, appointed John Law as Controller General of Finances in 1720, effectively giving him control over external and internal commerce. The rapid ascension of this new global monopoly led to massive speculation and stock prices ballooned to over sixty times their original value. A part of this bubble involved John Law printing paper money and then buying shares in his own company with the money he had just printed. Sort of like rolling Enron and the Federal Reserve together; where only good things could happen. What he did was print money to pay dividends in a sort of money printing ponzi. To his credit the company did own about 1/4 of the US, according to Niall Ferguson Law exaggerated the wealth of Louisiana with an effective marketing scheme, which led to wild speculation on the shares of the company in 1719. The scheme promised success for the Mississippi Company by combining investor fervor and the wealth of its Louisiana prospects into a sustainable, joint-stock, trading company. The popularity of company shares were such that they sparked a need for more paper bank notes, and when shares generated profits the investors were paid out in paper bank notes.[8] In 1720, the bank and company were merged and Law was appointed by Philippe II, Duke of Orleans, then Regent for Louis XV, to be Comptroller General of Finances[9] to attract capital. Law's pioneering note-issuing bank thrived until the French government was forced to admit that the number of paper notes being issued by the Banque Royale exceeded the value of the amount of metal coinage it held.[10] The "bubble" burst at the end of 1720,[11] when opponents of the financier attempted to convert their notes into specie en masse, forcing the bank to stop payment on its paper notes.[12] By the end of 1720 Philippe d'Orléans had dismissed Law from his positions. Law then fled France for Brussels, eventually moving on to Venice, where he lived off his gambling. He was buried in the church San Moisè in Venice. There's a lot more detail to the story but here's a comical cartoon. Mostly posted because a Cherub seems to be blowing a giant fart out of John Law's arse and claiming he is the master of wind.  quote:Contemporary political cartoon of Law from Het Groote Tafereel der Dwaasheid (1720); text reads "Law loquitur. The wind is my treasure, cushion, and foundation. Master of the wind, I am master of life, and my wind monopoly becomes straightway the object of idolatry.
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Jul 27, 2017 07:29
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Thanks for the postings, everyone. I missed this thread for a month because I tend to skip over stickied threads. Oops!
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Jul 28, 2017 19:09
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I nominate Napoleon Bonaparte and his government for the Louisiana Purchase, doubling the size of the US for a cool $15M (less than 3 cents an acre) https://en.wikipedia.org/wiki/Louisiana_Purchase quote:Although the foreign minister Talleyrand opposed the plan, on April 10, 1803, Napoleon told the Treasury Minister François de Barbé-Marbois that he was considering selling the entire Louisiana Territory to the United States. On April 11, 1803, just days before Monroe's arrival, Barbé-Marbois offered Livingston all of Louisiana for $15 million, equivalent to about $233 million in 2011 dollars[15] which averages to less than three cents per acre.[16][17] You could also say that the Alaska Purchase was a smoking deal too, buying all of Alaska (all the seals you can eat and all the petroleum you can drink) for the equivalent of $123M in today's dollars. Motivated sellers in the form of desperate, cash strapped colonizing governments can make for some real bargains.
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Jul 31, 2017 07:10
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canyoneer posted:I nominate Napoleon Bonaparte and his government for the Louisiana Purchase, doubling the size of the US for a cool $15M (less than 3 cents an acre) To be fair, both of those purchases had another factor in them. Both the French and Russians had an antagonistic relationship with the British at the time of the purchase. If the Brits wanted to take those colonies by force, good luck defending them with the Royal Navy in the way, and many officials believed the Brits would steal those lands sooner or later. By that line of logic, it was better to get some pennies from the Americans than let perfidious albion take it for free.
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Aug 26, 2017 21:39
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So what do y'all want for the prize?
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Aug 27, 2017 00:04
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Stock in a Dutch tulip farm.
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Aug 27, 2017 05:36
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One dogecoin. https://coinmarketcap.com/currencies/dogecoin/
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Aug 28, 2017 02:12
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An acre of the Moon. Real Estate is always a good investment.
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Aug 29, 2017 17:43
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CannonFodder posted:An acre of the Moon. Real Estate is always a good investment. Lunar Land website posted:Lunar Land's Legal Right To Offer Moon Land I'm sold.
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Aug 29, 2017 18:14
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Moneyball posted:So what do y'all want for the prize? A horse.
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Aug 29, 2017 20:10
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Paid for horse wedding
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Aug 31, 2017 01:52
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Bitcoin.
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Aug 31, 2017 02:34
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Pay for my horse wedding with bitcoin.
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Aug 31, 2017 14:15
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Can you get a payday loan in bitcoin?
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Sep 10, 2017 07:09
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Yeah man, what do you need and where do you live???
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Sep 11, 2017 17:56
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I want the BWM bird
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Sep 13, 2017 23:42
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How about the BWM bird as a gang tag for the winner(s)? Who wants to make one?
