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Money for Nothing: The Scientists, Fraudsters, and Corrupt Politicians Who Reinvented Money, Panicked a Nation, and Made the World Rich
The sweeping story of how the greatest minds of the Scientific Revolution applied their new ideas to people, money, and markets--and along the way, invented modern finance.
Money for Nothing chronicles the moment when the needs of war, discoveries of natural philosophy, and ambitions of investors collided. It's about how the Scientific Revolution intertwined with finance to set England--and the world--off in an entirely new direction.
At the dawn of the eighteenth century, England was running out of money due to a prolonged war with France. Parliament tried raising additional funds by selling debt to its citizens, taking in money now with the promise of interest later. It was the first permanent national debt, but still they needed more. They turned to the stock market--a relatively new invention itself--where Isaac Newton's new mathematics of change over time, which he applied to the motions of the planets and the natural world, were fast being applied to the world of money. What kind of future returns could a person expect on an investment today? The Scientific Revolution could help. In the hub of London's stock market--Exchange Alley--the South Sea Company hatched a scheme to turn pieces of the national debt into shares of company stock, and over the spring of 1720 the plan worked brilliantly. Stock prices doubled, doubled again, and then doubled once more, getting everyone in London from tradespeople to the Prince of Wales involved in money mania that consumed the people, press, and pocketbooks of the empire.
Unlike science, though, with its tightly controlled experiments, the financial revolution was subject to trial and error on a grand scale, with dramatic, sometimes devastating, consequences for people's lives. With England at war and in need of funds and "stock-jobbers" looking for any opportunity to get in on the action, this new world of finance had the potential to save the nation--but only if it didn't bankrupt it first.
Money for Nothing chronicles the moment when the needs of war, discoveries of natural philosophy, and ambitions of investors collided. It's about how the Scientific Revolution intertwined with finance to set England--and the world--off in an entirely new direction.
At the dawn of the eighteenth century, England was running out of money due to a prolonged war with France. Parliament tried raising additional funds by selling debt to its citizens, taking in money now with the promise of interest later. It was the first permanent national debt, but still they needed more. They turned to the stock market--a relatively new invention itself--where Isaac Newton's new mathematics of change over time, which he applied to the motions of the planets and the natural world, were fast being applied to the world of money. What kind of future returns could a person expect on an investment today? The Scientific Revolution could help. In the hub of London's stock market--Exchange Alley--the South Sea Company hatched a scheme to turn pieces of the national debt into shares of company stock, and over the spring of 1720 the plan worked brilliantly. Stock prices doubled, doubled again, and then doubled once more, getting everyone in London from tradespeople to the Prince of Wales involved in money mania that consumed the people, press, and pocketbooks of the empire.
Unlike science, though, with its tightly controlled experiments, the financial revolution was subject to trial and error on a grand scale, with dramatic, sometimes devastating, consequences for people's lives. With England at war and in need of funds and "stock-jobbers" looking for any opportunity to get in on the action, this new world of finance had the potential to save the nation--but only if it didn't bankrupt it first.
400 pages, Hardcover
First published June 16, 2020
200 people are currently reading
2099 people want to read
About the author
Thomas Levenson
16 books59 followersMy day job has me professing science writing at MIT, where I teach in the Institute's Graduate Program in Science Writing.
I continue to do what I did before I joined the professoriat: write books (and the occasional article), and make documentary films about science, its history, and its interaction with the broader culture in which scientific lives and discoveries unfold.
Besides writing, film making and generally being dour about the daily news, I lead an almost entirely conventional life in one of Boston's inner suburbs with a family that gives me great joy.
I continue to do what I did before I joined the professoriat: write books (and the occasional article), and make documentary films about science, its history, and its interaction with the broader culture in which scientific lives and discoveries unfold.
Besides writing, film making and generally being dour about the daily news, I lead an almost entirely conventional life in one of Boston's inner suburbs with a family that gives me great joy.
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Displaying 1 - 30 of 70 reviews
September 11, 2020
Everything you wanted to know but were afraid to ask ...
There are things that you feel you ought to understand, but don't. For me, it's things like basic physics (why metal aeroplanes fly and why metal boats float) and basic linguistics (why the Great Vowel Shift happened in the late medieval period). The South Sea Bubble has also always been one of those elusive things. I knew people lost a lot of money, but I never really new anything more than that.
Leveson does a really good job of patiently explaining. He is a scholar who writes with a warm and light touch. He provides the nitty-gritty details from the original sources to give the book authority, and yet at the same time communicates with the skill of a gifted teacher.
One thing that made the book really enjoyable for me was the context that the author provided. The first third of the book sets the scene of what was happening in scientific thinking and observation, in mathematical theory, and in monetary practice in the middle to late C17th. Without those changes and the prevailing national debt, it is difficult to see how the bubble could have happened at the time that it did. It grew out of a context, and it was helpful to be able to understand more of that context.
A second feature of the book is that it clearly explains many of the basic concepts necessary to understand how the bubble started and how it was deliberately pumped up. If you had previously said to me, "The company was set up to swap debt for shares," that would have meant nothing. Thanks to the clarity of the author, I now feel I can grasp what was happening. We are also taken through the many ways in which the share price was recklessly inflated by the company directors.
The reason for four stars and not five is that there were parts that I felt needed greater clarity. For example, I could understand that Newton was seeing things in new ways mathematically, but I couldn't really see what those new ways were, or what the link was with the bubble. However, I am ready to accept that that may have been more to do with my limited grasp of calculus.
Nevertheless, it was a thorough, helpful, and enjoyable read.
There are things that you feel you ought to understand, but don't. For me, it's things like basic physics (why metal aeroplanes fly and why metal boats float) and basic linguistics (why the Great Vowel Shift happened in the late medieval period). The South Sea Bubble has also always been one of those elusive things. I knew people lost a lot of money, but I never really new anything more than that.
Leveson does a really good job of patiently explaining. He is a scholar who writes with a warm and light touch. He provides the nitty-gritty details from the original sources to give the book authority, and yet at the same time communicates with the skill of a gifted teacher.
One thing that made the book really enjoyable for me was the context that the author provided. The first third of the book sets the scene of what was happening in scientific thinking and observation, in mathematical theory, and in monetary practice in the middle to late C17th. Without those changes and the prevailing national debt, it is difficult to see how the bubble could have happened at the time that it did. It grew out of a context, and it was helpful to be able to understand more of that context.
A second feature of the book is that it clearly explains many of the basic concepts necessary to understand how the bubble started and how it was deliberately pumped up. If you had previously said to me, "The company was set up to swap debt for shares," that would have meant nothing. Thanks to the clarity of the author, I now feel I can grasp what was happening. We are also taken through the many ways in which the share price was recklessly inflated by the company directors.
The reason for four stars and not five is that there were parts that I felt needed greater clarity. For example, I could understand that Newton was seeing things in new ways mathematically, but I couldn't really see what those new ways were, or what the link was with the bubble. However, I am ready to accept that that may have been more to do with my limited grasp of calculus.
Nevertheless, it was a thorough, helpful, and enjoyable read.
May 7, 2024
I watched the "Extra History" miniseries about the South Sea bubble on Youtube years ago. Its creators made the seemingly dry notion of a financial bubble into a fascinating and fun story. It was the main reason that this full book on the topic coming through on an Audible two-for-one sale caught my attention.
Money for Nothing starts with three chapters about the scientific revolution and how it gradually changed people's perceptions of numbers, specifically numerical projections and changes over time. Unfortunately, despite Dan Bittner's clear narration (I'm not usually a fan of the "newscaster" style of nonfiction audiobook narration, but it was helpful here!), I had trouble following the trail of financial instruments and manipulations that led to what eventually became the South Sea bubble, and the accompanying large "cast of characters" in the English bureaucracy and populace who were central figures in its creation and its growth. I picked up a copy of the paperback, and started over from the beginning, and had a much easier time, since I was able to absorb its unfamiliar concepts at my own pace. I also liked the various illustrations that accompanied the text.
Thomas Levenson's writing is, honestly, very clear and understandable. He never gets too far into the weeds about complex numbers or concepts. I was readily able to follow the innovations to British finance between the 1690s and 1720s, and how ebullient belief in a stock lacking a solid business foundation caused terrific problems down the line. Those problems not only include financial losses to investors, but governmental inquiries, human suffering, and suicide. The South Sea bubble wasn't necessarily irrational belief in action, or the madness of crowds. At least in part, the trading of government annuities, lotteries, and so on for a newly created Company's stock was a new way of doing things whose potential downfalls weren't clear, until they very much were.
