2023-06-11 16:44:48
Weekly Groww Digest
11 June 2023
Sensex: 62,625.63 Ⲡ0.13%
Nifty: 18,563.40 Ⲡ0.16%
The crash of 2008 was monumental.
The dot-com bubble of 2000 burst with far-reaching consequences.
The Japanese stock market plummeted around 1990 was also called a crash.
Through the centuries, crashes have made their presence felt to people.
These are modern phenomena.
One of the older ones weâve heard of is the tulip mania.
But even before that was the South Sea bubble â often called the first financial crash.
The TimesIn the 1500s, the world was being âdiscoveredâ. New land was being âfoundâ.
This is a very European view of things.
Continents existed and people lived on them. But the Europeans didnât know about them.
They set out on daring journeys exploring the unknown oceans. When they came across a land they didnât previously know about, they announced they âdiscoveredâ the land.
The Europeans were quite advanced in that era. They had ships â ships that could cross oceans. They also had better weapons.
A race was on among the different countries of Europe â of capturing countries in far off continents.
That is how so many countries around the world came to be ruled by a few European countries â the British, Portuguese, Spanish, French, Germans, the Dutch â a few of them.
Many shipping companies opened up in different parts of Europe.
The trade that these companies did varied.
They traded in raw materials, finished goods, textiles, food items, and the like.
Unfortunately, they also traded in something that is absolutely shameful â slaves.
Slavery was not a job offered to a person. A slave was âownedâ â much like a horse or cow is owned by its master.
There really was no escape. Nobody chose to be a slave. People were forced into slavery.
Today, it is banned in any respectful country.
But back then, slavery was completely acceptable â just like nobody thinks it wrong for you to own a horse if you can afford one.
It sounds pathetic. And it is pathetic.
That is how it was back then â unfortunately.
Also makes you wonder what practices from today will be considered pathetic a few hundred years from now.
Many companies were in the business of buying slaves from countries from African countries and selling them in ânew landsâ like South America and North America.
With the European settlers arriving in these new lands, the amount of work to be done â buildings constructed, roads paved, forests cut, etc: all the things Europeans liked â was gargantuan.
There was a massive demand for manpower.
This is where slaves came in.
European settlers bought slaves from slave traders and kept them forever â often in horrendous conditions.
Certain traders and later, certain companies specialized in this trade.
Theyâd get people from African countries (forcefully and against their will) and sell them in the new lands of South and North America.
Over the decades and even centuries, it had become clear that trading in slaves had huge profit margins.
What Happened
In the start of the 1700s, the British Empire was reeling under debt. Why â thatâs another story.
The point is, it had a lot of debt and needed to earn money.
In 1711, they formed a public-private partnership company: the South Sea Company.
In 1713, this company was allowed to become a monopoly. No other British company could do what they could do â sell slaves.
The common British folks knew about how profitable the slave trade could be.
So when a company with a monopoly in the slave trade came up, the public rushed to buy its stocks.
The South Sea Companyâs stocks were in great demand.
Expecting great profits from its trade, the company started offering a 6% per annum interest to its shareholders.
One of the biggest clients for these slaves was the Spanish. They had huge pieces of land in South America.
A little before that time, the Spanish king had died without any children. There was a war among those who were claiming rights to the throne.
This was called the War of the Spanish Succession. It ended in 1714.
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