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Sep 20, 2017 15:06
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I had a big post summarizing the schemes of Gregor MacGregor, the Scottish veteran of the Venezuelan Wars of Independence who single-handedly invented securities fraud but Mike Duncan tells the story better than me summarizing Wikipedia. Gregor MacGregor, “war hero” returned to Britain in 1821 after abandoning his men in New Granada and really wanted some cash. He took a land grant charter he got from a British client king of some wasteland jungle in Honduras and proclaimed himself “Cazique of Poyais”, a country he totally did not just make up. Taking advantage of Latin American political chaos and apathetic investors who wanted a quick buck, he got London bankers to underwrite hundreds of thousands of pounds in loans and high-interest bonds on nonexistent government revenues, sold thousands of acres’ worth of fraudulent land certificates to prospective investors, and solicited hundreds of people to emigrate to his “country,” trading their cash and gold for Poyais currency. It just gets better from there. Luigi Thirty fucked around with this message at 16:28 on Sep 20, 2017 |
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Sep 20, 2017 16:26
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I nominate King Louis XVI of France: Wikipedia posted:Radical financial reforms by Turgot and Malesherbes angered the nobles and were blocked by the parlements who insisted that the King did not have the legal right to levy new taxes. So, in 1776, Turgot was dismissed and Malesherbes resigned, to be replaced by Jacques Necker. Necker supported the American Revolution, and he carried out a policy of taking out large international loans instead of raising taxes. He attempted to gain public favor in 1781 when he had published the first ever statement of the French Crown's expenses and accounts, the Compte rendu au Roi. This allowed the people of France to view the king's accounts in modest surplus.[22] When this policy failed miserably, Louis dismissed him, and then replaced him in 1783 with Charles Alexandre de Calonne, who increased public spending to "buy" the country's way out of debt. Again this failed, so Louis convoked the Assembly of Notables in 1787 to discuss a revolutionary new fiscal reform proposed by Calonne. When the nobles were informed of the extent of the debt, they were shocked into rejecting the plan. After this, Louis XVI tried, along with his new Controller-General des finances, Étienne-Charles de Loménie de Brienne, to force the Parlement de Paris to register the new laws and fiscal reforms. Upon the denial of the members of the Parlement, Louis XVI tried to use his absolute power to subjugate them by every means: enforcing in many occasions the registration of his reforms (6 August 1787, 19 November 1787, and 8 May 1788), exiling all Parlement magistrates to Troyes as a punishment on 15 August 1787, prohibiting six members from attending parliamentary sessions on 19 November, arresting two very important members of the Parlement, who opposed his reforms, on 6 May 1788, and even dissolving and depriving of all power the "Parlement," replacing it with a Plenary Court, on 8 May 1788. All of these measures and shows of royal power failed mainly for three reasons. First: the majority of the population stood in favor of the Parlement against the king, and thus continuously rebelled against him. Second: the royal treasury was literally running out of money, in which case it would be incapable of sustaining its own imposed reforms. And third: although the king had as much absolute power as his predecessors, he lacked one crucial trait for absolutism to function properly: authority. Having become unpopular to both the commoners and the aristocracy, Louis XVI was, therefore, able to impose his decisions and reforms only for very short periods of time, ranging from 2 to 4 months, before revoking them. And Wiki doesn't even mention things like the crown's lavish spending maintaining and renovating the Palace of Versailles. To be fair it wasn't all his fault, the crown was already in debt when he became king. But he was the 1780s absolute monarch equivalent of a BWM goon continually asking for advice, being told various ways to fix the problem, and then ignoring the advice and asking for new advice only now the situation is even worse because they didn't follow the earlier advice. Eventually the situation got so bad that Louis XVI convened the Estates General to try and levy new taxes, and the Third Estate got so fed up with his poo poo that they beheaded him. Louis XVI: so bad with money that he literally caused the French Revolution.
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Sep 20, 2017 17:48
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Ever wonder why people say "And if you believe that, I've got some swampland in Florida to sell you?" Florida real estate speculation has been a money pit going back to the 1920s, but it was one company that really managed to take it to the limit, Gulf American Land Corporation. Gulf American was founded by two Baltimore street vendors, Leonard and Jack Rosen. They hooked up with a dirty Chicago financier named Jay Pritzger to buy 103 square miles of mangrove swamps outside the Everglades, then divide them into 1/4 acre lots and sell 'em for cheap to retirees in the Northeast who wanted to run out the clock in the Sunshine State. The only problem was, the swampland was...swampland. You can't really build a condo in 2 feet of standing water. The Rosens drained the swamps by digging drainage canals, then using the dirt to fill in the lots just enough so they could pass the building inspector. The condos were about as structurally sound as a tar-paper shack, but they were built. Business was so good, they had to start their own airline just to fly down prospective customers. This became the sales pitch, fly down to Florida for a free vacation on our airline, just sit through a 30 minute sales presentation. They eventually got out of the land business after the State of Florida started a investigation, and it turned out they had oversold property lots, hooked people into land payments they couldn't afford, etc. The drainage canal thing wasn't exactly up to code either. In the end they changed the name to Gulf American and sold itself to General Acceptance Corporation for about $63 million of General Acceptance stock. The Rosen's made out like bandits, and today General Acceptance makes such fine products as extended car warranties, buy-here pay-here car lending, and identity theft insurance. https://en.wikipedia.org/wiki/Gulf_American_Land_Corporation
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