Aside from my natural interest in a precipitous fall following a precipitous rise, the financial doings forming the core of this book are strongly leavened by human interest along the way, and I think that's why I stuck with it despite its subject matter that's pretty far outside my usual reading. As Levenson makes clear in his epilogue, its subject matter is pertinent to the present, and will be pertinent to the future, too.
Money for Nothing starts with three chapters about the scientific revolution and how it gradually changed people's perceptions of numbers, specifically numerical projections and changes over time. Unfortunately, despite Dan Bittner's clear narration (I'm not usually a fan of the "newscaster" style of nonfiction audiobook narration, but it was helpful here!), I had trouble following the trail of financial instruments and manipulations that led to what eventually became the South Sea bubble, and the accompanying large "cast of characters" in the English bureaucracy and populace who were central figures in its creation and its growth. I picked up a copy of the paperback, and started over from the beginning, and had a much easier time, since I was able to absorb its unfamiliar concepts at my own pace. I also liked the various illustrations that accompanied the text.
Thomas Levenson's writing is, honestly, very clear and understandable. He never gets too far into the weeds about complex numbers or concepts. I was readily able to follow the innovations to British finance between the 1690s and 1720s, and how ebullient belief in a stock lacking a solid business foundation caused terrific problems down the line. Those problems not only include financial losses to investors, but governmental inquiries, human suffering, and suicide. The South Sea bubble wasn't necessarily irrational belief in action, or the madness of crowds. At least in part, the trading of government annuities, lotteries, and so on for a newly created Company's stock was a new way of doing things whose potential downfalls weren't clear, until they very much were.
Aside from my natural interest in a precipitous fall following a precipitous rise, the financial doings forming the core of this book are strongly leavened by human interest along the way, and I think that's why I stuck with it despite its subject matter that's pretty far outside my usual reading. As Levenson makes clear in his epilogue, its subject matter is pertinent to the present, and will be pertinent to the future, too.
November 3, 2025
After I read the author's book on Isaac Newton, I tried this one: it was a decent coverage of England's South Sea Bubble caused by the advent of modern capitalism; felt like an eighteenth-century version of the Great Recession caused by the suprime crisis from the twenty-first century. In a way, the cyclic events show what we call the evil of today's capitalism wasn't any different three centuries ago!
May 1, 2023
The author at Scalzi's: https://whatever.scalzi.com/2020/08/1...
Excerpt: "[Isaac] Newton had lost £20,000–roughly four million dollars in 21st century money–in a financial scam that happened exactly three centuries ago this year, an event called the South Sea Bubble. Afterwards, he told his niece that he could “calculate the motion of heavenly bodies but not the madness of the people.”
DNF. OK+, but it didn't really hold my interest. Returned some time ago, and I have largely forgotten the book. Not recommended. but not bad.
Excerpt: "[Isaac] Newton had lost £20,000–roughly four million dollars in 21st century money–in a financial scam that happened exactly three centuries ago this year, an event called the South Sea Bubble. Afterwards, he told his niece that he could “calculate the motion of heavenly bodies but not the madness of the people.”
DNF. OK+, but it didn't really hold my interest. Returned some time ago, and I have largely forgotten the book. Not recommended. but not bad.
January 29, 2022
This was a very good book.
A really important and timely book on money and power. How they overlap, and how they complement each other - to the detriment of us honest citizens.
Very good read.
Would recommend!
A really important and timely book on money and power. How they overlap, and how they complement each other - to the detriment of us honest citizens.
Very good read.
Would recommend!
August 4, 2020
TL;DR
In Thomas Levenson's Money for Nothing: The Scientists, Fraudsters, and Corrupt Politicians Who Reinvented Money, Panicked a Nation, and Made the World Rich, the scientific revolution coincides with England’s need for financial innovation, and Levenson depicts the turmoil, hope, promise, and despair with a novelist’s eye. Highly Recommended.
Disclaimer: The publisher provided a copy of this ARC in exchange for an honest review on NetGalley. Read more reviews on Primmlife.com.
Review: Money for Nothing
Until I read Terry Pratchett’s Making Money, I never thought about the development of money as a historical process. I never would have thought the history of money could be interesting, but along came Money for Nothing by Thomas Levenson. While Mr. Levenson wasn’t as funny as Pratchett, he kept my interest as well as any Discworld book. Money for Nothing started by discussing Isaac Newton, and that’s guaranteed to get my interest going. But from there, he goes on to document how the scientific revolution of Newton’s time affected money leading into the South Sea Company and the market bubble (?bubbles?) it created. Money for Nothing by Thomas Levenson wrote this evolution of money as close to a novel as historical non-fiction gets. It dealt with a lot of history I knew nothing about, shedding new light on historical figures, and showing that when it comes to money, people never really change.
Thomas Levenson’s Money for Nothing was the historical book I didn’t know I wanted to read. I picked it up because the description promised it would show how the scientific revolution affected the concept of money. Levenson delivered. Money for Nothing examines the process of money becoming an ever-more abstract concept. During Newton’s time, England faced a number of unique monetary issues from the metal of their coins being worth more than the face value to untenable national debt to insurance betting to stock bubbles. Despite being roughly 300 years ago, England faced modern financial troubles. The more things change, the more they stay the same.
Levenson says that this period starts the formation of modern finance. He lays it out in an intriguing and well written way. While the focus is how money evolved into ever more abstract forms, Levenson uses people and their lives to convey the concept. His writing on Newton fascinated me, and I’ll have to check out his other book, Newton and the Counterfeiter, because of this. Sir Isaac is an amazing person in the history of science, for sure, but just in general, he led an interesting life, including time at the Royal Mint. Levenson writes Newton so well because he focuses on the person, both good and bad. The author brings this same attention to humanity for all the people in the book, and there’s lots and lots of names here. While some sought to make finance a purely reason-based pursuit, the South Sea Bubble shows that reason had little to do with the rise in price. Archibald Hutcheson used mathematical reasoning to show that the South Sea stock was overpriced. He printed pamphlets about it, and yet no one believed him. Levenson’s explanation of Hutcheson’s work and why it mattered despite being ignored is wonderful. He explains the revolutionary shift in thinking Hutcheson made. Would the bubble have been avoided if Hutcheson was taken seriously? It’s hard to say, but maybe it wouldn’t have been as bad.
Individuals
When I started reading, I noticed a neat pattern. Each chapter focused on an individual and their contribution to the financial issues of the day. For example, chapter one focused on Newton, two on William Petty, and three on Edmund Halley. But quickly the list grew too long for me to keep up with, and I got caught up reading, forgetting to break to make name notes. There are many, many people in this book, but Levenson does such a good job of describing and presenting them, that they all remain distinct. It helps that a number of these people are well-known, but even those who aren’t receive attention and care. I appreciated the time Levenson took to ‘flesh out’ his characters. We learn about Hutcheson, John Blunt, Daniel Defoe, and many more. Each fit in without derailing the overall narrative. It’s really, really well done.
When learning about historical figures, we tend to learn only a fraction, and we think its their whole lives. For example, Newton did more than just invent calculus and gravity. But those are the things I learned in school about him, and other aspects of his life received no thought from me. Sorry, Isaac, old chum. But one of the great things about books like Money for Nothing is that the audience gets to see famous figures from history living life and doing things that they aren’t famous for. Seeing historical figures getting caught up in Exchange Alley’s rush towards the Bubble made them all the more human, and I think that’s a great thing. It’s hard to look at figures of the past, giants of society, and remember that they occasionally drank too much or made bad mundane decisions occasionally. With all the people moving in and out of this book, Levenson gives a taste of how the South Sea Company affected the whole of London.
Nonfiction that Reads Like a Novel
If a fiction reader were to ask me for a book to get started on nonfiction, in general, or history, in particular, I’d recommend this book. I can’t praise this aspect of Money for Nothing enough. I am easily distracted, and since most nonfiction books don’t build tension – granted it’s hard to do that when the ending is widely known – I lose focus easier than when reading fiction. However, Levenson’s focus on the ‘characters’ of this historical drama kept me engaged. Even though I knew what was coming, I didn’t know how the individuals would be affected. So, this created a form of tension that a lot of nonfiction books lack. If I were to write a history book, Money for Nothing would be one I’d emulate.
Caution is Required
This book documents the dangers of modern finance, and it shows that most financial innovations are done through trial and error. This method is necessary but can be disastrous, as the book so thoroughly shows. Money for Nothing demonstrates that risk increases as money moves from the hard backing of land, silver, labor, product, etc. to more abstract concepts. What does this say, though, about fiat currency? Does Levenson believe that a nation’s money should have a hard backing? I’d love to know his take on Modern Monetary Theory, a la The Deficit Myth.
