Finance and Fraud in the Revolutionary Atlantic. Professor M. Ghachem 21H.382 Rm. E51-296g Fall Fri. 1-4pm

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1 Finance and Fraud in the Revolutionary Atlantic Professor M. Ghachem 21H.382 Rm. E51-296g Fall Fri. 1-4pm Office hours: Fri pm The 2008 financial crisis has renewed an old debate in modern Atlantic history over the capacity of liberal-democratic and capitalist institutions to ensure financial justice and transparency. This HASS-H seminar looks back to a period of Atlantic history when financial power and republican norms first began to conflict in a sustained and direct manner, and asks what we can learn from those earlier conflicts. The eighteenth century was a period of recurring financial crisis that also generated powerful and enduring norms of what a just society should look like. Beginning with the first major stock market crashes (the South Sea and Mississippi Bubbles of ) and culminating with the revolutionary crises in America and France, the North Atlantic provided unprecedented opportunities for governments, monopolistic joint-stock trading companies, banks, and land speculators to transform economy and society through the creation of novel instruments of taxation, debt, investment, and commercial exchange. We will look at the rising tides of political conflict that flowed from the close interaction between public and private finance, as well as the responses of the American and French revolutionary orders. The seminar concludes with a comparison of eighteenth-century and contemporary financial crises. Course Materials: There are no required texts for purchase. All readings will be made available via Stellar (as downloadable PDF attachments, via hyperlinks, or e-reserves). Although no background knowledge is assumed or required, it will be useful to have some familiarity with the events and issues of the American and French revolutions. If you feel rusty on either score, please consult one or more of the following short texts between the start of the semester and Oct. 24: 1. Gordon S. Wood, The American Revolution: A History (New York: Modern Library, 2002). 2. Edmund S. Morgan, The Birth of the Republic, , 4 th ed. (Chicago, IL: University of Chicago Press, 2012). 3. William Doyle, The French Revolution: A Very Short Introduction (New York: Oxford University Press, 2001). 4. Jeremy S. Popkin, A Short History of the French Revolution, 5 th ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2010). Evaluation, attendance, etc.: This seminar meets once a week for three hours for close readings of texts that must be studied carefully and critically in advance in order for the class to work. 1

2 Because we meet only once a week and cover a good deal of ground in each seminar meeting, students who miss more than two sessions of the seminar will not be able to receive a passing grade for the course barring an unusual medical or personal emergency. If you must miss a class, please contact me in advance. Grades are based on class participation (40%) and a series of three writing assignments spaced throughout the seminar (60%), apportioned as follows: 1. A five page paper that either (a) critically assesses the Ferguson film Blowing Bubbles (to be shown in class on Oct. 3) or (b) insightfully compares the Persian Letters and Cato s Letters selections on the Mississippi and South Sea Bubbles for Oct. 3 and Oct. 10. In either case, your paper should make substantial use of the various secondary readings assigned for Sept. 6, Oct. 3, and Oct. 10. Due in class on Oct. 10. [15%] 2. A six to seven page paper critically evaluating the readings for Sept. 12 in light of what you will have read in the following seven weeks of the seminar. Due in class on Nov. 7. [20%] 3. A nine to ten page paper comparing the role of the French Indies and British East India companies in the Age of Revolution. Due in class on Dec. 5. [25%] The use of laptops and tablets is permitted in the seminar provided that students use them only for notetaking, viewing the assigned readings for that day, or looking up materials on the internet that are relevant to the discussion at hand. Schedule of Meetings and Readings: The following list of topics and reading assignments can be considered stable for the most part but is likely to change in small ways over the course of the semester. Whenever that happens, I will announce the change well in advance of the relevant seminar meeting(s) and post an updated version of the syllabus to Stellar. Part One: Introduction Sept. 5: Introduction a) John Lancaster, The Danger of Financial Jargon, The New Yorker, Aug, 4., 2014, at Sept. 12: Perspectives on Financial Capitalism: Fraud, Inequality, and the Market a) Hyman Minsky, The Financial Instability Hypothesis, Working Paper no. 74 (May 1992), Levy Economics Institute of Bard College, at b) Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, MA: Harvard University Press, 2013), pp

3 c) Emma Rothschild, Economic Sentiments: Adam Smith, Condorcet, and the Enlightenment (Cambridge, MA: Harvard University Press, 2001), pp Sept. 26: The Mississippi and South Sea Bubbles: An Overview a) Larry Neal, Venture Shares of the Dutch East India Company, in The Origins of Value: The Financial Innovations that Created Modern Capital, ed. William N. Goetzmann and K. Geert Rouwenhorst (New York: Oxford University Press, 2005), b) James Macdonald, A Free Nation Deep in Debt: The Financial Roots of Democracy (New York: Farrar, Straus and Giroux, 2003), ch. 5 (pp ). c) Rik Frehen, William N. Goetzmann, and K. Geert Rouwenhorst, Finance in the Great Mirror of Folly, in The Great Mirror of Folly: Finance, Culture, and the Crash of 1720, ed. William N. Goetzmann, Catherine Labio, K. Geert Rouwenhorst, and Timothy G. Young (New Haven, CT: Yale University Press, 2013), In-class viewing: selected images from Het Groote Tafereel der Dwaasheid [The Great Mirror of Folly] (Amsterdam, 1720). Oct. 3: France and the Mississippi Bubble a) Robert Harms, The Diligent: A Voyage Through the Worlds of the Slave Trade (New York: Basic Books, 2001), pp b) Antoin E. Murphy, John Law: Innovating Theorist and Policymaker, in The Origins of Value: The Financial Innovations that Created Modern Capital, ed. William N. Goetzmann and K. Geert Rouwenhorst (New York: Oxford University Press, 2005), c) Thomas E. Kaiser, Money, Despotism, and Public Opinion in Early Eighteenth-Century France: John Law and the Debate on Royal Credit, The Journal of Modern History 63, no. 1 (1991): d) Montesquieu, The Persian Letters (1721), trans. C.J. Betts (New York: Penguin, 1993), letters 138, 142, and 146. Film (to be shown in class): Niall Ferguson, Blowing Bubbles: The Emergence of Stock Trading (BBC Worldwide), at Oct 10: England, Slavery, and the South Sea Bubble (tentative: research visit/field trip to the South Sea Bubble Collection at Harvard Business School s Baker Library) a) Carl Wennerlind, Casualties of Credit: The English Financial Revolution, (Harvard University Press, 2011), ch. 6 (pp ), epilogue (pp ). b) John Trenchard and Thomas Gordon, Cato s Letters, or Essays on Liberty, Civil and Religious, and Other Important Subjects, vol. 1 ( ), 3