I do agree that we need to be cautious with innovating and evolving money. Also, I agree that the more abstract money gets, the harder it is for non-finance people to understand. But I think fiat currency is important; in The People, No, Thomas Frank says the need for fiat currency led to the formation of the Populist Party around the end of the 1800’s. I don’t know enough to articulate the difference between a fiat currency versus a stock derivative, but I think there is one. I could be wrong; I’m not an expert in the field. They have a commonality in that they are abstract versions of money. Maybe it’s the level of perceived risk that I see between the two. Based on Money for Nothing, I’d like to hear Levenson’s analysis of the two concepts.
Conclusion
Thomas Levenson’s Money for Nothing shows the lessons from the South Sea Bubble apply today as much as back then. The scientific revolution coincided with a time when England needed financial innovation, and Levenson depicts the turmoil, hope, promise, and despair with a novelist’s eye. Money for Nothing proves that we often fail to learn from history, especially when there’s an easy dollar to be made.
Money for Nothing by Thomas Levenson becomes available from Random House on August 18th, 2020.
8.5 out of 10!
In Thomas Levenson's Money for Nothing: The Scientists, Fraudsters, and Corrupt Politicians Who Reinvented Money, Panicked a Nation, and Made the World Rich, the scientific revolution coincides with England’s need for financial innovation, and Levenson depicts the turmoil, hope, promise, and despair with a novelist’s eye. Highly Recommended.
Disclaimer: The publisher provided a copy of this ARC in exchange for an honest review on NetGalley. Read more reviews on Primmlife.com.
Review: Money for Nothing
Until I read Terry Pratchett’s Making Money, I never thought about the development of money as a historical process. I never would have thought the history of money could be interesting, but along came Money for Nothing by Thomas Levenson. While Mr. Levenson wasn’t as funny as Pratchett, he kept my interest as well as any Discworld book. Money for Nothing started by discussing Isaac Newton, and that’s guaranteed to get my interest going. But from there, he goes on to document how the scientific revolution of Newton’s time affected money leading into the South Sea Company and the market bubble (?bubbles?) it created. Money for Nothing by Thomas Levenson wrote this evolution of money as close to a novel as historical non-fiction gets. It dealt with a lot of history I knew nothing about, shedding new light on historical figures, and showing that when it comes to money, people never really change.
Thomas Levenson’s Money for Nothing was the historical book I didn’t know I wanted to read. I picked it up because the description promised it would show how the scientific revolution affected the concept of money. Levenson delivered. Money for Nothing examines the process of money becoming an ever-more abstract concept. During Newton’s time, England faced a number of unique monetary issues from the metal of their coins being worth more than the face value to untenable national debt to insurance betting to stock bubbles. Despite being roughly 300 years ago, England faced modern financial troubles. The more things change, the more they stay the same.
Levenson says that this period starts the formation of modern finance. He lays it out in an intriguing and well written way. While the focus is how money evolved into ever more abstract forms, Levenson uses people and their lives to convey the concept. His writing on Newton fascinated me, and I’ll have to check out his other book, Newton and the Counterfeiter, because of this. Sir Isaac is an amazing person in the history of science, for sure, but just in general, he led an interesting life, including time at the Royal Mint. Levenson writes Newton so well because he focuses on the person, both good and bad. The author brings this same attention to humanity for all the people in the book, and there’s lots and lots of names here. While some sought to make finance a purely reason-based pursuit, the South Sea Bubble shows that reason had little to do with the rise in price. Archibald Hutcheson used mathematical reasoning to show that the South Sea stock was overpriced. He printed pamphlets about it, and yet no one believed him. Levenson’s explanation of Hutcheson’s work and why it mattered despite being ignored is wonderful. He explains the revolutionary shift in thinking Hutcheson made. Would the bubble have been avoided if Hutcheson was taken seriously? It’s hard to say, but maybe it wouldn’t have been as bad.
Individuals
When I started reading, I noticed a neat pattern. Each chapter focused on an individual and their contribution to the financial issues of the day. For example, chapter one focused on Newton, two on William Petty, and three on Edmund Halley. But quickly the list grew too long for me to keep up with, and I got caught up reading, forgetting to break to make name notes. There are many, many people in this book, but Levenson does such a good job of describing and presenting them, that they all remain distinct. It helps that a number of these people are well-known, but even those who aren’t receive attention and care. I appreciated the time Levenson took to ‘flesh out’ his characters. We learn about Hutcheson, John Blunt, Daniel Defoe, and many more. Each fit in without derailing the overall narrative. It’s really, really well done.
When learning about historical figures, we tend to learn only a fraction, and we think its their whole lives. For example, Newton did more than just invent calculus and gravity. But those are the things I learned in school about him, and other aspects of his life received no thought from me. Sorry, Isaac, old chum. But one of the great things about books like Money for Nothing is that the audience gets to see famous figures from history living life and doing things that they aren’t famous for. Seeing historical figures getting caught up in Exchange Alley’s rush towards the Bubble made them all the more human, and I think that’s a great thing. It’s hard to look at figures of the past, giants of society, and remember that they occasionally drank too much or made bad mundane decisions occasionally. With all the people moving in and out of this book, Levenson gives a taste of how the South Sea Company affected the whole of London.
Nonfiction that Reads Like a Novel
If a fiction reader were to ask me for a book to get started on nonfiction, in general, or history, in particular, I’d recommend this book. I can’t praise this aspect of Money for Nothing enough. I am easily distracted, and since most nonfiction books don’t build tension – granted it’s hard to do that when the ending is widely known – I lose focus easier than when reading fiction. However, Levenson’s focus on the ‘characters’ of this historical drama kept me engaged. Even though I knew what was coming, I didn’t know how the individuals would be affected. So, this created a form of tension that a lot of nonfiction books lack. If I were to write a history book, Money for Nothing would be one I’d emulate.
Caution is Required
This book documents the dangers of modern finance, and it shows that most financial innovations are done through trial and error. This method is necessary but can be disastrous, as the book so thoroughly shows. Money for Nothing demonstrates that risk increases as money moves from the hard backing of land, silver, labor, product, etc. to more abstract concepts. What does this say, though, about fiat currency? Does Levenson believe that a nation’s money should have a hard backing? I’d love to know his take on Modern Monetary Theory, a la The Deficit Myth.
I do agree that we need to be cautious with innovating and evolving money. Also, I agree that the more abstract money gets, the harder it is for non-finance people to understand. But I think fiat currency is important; in The People, No, Thomas Frank says the need for fiat currency led to the formation of the Populist Party around the end of the 1800’s. I don’t know enough to articulate the difference between a fiat currency versus a stock derivative, but I think there is one. I could be wrong; I’m not an expert in the field. They have a commonality in that they are abstract versions of money. Maybe it’s the level of perceived risk that I see between the two. Based on Money for Nothing, I’d like to hear Levenson’s analysis of the two concepts.
Conclusion
Thomas Levenson’s Money for Nothing shows the lessons from the South Sea Bubble apply today as much as back then. The scientific revolution coincided with a time when England needed financial innovation, and Levenson depicts the turmoil, hope, promise, and despair with a novelist’s eye. Money for Nothing proves that we often fail to learn from history, especially when there’s an easy dollar to be made.
Money for Nothing by Thomas Levenson becomes available from Random House on August 18th, 2020.
8.5 out of 10!
January 8, 2024
A surprisingly useful history
Money for Nothing tells the story of the South Sea Bubble. The book starts with a brief history of Isaac Newton and how his breakthroughs in math epitomised and catalysed a desire by natural philosophers to measure and analyse everything quantitatively.
The author argues that the scientific revolution led to the creation of new conceptions of money, new formulations of credit and eventually the South Sea Bubble.
The South Sea Bubble has striking parallels to the crypto boom / busts, including the creation of new concepts of money and the froth / graft that accompanies the invention.
Money for Nothing tells the story of the South Sea Bubble. The book starts with a brief history of Isaac Newton and how his breakthroughs in math epitomised and catalysed a desire by natural philosophers to measure and analyse everything quantitatively.
The author argues that the scientific revolution led to the creation of new conceptions of money, new formulations of credit and eventually the South Sea Bubble.
The South Sea Bubble has striking parallels to the crypto boom / busts, including the creation of new concepts of money and the froth / graft that accompanies the invention.
July 11, 2020
Good look at financial markets and lessons not learned
I enjoyed this book. It reads more like a novel than non-fiction as it is a well-told story, full of interesting, well-developed characters; some sympathetic, some not. Author Thomas Levenson creates a good sense of drama and I found the book hard to put down but I also found some descriptions of the financial tools used a little confusing. However, this may be more a result of the actual tools than the writing. The lessons from the events of the book are still applicable today, and Levenson addresses this in later parts of the book where he looks at the 2008 market crash. I had also read “The Hunt for Vulcan” by Levenson which was excellent. Some of the charm I saw in “The Hunt for Vulcan” did not carry over into “Money from nothing” but perhaps Levenson is more comfortable writing about science. Overall this is a book well-worth reading.
Disclosure: I received a complimentary copy of this book via Netgalley for review purposes.
I enjoyed this book. It reads more like a novel than non-fiction as it is a well-told story, full of interesting, well-developed characters; some sympathetic, some not. Author Thomas Levenson creates a good sense of drama and I found the book hard to put down but I also found some descriptions of the financial tools used a little confusing. However, this may be more a result of the actual tools than the writing. The lessons from the events of the book are still applicable today, and Levenson addresses this in later parts of the book where he looks at the 2008 market crash. I had also read “The Hunt for Vulcan” by Levenson which was excellent. Some of the charm I saw in “The Hunt for Vulcan” did not carry over into “Money from nothing” but perhaps Levenson is more comfortable writing about science. Overall this is a book well-worth reading.
Disclosure: I received a complimentary copy of this book via Netgalley for review purposes.
January 27, 2022
South Sea Bubble. If you are inventing financial derivatives to line your own pockets and enable your nation's military war spending, it helps to bribe parliament. The author writes documentaries, with little scenes and character introductions and narrated voiceovers pulling us through the history. But I really expected more comparative analysis, and when given the chance (offering brief comparison to France's similarities in that period, and 2008) fails to connect.
January 16, 2021
This was an interesting financial history volume that located the South Sea Bubble within its historical context adjacent to the scientific revolution, which soon led to imperfect applications to the world of manmade political and economic systems. My main quibble with the book is that its central theme exploring the interplay between science and political economy bookended the narrative but lost the thread at times in the middle. But overall, this was an insightful volume with plenty of useful takeaways about the nature of financial innovation, speculative panic, and the interplay between financial markets and the aims and needs of governments.
The story begins with Newton's annus mirabilus following the Black Death, and the revolutions in thinking about the world this unleashed. Newton himself was soon tempted out of his quiet academic life into the world of the contemporary economy to become master of the mint, where he engaged in substantive policy debate around the monetary system. Around this time, natural philosophy was growing alongside scientific progress, as thinkers sought to apply scientific empiricism and observation of the world to problems around them: including William Petty and his ventures into Irish land valuation, and Edmund Halley (of comet fame) exploring life expectancy and the foundations of insurance. In the process, the idea of money was transformed from a fixed quantity that can purchase goods to a means of linking promises around the future to the present.
The political context of this time set the tone: following the ascension of William and Mary, the English Crown had plenty more wars to fight, while devolution of some powers to Parliament limited the ability of the Crown to borrow in the same way it had. Financial experiments rushed in to fill this gap - from lottery annuity schemes to tontine structures, designed to help the Crown borrow and rewarding investors in new ways. Meanwhile the popularity of joint stock companies grew following the Phipps treasure discovery (major companies to date were the East India Company and the Bank of England), as the idea of money evolved to make the investing public more comfortable with owning an abstract idea of a thing rather than a physical thing itself. This coincided with the rise of the radical informality of coffeehouse culture as Jonathan's introduced the country to Turkish coffee - coffeehouses were initially meeting places for groups like the Royal Society, then became the home of 'stock jobbers' who were unwelcome in more formal venues. A stock market was born and became a true market thanks to the work of Castaing to aggregate and distribute price information. This market created transferability of debt for the first time, bringing in a wider investor base and helping the Crown to borrow more easily.
Around this time Newton wrote a defense of the idea of credit, which reads like a precursor to theories of fiscal policy (though Levenson notes that economic science had not yet evolved and Newton's ideas can't be said to have originated future theories - but he was onto something). The concept that nations could build debts based on promises of future activity was an important step towards various forms of economic progress.
The Crown soon found itself in a precarious position, needing to borrow more but unable to pay off certain floating rate, unsecured debt. The latest financial innovation to be attempted was the debt/equity swap: investors in floating rate debt would be incentivized to swap this debt for equity in a company, the government would pay a lower rate of interest to the company, and the company would receive a base of capital. The South Sea Company was formed in this vein - and its commercial prospects weren't all that promising, given it was based around a monopoly on trade with Spain (without Spanish consent to engage in this trade). It therefore evolved largely as a vehicle for financial bookkeeping, with all of its activity centered around selling stock and handling payments from the Crown. It grew further in this manner through a debt restructuring led by Robert Walpole (itself premised on scientific ideas) following a bidding war against the BoE for the right to participate in this debt/equity swap. This phase of growth was purely a game of enriching insiders, as the structure of the swap let the company sell new shares in a way that would boost the holdings of existing shareholders. Various forms of bribery, market manipulation (insiders buying shares to boost market), and leverage (issuing of credit to encourage buying of more shares) ensued. Daniel Defoe stands in as a sort of contemporary chorus in this telling, and his logic echoed that of the time: this whole process of financial engineering was reasonable, and logically extended from the rules of political economy that derived from scientific knowledge. Some scientifically derived skepticism followed as well, notably from Archibald Hutcheson who introduced some simple concepts of valuation: an asset's value relates to the income it can provide (so stocks and bonds can be compared to land), and at present prices the amount of activity the South Sea Company would need to perform to justify investing was simply nonsensical. Many from different walks of life - parliamentarians, royalty, Newton - were drawn into the bubble, and a few honest fortunes were made along the way, primarily by those whose correspondence suggests they followed Hutcheson's logic of walking away when the moves no longer made sense to them.
The aftermath of the bubble's inevitable collapse laid the foundation for much of English history that would follow. Importantly, the bubble worked to transform and make sustainable the national debt, so that the resources of the future could again be called upon to improve the present (and a precedent of rule of law was applied when appeals to reverse the exchange of now worthless South Sea Shares for government debt were refused). Robert Walpole grew in stature in the aftermath and became effectively the country's first prime minister. Interestingly, while France lived through its own contemporaneous bubble (the Mississippi Bubble of John Law), and engaged in some new experiments (e.g. creating fiat currency), the French monarchy largely returned to the old status quo of privatized tax collection and splintered national finances. Meanwhile, England moved forward with a confidence in financial ingenuity, a tendency that enabled England to vastly outperform its expected population-based outcomes in the century of war to follow: England was not richer than France but was more skilled at mobilizing its resources. This logic extended across the Atlantic to new United States, where further innovations (such as popularization of LLCs over partnerships) enabled new risk-taking ventures that helped the country to grow. Alexis de Tocqueville observed this culture with admiration, noting that this capitalist spirit practically made crises inevitable, but that these would likely be way-stations on a prosperous road.
The story begins with Newton's annus mirabilus following the Black Death, and the revolutions in thinking about the world this unleashed. Newton himself was soon tempted out of his quiet academic life into the world of the contemporary economy to become master of the mint, where he engaged in substantive policy debate around the monetary system. Around this time, natural philosophy was growing alongside scientific progress, as thinkers sought to apply scientific empiricism and observation of the world to problems around them: including William Petty and his ventures into Irish land valuation, and Edmund Halley (of comet fame) exploring life expectancy and the foundations of insurance. In the process, the idea of money was transformed from a fixed quantity that can purchase goods to a means of linking promises around the future to the present.
The political context of this time set the tone: following the ascension of William and Mary, the English Crown had plenty more wars to fight, while devolution of some powers to Parliament limited the ability of the Crown to borrow in the same way it had. Financial experiments rushed in to fill this gap - from lottery annuity schemes to tontine structures, designed to help the Crown borrow and rewarding investors in new ways. Meanwhile the popularity of joint stock companies grew following the Phipps treasure discovery (major companies to date were the East India Company and the Bank of England), as the idea of money evolved to make the investing public more comfortable with owning an abstract idea of a thing rather than a physical thing itself. This coincided with the rise of the radical informality of coffeehouse culture as Jonathan's introduced the country to Turkish coffee - coffeehouses were initially meeting places for groups like the Royal Society, then became the home of 'stock jobbers' who were unwelcome in more formal venues. A stock market was born and became a true market thanks to the work of Castaing to aggregate and distribute price information. This market created transferability of debt for the first time, bringing in a wider investor base and helping the Crown to borrow more easily.
Around this time Newton wrote a defense of the idea of credit, which reads like a precursor to theories of fiscal policy (though Levenson notes that economic science had not yet evolved and Newton's ideas can't be said to have originated future theories - but he was onto something). The concept that nations could build debts based on promises of future activity was an important step towards various forms of economic progress.