4 preface (read only the first few pghs.) and letters 1-11, at c) Review this website describing the Harvard Business School s Kress collection on the South Sea and Mississippi Bubbles: then, identify one primary source in the collection that is of particular interest to you, so that you can request it in person during our visit to the Baker Library. * PAPER #1 DUE IN CLASS TODAY * Oct. 17: The Monopoly Trading Companies a) Philip J. Stern, Company, state and empire: governance and regulatory frameworks in Asia, in Britain s Ocean Empire: Atlantic and Indian Ocean Worlds, c , ed. H.V. Bowen, Elizabeth Mancke, and John G. Reid (New York: Cambridge, University Press, 2012), pp b) Philippe Haudrère, The French India Company and its trade in the eighteenth century, in Merchants, Companies, and Trade: Europe and Asia in the Early Modern Era, ed. Sushil Chaudhury and Michel Morineau (New York: Cambridge University Press, 1999), c) Leos Müller, The Swedish East India Company Strategies and Functions of an Interloper, in Small is Beautiful? Interlopers and Smaller Trading Nations in the Pre-Industrial Period, ed. Markus A. Denzel, Jan de Vries, and Philipp Robinson Rossner (Stuttgart, Germany: Franz Zeiner Verlag, 2011), d) Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, vol. 2 (Indianapolis, IN: Liberty Fund, 1981), pp (Part IV, ch. 7, ). Oct. 24: The Anglo-American Tea Crisis a) Benjamin Labaree, Catalyst for Revolution: The Boston Tea Party, 1773 (Boston, MA: Bicentennial Commission, 1973). b) James R. Fichter, So Great a Profitt: How the East Indies Trade Transformed Anglo-American Capitalism (Cambridge, MA: Harvard University Press, 2010), c) L. F. S. Upton, Proceedings of Ye Body Respecting the Tea, William and Mary Quarterly 22, no. 2 (1965): d) Review the Massachusetts Historical Society s website (text and supporting primary sources) on the Boston Tea Party, at Oct. 31: Economy and Finance in Old Regime France a) Kenneth Margerison, The Shareholders Revolt at the Compagnie des Indes: Commerce and Political Culture in Old Regime France, French History 20, no. 1 (2006):

5 b) L. M. Cullen, History, Economic Crises, and Revolution: Understanding Eighteenth-Century France, Economic History Review 46, no. 4 (1993): c) Michael Kwass, The Global Underground: Smuggling, Rebellion, and the Origins of the French Revolution, in The French Revolution: A Global Perspective, ed. Suzanne Desan, Lynn Hunt, and William Max Nelson (Ithaca, NY: Cornell University Press, 2013), d) Jacob Soll, The Reckoning: Financial Accountability and the Rise and Fall of Nations (New York: Basic Books, 2014), Nov. 7: Corporations, Land, and Franco-American Speculation in the 1780s a) Pauline Maier, The Revolutionary Origins of the American Corporation, William and Mary Quarterly (1): b) François Furstenberg, When the United States Spoke French: Five Refugees Who Shaped a Nation (New York: Penguin, 2014), c) George V. Taylor, The Paris Bourse on the Eve of the Revolution, , American Historical Review 67, no. 4 (1962): * PAPER #2 DUE IN CLASS TODAY * Nov. 14: Fiscal and Financial Crisis in Revolutionary France a) Gail Bossenga, Financial Origins of the French Revolution, in From Deficit to Deluge: The Origins of the French Revolution, ed. Thomas E. Kaiser and Dale K. Van Kley (Stanford, CA: Stanford University Press, 2011), b) Lynn Hunt, The Global Financial Origins of 1789, in The French Revolution: A Global Perspective, ed. Suzanne Desan, Lynn Hunt, and William Max Nelson (Ithaca, NY: Cornell University Press, 2013), c) Robert Darnton, George Washington s False Teeth: An Unconventional Guide to the Eighteenth Century (New York: W.W. Norton, 2003), Nov. 21: The End of Monopoly Capitalism? a) Norman Hampson, The Life and Opinions of Maximilien Robespierre (London: Duckworth, 1974), b) The Law of 22 Prairial Year II (10 June 1794), at c) James R. Fichter, So Great a Profitt: How the East Indies Trade Transformed Anglo-American Capitalism (Cambridge, MA: Harvard University Press, 2010), Dec. 5: Conclusion (please be sure to bring your laptops to class today: we will spend minutes at the start of class filling out the online subject evaluations) a) James Stewart, Eight Days, The New Yorker, Sept. 21, 2009, at 5

6 b) Jed Rakoff, The Financial Crisis: Why Have No High-Level Executives Been Prosecuted?, The New York Review of Books, Jan. 9, 2014, at * PAPER #3 DUE IN CLASS TODAY * 6