The Crown soon found itself in a precarious position, needing to borrow more but unable to pay off certain floating rate, unsecured debt. The latest financial innovation to be attempted was the debt/equity swap: investors in floating rate debt would be incentivized to swap this debt for equity in a company, the government would pay a lower rate of interest to the company, and the company would receive a base of capital. The South Sea Company was formed in this vein - and its commercial prospects weren't all that promising, given it was based around a monopoly on trade with Spain (without Spanish consent to engage in this trade). It therefore evolved largely as a vehicle for financial bookkeeping, with all of its activity centered around selling stock and handling payments from the Crown. It grew further in this manner through a debt restructuring led by Robert Walpole (itself premised on scientific ideas) following a bidding war against the BoE for the right to participate in this debt/equity swap. This phase of growth was purely a game of enriching insiders, as the structure of the swap let the company sell new shares in a way that would boost the holdings of existing shareholders. Various forms of bribery, market manipulation (insiders buying shares to boost market), and leverage (issuing of credit to encourage buying of more shares) ensued. Daniel Defoe stands in as a sort of contemporary chorus in this telling, and his logic echoed that of the time: this whole process of financial engineering was reasonable, and logically extended from the rules of political economy that derived from scientific knowledge. Some scientifically derived skepticism followed as well, notably from Archibald Hutcheson who introduced some simple concepts of valuation: an asset's value relates to the income it can provide (so stocks and bonds can be compared to land), and at present prices the amount of activity the South Sea Company would need to perform to justify investing was simply nonsensical. Many from different walks of life - parliamentarians, royalty, Newton - were drawn into the bubble, and a few honest fortunes were made along the way, primarily by those whose correspondence suggests they followed Hutcheson's logic of walking away when the moves no longer made sense to them.
The aftermath of the bubble's inevitable collapse laid the foundation for much of English history that would follow. Importantly, the bubble worked to transform and make sustainable the national debt, so that the resources of the future could again be called upon to improve the present (and a precedent of rule of law was applied when appeals to reverse the exchange of now worthless South Sea Shares for government debt were refused). Robert Walpole grew in stature in the aftermath and became effectively the country's first prime minister. Interestingly, while France lived through its own contemporaneous bubble (the Mississippi Bubble of John Law), and engaged in some new experiments (e.g. creating fiat currency), the French monarchy largely returned to the old status quo of privatized tax collection and splintered national finances. Meanwhile, England moved forward with a confidence in financial ingenuity, a tendency that enabled England to vastly outperform its expected population-based outcomes in the century of war to follow: England was not richer than France but was more skilled at mobilizing its resources. This logic extended across the Atlantic to new United States, where further innovations (such as popularization of LLCs over partnerships) enabled new risk-taking ventures that helped the country to grow. Alexis de Tocqueville observed this culture with admiration, noting that this capitalist spirit practically made crises inevitable, but that these would likely be way-stations on a prosperous road.
October 19, 2024
Excellent history book if you’re interested in the public credit market and Walpole, you know, like normal people
May 27, 2025
A fascinating and important story, generally very well told.
October 11, 2021
A rare book of economic history that pulls one along like a Ludlum novel! The focus is the South Sea Bubble. The author starts with Newton, not just his usual achievements in calculus and physics, but as the Master of the Mint, and finishes with Walpole laying the foundations of modern British sovereign fundraising’ midst the wreckage of the bubble bursting in 1720. Tedious history leaps into vivid, enthralling action. Brilliant book!!!
January 22, 2021
Interesting book, but not the page turner some advertised it to be. If this sort of book (a description of Britain's "South Sea Bubble" of the 1820s) is intended for a broad audience of readers, it should be written by a journalist, not an academic. Don't get me wrong. Thomas Levenson is a good writer who manages many a good turn of phrase, but if you're expecting something along the lines of "Bad Blood," "Money for Nothing" will disappoint. It's better suited as reading for Economics 307, The History of Money and Banking, than my book club. We'll discuss "Money for Nothing" next week. I'll wager not everyone finished it.
June 17, 2024
Fascinating account of a huge financial crisis in the 1720s that few today know about. England was in massive debt due to constant wars, transferred that debt to an entity named The South Sea Company, which began selling shares of the debt in a variety of cunning and complicated ways until it was by far the biggest financial concern in England. But the SSC never made good on its promises, and eventually the confidence waned and the bubble burst. Levenson argues that along the way England became more confident and conversant with the mathematical alchemy of modern finance, and that in the end is key to explaining England's effective dominance over the century to follow.
January 3, 2021
I had heard of the South Sea Bubble previously (mostly how one of the world's smartest people - Isaac Newton - got caught up in it), but reading Levenson's work on it really brings it home. The way he lays out the economic, cultural, and political context that allowed the South Sea Company to "thrive" was excellent.
Some of the financial concepts are a bit technical and required a couple of re-reads, but it was doable. Levenson is a great science writer, so the mathematical concepts are well-laid out for the reader.
Some of the financial concepts are a bit technical and required a couple of re-reads, but it was doable. Levenson is a great science writer, so the mathematical concepts are well-laid out for the reader.
August 13, 2022
Deep dive into the South Sea Bubble. It provides a lot of information on what led up to it, who the major players were, how it developed, and the overall result. While this book will have a limited scope in its audience, those looking for information on late 17th century and early 18th century English monetary policy, culminating in the South Sea Bubble, will find what they are looking for.
September 14, 2020
Audiobook.
Enjoyable historical recollection with fresh insights to South Sea bubble and the underlying dynamics, starting from Isaac Newton. Lost one star for being too long, not all historical details matter nor contribute for reading experience. Nevertheless, highly recommend.
Enjoyable historical recollection with fresh insights to South Sea bubble and the underlying dynamics, starting from Isaac Newton. Lost one star for being too long, not all historical details matter nor contribute for reading experience. Nevertheless, highly recommend.
November 30, 2024
Toward the end of his study about the cause or causes of speculative financial bubbles and their collapse, using the South Sea Company and look-alike joint stock companies, Levenson writes,
" . . . [w]e now know that all significant financial innovation carries with it the near certainty that ignorance and confusion about any new investment trick, combined with the fact that human emotion drives decisions about money, create conditions in which the behavior that leads to disaster recurs in broadly predictable sequences." Bingo, at least most of it, for his is as honest and frank a conclusion about animal spirits as I've seen academic writers admit, one that Wall Street brokers and investment analysts hate to admit, and one that gives them the willies to think about.
However, some of the most dramatic examples of speculative bubbles I've observed in more than 50 years of being active in the financial markets involve not only new instruments not readily subject to quantitative analysis review (e.g. credit default swaps, MBS, and pyramided derivatives, all so complex that any analysis falls short) but other just as spectacular financial bubbles built in the old standbys that populated financial markets from the early times, at least in the US: gold, silver and copper futures (remember Nelson Bunker Hunt's foray into cornering the silver market in 1980), interest rate derivatives, and, in every bull cycle, more than one bubble being built in the stock of the "next best thing", or more correctly, the next worst best thing that traders ride up: the stock of companies with no earnings, no or nearly no hard assets, and no prospects of customers to sell any product or service, existent or non-existent. Yes, it happens, and one can even make the case that the current President-elect Donald Trump, has convinced some gullible traders that the stock of Truth Social, a company with no earnings and the only asset a megaphone, was run up to more than $79.00 a share at its initial offering before falling to around 11 and bouncing off 11 to 31, where the chart formation being formed tells me that the price is steadying itself to fall again. At least one analyst made the case that DJT stock justifies a $ 2.00 a share price, but tell that to those who own it, or, gulp, have invested in it for the long term
Levenson correctly introduces us to the subject of financial bubbles using both the South Sea Company and Isaac Newton's math skills. The SSC was always a scam--a company chartered for the express purpose of assuming government debt, authorizing the sale of stock, selling the stock to both the public in multiple new issues, but keeping the best prices for the insiders. And, then there's the issue of where earnings will appear and when earnings will appear. The entire premise of SSC's earnings prospects was constructed on SSC gathering in interest payments from the British crown for debt it incurred in fighting never-ending wars and engaging in trade along routes that were not proved, and then issuing new stock (thus diluting old shares) as each speculative cycle renewed itself.
And, of course, all of it was promoted by the John Blunts and the other financial wizards and writers of the time who promoted the stock by giving the suckers a plausible story about a stock whose business and financial fortunes are not transparent and sometimes fraudulent.
What savvy stock and futures traders (I am neither but I know how they think) might suggest is that once traders--some neophytes, some gullible, some knowledgeable--become convinced that personal fortunes are on the horizon (have we forgotten Enron and Gamestop already), only greed--unbridled, unthoughtful, and pulsing through the mind and the markets--confirm the reason for the greed until an event or two occurs that pricks the bubble and sends the gullible to the showers where oftentimes they drown from their gullibility. Fortunately, Dr. Levenson makes the connection between the multi-tiered derivatives where no one would tell what they were buying or selling and the temporary collapse of the financial markets, banking system, and credit availability, something that I have not seen in my lifetime and have only read about (such as the Panic of 1907 and the Great Depression, both of which were fueled by speculative bubbles).
Levenson tells a good story and offers a terrific reminder to be wary of the prominent, the "connected", and the rich (don't buy anything from Elon Musk or Donald Trump) because they will do whatever it takes to make sure they are not weakened or even affected. One lesson that can be drawn is one involving the mathematics behind successful stocks. Good mathematical analysis--not even Sir Isaac Newton's--simply does not explain how bubbles are built and how they collapse. And, no matter how much we know about speculative financial bubbles and are forewarned, they will occur repeatedly when times seem good and usually just before times become economically miserable.
" . . . [w]e now know that all significant financial innovation carries with it the near certainty that ignorance and confusion about any new investment trick, combined with the fact that human emotion drives decisions about money, create conditions in which the behavior that leads to disaster recurs in broadly predictable sequences." Bingo, at least most of it, for his is as honest and frank a conclusion about animal spirits as I've seen academic writers admit, one that Wall Street brokers and investment analysts hate to admit, and one that gives them the willies to think about.
However, some of the most dramatic examples of speculative bubbles I've observed in more than 50 years of being active in the financial markets involve not only new instruments not readily subject to quantitative analysis review (e.g. credit default swaps, MBS, and pyramided derivatives, all so complex that any analysis falls short) but other just as spectacular financial bubbles built in the old standbys that populated financial markets from the early times, at least in the US: gold, silver and copper futures (remember Nelson Bunker Hunt's foray into cornering the silver market in 1980), interest rate derivatives, and, in every bull cycle, more than one bubble being built in the stock of the "next best thing", or more correctly, the next worst best thing that traders ride up: the stock of companies with no earnings, no or nearly no hard assets, and no prospects of customers to sell any product or service, existent or non-existent. Yes, it happens, and one can even make the case that the current President-elect Donald Trump, has convinced some gullible traders that the stock of Truth Social, a company with no earnings and the only asset a megaphone, was run up to more than $79.00 a share at its initial offering before falling to around 11 and bouncing off 11 to 31, where the chart formation being formed tells me that the price is steadying itself to fall again. At least one analyst made the case that DJT stock justifies a $ 2.00 a share price, but tell that to those who own it, or, gulp, have invested in it for the long term
Levenson correctly introduces us to the subject of financial bubbles using both the South Sea Company and Isaac Newton's math skills. The SSC was always a scam--a company chartered for the express purpose of assuming government debt, authorizing the sale of stock, selling the stock to both the public in multiple new issues, but keeping the best prices for the insiders. And, then there's the issue of where earnings will appear and when earnings will appear. The entire premise of SSC's earnings prospects was constructed on SSC gathering in interest payments from the British crown for debt it incurred in fighting never-ending wars and engaging in trade along routes that were not proved, and then issuing new stock (thus diluting old shares) as each speculative cycle renewed itself.
And, of course, all of it was promoted by the John Blunts and the other financial wizards and writers of the time who promoted the stock by giving the suckers a plausible story about a stock whose business and financial fortunes are not transparent and sometimes fraudulent.
What savvy stock and futures traders (I am neither but I know how they think) might suggest is that once traders--some neophytes, some gullible, some knowledgeable--become convinced that personal fortunes are on the horizon (have we forgotten Enron and Gamestop already), only greed--unbridled, unthoughtful, and pulsing through the mind and the markets--confirm the reason for the greed until an event or two occurs that pricks the bubble and sends the gullible to the showers where oftentimes they drown from their gullibility. Fortunately, Dr. Levenson makes the connection between the multi-tiered derivatives where no one would tell what they were buying or selling and the temporary collapse of the financial markets, banking system, and credit availability, something that I have not seen in my lifetime and have only read about (such as the Panic of 1907 and the Great Depression, both of which were fueled by speculative bubbles).
Levenson tells a good story and offers a terrific reminder to be wary of the prominent, the "connected", and the rich (don't buy anything from Elon Musk or Donald Trump) because they will do whatever it takes to make sure they are not weakened or even affected. One lesson that can be drawn is one involving the mathematics behind successful stocks. Good mathematical analysis--not even Sir Isaac Newton's--simply does not explain how bubbles are built and how they collapse. And, no matter how much we know about speculative financial bubbles and are forewarned, they will occur repeatedly when times seem good and usually just before times become economically miserable.
December 31, 2024
I bought this book over Christmas break, knocking it off my growing list of to-read books on Goodreads. I think I encountered it in a Twitter post? Either way, this was an excellent read, the perfect combination of familiar touchpoints, new material, and excellent writing.
The book begins quite surprisingly with Isaac Newton and the black plague. A book on finance beginning with the foundations of modern physics! I had recently read Kuhn's "The Structure of Scientific Revolutions," and know a bit of physics myself from my engineering background. A lot of great material here that I could nod along, while discovering Newton's surprising stint as the warden of the mint that was wholly new to me. All of this supported one of Levenson's key premises, that modern finance exists because of the Enlightenment idea of discovering natural laws; by abstracting money to numbers over time, you could study the trajectory of the stock market in the same way you could study the trajectory of a planet.
But no fear-- there is little in terms of technical content here. Not a single equation shows up in the book. The book itself it quite limited in the scope of its historical inquiry: in reality, it's a deep dive into a single event, the South Sea Bubble of 1720, one of the first stock market crashes. Stocks were new, and no one knew what would happen when the system failed. There are so many fascinating side quests, including Newton's handling of the hard currency, the infinite money machine of bad actors shaving silver off of coins and selling them in France, the rise of John Law to the top of finance in France and his downfall, and the survey of Irish lands in order to sell them. Levenson is an adept writer in that he helps make sense of such new material to the everyday reader.
I originally thought I was reading a history of the stock market, but it isn't that. The detailed history is really confined pretty much to the aftermath of the South Sea Bubble. It does give some immediate aftermath, including how this financial machine allowed Britain to defeat France at Waterloo and how these new financial instruments empowered early America. The epilogue jumps to the present day to cover the 2008 housing market crash, drawing the connections to the South Sea Bubble. What is the common thread? The interconnectedness of the network of modern finance, while also allowing cheap and easy capital, has a key vulnerability: a small failure ripples throughout the entire system. Levenson admits he can't fully offer a solution, as that's not what the book is meant to be, but it is clear that financial regulations MUST be in place; if you have frequent local failures, they will propagate through the entire system.
I loved this book, because I honestly dread finance anything. But history and science to explain it? That is my jam. Plus I can come away not feeling any more despoiled. I can keep on hating crypto bros with new historical allies like Daniel DeFoe and Jonathan Swift, who decried and mocked the "stock jobbers" of their own day.
The book begins quite surprisingly with Isaac Newton and the black plague. A book on finance beginning with the foundations of modern physics! I had recently read Kuhn's "The Structure of Scientific Revolutions," and know a bit of physics myself from my engineering background. A lot of great material here that I could nod along, while discovering Newton's surprising stint as the warden of the mint that was wholly new to me. All of this supported one of Levenson's key premises, that modern finance exists because of the Enlightenment idea of discovering natural laws; by abstracting money to numbers over time, you could study the trajectory of the stock market in the same way you could study the trajectory of a planet.
But no fear-- there is little in terms of technical content here. Not a single equation shows up in the book. The book itself it quite limited in the scope of its historical inquiry: in reality, it's a deep dive into a single event, the South Sea Bubble of 1720, one of the first stock market crashes. Stocks were new, and no one knew what would happen when the system failed. There are so many fascinating side quests, including Newton's handling of the hard currency, the infinite money machine of bad actors shaving silver off of coins and selling them in France, the rise of John Law to the top of finance in France and his downfall, and the survey of Irish lands in order to sell them. Levenson is an adept writer in that he helps make sense of such new material to the everyday reader.
I originally thought I was reading a history of the stock market, but it isn't that. The detailed history is really confined pretty much to the aftermath of the South Sea Bubble. It does give some immediate aftermath, including how this financial machine allowed Britain to defeat France at Waterloo and how these new financial instruments empowered early America. The epilogue jumps to the present day to cover the 2008 housing market crash, drawing the connections to the South Sea Bubble. What is the common thread? The interconnectedness of the network of modern finance, while also allowing cheap and easy capital, has a key vulnerability: a small failure ripples throughout the entire system. Levenson admits he can't fully offer a solution, as that's not what the book is meant to be, but it is clear that financial regulations MUST be in place; if you have frequent local failures, they will propagate through the entire system.
I loved this book, because I honestly dread finance anything. But history and science to explain it? That is my jam. Plus I can come away not feeling any more despoiled. I can keep on hating crypto bros with new historical allies like Daniel DeFoe and Jonathan Swift, who decried and mocked the "stock jobbers" of their own day.
September 26, 2020
Excellent History and Entertaining Primer to Financial Markets
I.David blog:
https://www.goodreads.com/author/show...
In Money for Nothing: The Scientists, Fraudsters, and Corrupt Politicians Who Reinvented Money, Panicked a Nation, and Made the World Rich Thomas Levenson traces the beginnings of our current financial system back to 18th century London. While a story about finance may seem to have narrow appeal, in Levenson’s capable hands, this story will be appreciated by a much broader audience.
The role of the narrative historian is to “connect the dots”. That is, to identify disparate events and to weave them together into a cohesive tale that informs and entertains the reader. Sometimes the dots are easy for the historian to identify. But other times, the historian must reach for dots that are more obscure. Levenson opted to reach for obscure dots. In Money for Nothing he has managed to connect the London Plague of 1690, Isaac Newton’s development of differential calculus, England’s unending wars with France, the South Sea Bubble and Robert Walpole’s term as Prime Minister of England. The connections work seamlessly
At its heart, this is the story of how England borrowed funds to finance its wars with France. England’s borrowing capabilities were greatly enhanced when the South Sea Company assumed its outstanding debts from creditors in exchange for shares of South Sea stock. South Sea, therefore, received payments on the debts from England and either kept them as added capital or paid them out as dividends to its shareholders. Most importantly, Levenson describes how, after the debts were converted to South Sea shares, the shares were fungible and could be traded, at prevailing prices, on the newly formed Exchange Alley.
As Levenson tells the story, this development of financial markets took place at a time when scientists and mathematicians were starting to quantify actions and risks that had previously been unquantifiable. This quantification could have been used to rationally value the South Sea shares. But, alas, it was not. Levenson’s is a story about people, not numbers. So instead of using available tools to value the stock, the investors acted in response to their greed and emotion. This greed and emotion fueled what became the South Sea Bubble.
Levenson explains how England was able to recover from the ultimate bust of the Bubble and to create workable financial markets. However, he warns that new financial instruments, like the ones that fueled the South Sea Bubble, are constantly being created and that investors, to this day, still find themselves investing based upon their greed and emotion rather than mathematical quantification.
I rated this very informative and entertaining book 4.0 stars. It should appeal to fans of English History. And it is also a good primer for anyone interested in financial markets.
I.David blog:
https://www.goodreads.com/author/show...
In Money for Nothing: The Scientists, Fraudsters, and Corrupt Politicians Who Reinvented Money, Panicked a Nation, and Made the World Rich Thomas Levenson traces the beginnings of our current financial system back to 18th century London. While a story about finance may seem to have narrow appeal, in Levenson’s capable hands, this story will be appreciated by a much broader audience.
The role of the narrative historian is to “connect the dots”. That is, to identify disparate events and to weave them together into a cohesive tale that informs and entertains the reader. Sometimes the dots are easy for the historian to identify. But other times, the historian must reach for dots that are more obscure. Levenson opted to reach for obscure dots. In Money for Nothing he has managed to connect the London Plague of 1690, Isaac Newton’s development of differential calculus, England’s unending wars with France, the South Sea Bubble and Robert Walpole’s term as Prime Minister of England. The connections work seamlessly
At its heart, this is the story of how England borrowed funds to finance its wars with France. England’s borrowing capabilities were greatly enhanced when the South Sea Company assumed its outstanding debts from creditors in exchange for shares of South Sea stock. South Sea, therefore, received payments on the debts from England and either kept them as added capital or paid them out as dividends to its shareholders. Most importantly, Levenson describes how, after the debts were converted to South Sea shares, the shares were fungible and could be traded, at prevailing prices, on the newly formed Exchange Alley.
As Levenson tells the story, this development of financial markets took place at a time when scientists and mathematicians were starting to quantify actions and risks that had previously been unquantifiable. This quantification could have been used to rationally value the South Sea shares. But, alas, it was not. Levenson’s is a story about people, not numbers. So instead of using available tools to value the stock, the investors acted in response to their greed and emotion. This greed and emotion fueled what became the South Sea Bubble.
Levenson explains how England was able to recover from the ultimate bust of the Bubble and to create workable financial markets. However, he warns that new financial instruments, like the ones that fueled the South Sea Bubble, are constantly being created and that investors, to this day, still find themselves investing based upon their greed and emotion rather than mathematical quantification.
I rated this very informative and entertaining book 4.0 stars. It should appeal to fans of English History. And it is also a good primer for anyone interested in financial markets.
May 9, 2024
This is a story that is worth telling, there is no doubt. I just wish it had been told better.
The South Sea bubble was the "first Great financial scam", resulting in vast losses throughout England and its neighbours, and almost bankrupting the country. Levenson skillfully takes us through the set-up and collapse of the fated scheme. At the end, people end up ruined, exiled or dead. It's a story that could rival the Billions TV series, and contains so many parallels to the GFC and other financial calamities that really beggar belief.
But the story is book-ended by some oddities. Levenson spends the first 4 chapters introducing none other than Isaac Newton and Edmond Halley, describing their talent and discoveries. The thread to follow is that the pending financial machinations were inspired by these Enlightenment thinkers. However while there is probably truth in this, the connection was not so strong for me and this argument could probably have been confined to a prologue.
Levenson then spends a few chapters explaining the aftermath of the South Sea collapse and making an argument that Britain's century-long superiority over the French was due to the rebuilding of its financial system in the aftermath. The case for this also seems sound, but the quality of the writing which makes this argument is not as good as the central story.
The other curious thing about this book is that Levenson makes a segue to the Mississippi Bubble event in France a few years earlier which... Also appears to be the first Great financial scam?? Confusing!
All in all, the meat of the story is fascinating and worth reading. But the book could have been much more focused on this without its exploration of enlightenment thinking and with a more condensed look at the 300-year aftermath of financial innovation. That would be a 5-star book.
As it is, the central story is bordering on essential reading but the method and the message are a bit muddled. 3.5 stars.
The South Sea bubble was the "first Great financial scam", resulting in vast losses throughout England and its neighbours, and almost bankrupting the country. Levenson skillfully takes us through the set-up and collapse of the fated scheme. At the end, people end up ruined, exiled or dead. It's a story that could rival the Billions TV series, and contains so many parallels to the GFC and other financial calamities that really beggar belief.
But the story is book-ended by some oddities. Levenson spends the first 4 chapters introducing none other than Isaac Newton and Edmond Halley, describing their talent and discoveries. The thread to follow is that the pending financial machinations were inspired by these Enlightenment thinkers. However while there is probably truth in this, the connection was not so strong for me and this argument could probably have been confined to a prologue.
Levenson then spends a few chapters explaining the aftermath of the South Sea collapse and making an argument that Britain's century-long superiority over the French was due to the rebuilding of its financial system in the aftermath. The case for this also seems sound, but the quality of the writing which makes this argument is not as good as the central story.
The other curious thing about this book is that Levenson makes a segue to the Mississippi Bubble event in France a few years earlier which... Also appears to be the first Great financial scam?? Confusing!
All in all, the meat of the story is fascinating and worth reading. But the book could have been much more focused on this without its exploration of enlightenment thinking and with a more condensed look at the 300-year aftermath of financial innovation. That would be a 5-star book.
As it is, the central story is bordering on essential reading but the method and the message are a bit muddled. 3.5 stars.
March 9, 2021
What a great story! A romp through English history around 1700, showcasing several disparate characters (yes, all Great White Men) who unwittingly wove together the financial strands that built the Empire upon which the sun never set. In Econ101 I had learned of the first economic bubbles--tulipmania, and the South Sea bubble. The first was based on a product (tulip bulbs); the second, on trading promises. This book treats not of tulips, but of the imaginative development of the tradable stock certificate. Isaac Newton was so much more than a gravity and calculus inventor. What a fertile time for new thinking was 1700! Each chapter of this book describes a different character and his eventual influence on modern thinking. Most of these characters are familiar, but their intertwined involvement is new to us. The author proposes one of the primary reasons for the success of the British empire endeavors of the 17 and 18 hundreds was due to their amazing ability to finance a military and trading enterprise much grander than any other.
This book is a must for any student of British history, or financial history. The narrative is fast-paced and exciting, imagining the fervor of scientific discovery as well as stock market fever! I also note the advances in governmental ethics since that time, wherein we thankfully now have greater expectations of honesty and probity in our representatives. The years 2016-2020 in the US hearkened back to the self-dealing days of yesteryear.
This book is a must for any student of British history, or financial history. The narrative is fast-paced and exciting, imagining the fervor of scientific discovery as well as stock market fever! I also note the advances in governmental ethics since that time, wherein we thankfully now have greater expectations of honesty and probity in our representatives. The years 2016-2020 in the US hearkened back to the self-dealing days of yesteryear.
September 24, 2021
When I told friends that I was reading a book about the South Sea Bubble in 1720, most of them had the reaction of "What?" and then, "When?"
Money for Nothing is Levenson's narrative of the South Sea Bubble and its aftermath, but he uses it as a stand-in for the evolution of financial trickery that heralded a new age of modern capitalism. The South Sea Company was founded in 1711, and its unscrupulous founders and backers used it to consolidated and reduce the cost of the national debt of the United Kingdom. That sort of worked. When they expanded their financial operations in 1720, it all came to a head, with shares going for over £1,000 at one point.
The book does a good job at giving not only an overview of the Bubble, but contextualizing it--the first chapter it set 50 years before the South Sea Company is even founded. Levenson has more of a casual style than I was expecting with amusing asides, but as I listened to it in audiobook format, I'm not sure what he used for his references. That said, he certainly wasn't lacking for sources, as the parliamentary inquiry that occurred after the Bubble collapsed preserved a lot of documents, and notables such as Daniel Defoe and Isaac Newton discussed this time period frequently. (Given the parallels, though, I do wish that Levenson had introduced John Law and the Mississippi Company in France sooner.)
Money for Nothing is Levenson's narrative of the South Sea Bubble and its aftermath, but he uses it as a stand-in for the evolution of financial trickery that heralded a new age of modern capitalism. The South Sea Company was founded in 1711, and its unscrupulous founders and backers used it to consolidated and reduce the cost of the national debt of the United Kingdom. That sort of worked. When they expanded their financial operations in 1720, it all came to a head, with shares going for over £1,000 at one point.
The book does a good job at giving not only an overview of the Bubble, but contextualizing it--the first chapter it set 50 years before the South Sea Company is even founded. Levenson has more of a casual style than I was expecting with amusing asides, but as I listened to it in audiobook format, I'm not sure what he used for his references. That said, he certainly wasn't lacking for sources, as the parliamentary inquiry that occurred after the Bubble collapsed preserved a lot of documents, and notables such as Daniel Defoe and Isaac Newton discussed this time period frequently. (Given the parallels, though, I do wish that Levenson had introduced John Law and the Mississippi Company in France sooner.)
November 12, 2021
This is a wonderful book. I read many history books but not often books which are written so well. The fact about history is that many times it is difficult to see beyond the anecdote, beyond the events themselves. What is hiding there? Was this development inevitable? Was Tolstoy right or, maybe, we can actually read the entire story in the actions of particular individuals? What I liked so much about this book was that it is much more than a book about the South Sea bubble. To be sure, it covers the bubble quite well but actually it is a book about the birth of modern capitalism. The history of England is quite relevant for how democracy appears and develops. This book shows that it is also quite relevant for the birth and development of financial markets and capitalism. I would have never thought that the history of modern capitalism can be as interesting to read as the history of, say, a revolution. The author is also very good and describing how a specific feature appeared and developed organically. I guess I knew the Stock Exchange did not appear exactly how it is now but, somehow, I never thought that its birth can make such an interesting and enlightening story.
August 22, 2024
Very enjoyable take on the first major financial crash
Weaves scientific advance into the story of the first major financial crash in western history, the South Sea Bubble of 1720 and its aftermath. The subsequent crash of 2008 was certainly the great great great grandchild of the South Sea Bubble. The author does a masterful job of setting the scene, narrating the events as the bubble inflated, and describing the aftermath.
He also compares how Britain handled the aftermath with that of France and posits that Britain’s military dominance might well have been achieved partly due to the British Treasury’s superior ability to raise funds in the 18th and early 19th centuries.
However, the author also makes the point that British capital markets and the banking system prevailing until the 19th century was tilted more towards public funding at the expense of the private sector. The pro-private sector institutional contrast with the emerging United States is quite striking.
Certainly recommended as it is written in a very engaging style and was an enjoyable read.
Weaves scientific advance into the story of the first major financial crash in western history, the South Sea Bubble of 1720 and its aftermath. The subsequent crash of 2008 was certainly the great great great grandchild of the South Sea Bubble. The author does a masterful job of setting the scene, narrating the events as the bubble inflated, and describing the aftermath.
He also compares how Britain handled the aftermath with that of France and posits that Britain’s military dominance might well have been achieved partly due to the British Treasury’s superior ability to raise funds in the 18th and early 19th centuries.
However, the author also makes the point that British capital markets and the banking system prevailing until the 19th century was tilted more towards public funding at the expense of the private sector. The pro-private sector institutional contrast with the emerging United States is quite striking.
Certainly recommended as it is written in a very engaging style and was an enjoyable read.
May 17, 2025
Putting together the idea of progress in mathematics with the evolution of financing the growth of empire through bonds is worth reflecting upon, particularly given the comparative study of British and French response to the failure of the South Sea and Mississippi companies respectively. Later economic growth in the USA under democratic governance is also illustrative of the advantages of effective financial markets within the realm of commerce and beyond the needs of government led empire building.
The author identifies the dangers of misunderstanding risk associated with complex derivatives and leveraging - with Lehman Bros effectively imitating the failure of the South Sea bubble - but in the epilogue he glosses over the politics of conservative deficit hawks looking to ignore the benefits of raising capital today to be paid for with future return on investments - essentially the premise of the use of calculus and net present value from Newton’s day!
The author identifies the dangers of misunderstanding risk associated with complex derivatives and leveraging - with Lehman Bros effectively imitating the failure of the South Sea bubble - but in the epilogue he glosses over the politics of conservative deficit hawks looking to ignore the benefits of raising capital today to be paid for with future return on investments - essentially the premise of the use of calculus and net present value from Newton’s day!
February 29, 2024
The South Sea bubble is a fascinating topic that a more capable author would probably have got more out of. Levenson lays the foundations of the incident well by recapping the scientific revolution of the late 17th century and in particular Isaac Newtons role in nudging human thinking towards more abstract concepts that were then implemented in the financial world. He then delves into the events of the bubble year of 1720 in detail, which ends up being too minute and too repetitive. The explanations of the financial engineering performed by the South Sea Company could have been more intuitive. Having spent so much time with Newton initially, Levenson then skates over his dallying with the bubble, including his famous quote "I can calculate the motion of heavenly bodies but not the madness of men", having lost significant sums in the bubble. The fallout of the bubble and how it impacted the fortunes of England's finances thereafter, as well as the link to the Great Financial Crisis was however well drawn out.
October 12, 2020
A great read; engaging and elaborate. Levenson subtly but effectively marries the characters of the 1720 South Sea mania with well-researched details of the financial decisions which took place. As Levenson notes several times, it is easy with hindsight to judge the financial malpractice taking place.
However, we have the luxury of some degree of empiricism from observing such behavior over centuries now, and yet still possess the same human desire for speedy wealth that leads us towards such peril today. We have Newton (and others) to thank for the embedding of that empiricism into our worldviews, but still rely upon our desires, not our rationality to drive us towards action.
Heartily recommend.
However, we have the luxury of some degree of empiricism from observing such behavior over centuries now, and yet still possess the same human desire for speedy wealth that leads us towards such peril today. We have Newton (and others) to thank for the embedding of that empiricism into our worldviews, but still rely upon our desires, not our rationality to drive us towards action.
Heartily recommend.
January 25, 2024
This book was interesting and I certainly learned everything possible about the South Sea Bubble of the early 1700's that I might have EVER wanted to know, but it was way too involved and in depth about economics, finances, and math. This is not a "History" book as advertised: it should have been listed as "Math/Economics." This book would be best in a 300 or 400 level college class, not as a book for popular consumption. It was almost the work of an actuary! My eyes blurred over reading half of this book, and I feel it should have contained a glossary. It was a slog to make it through, and I almost didn't finish - it dragged on that much.
I would not recommend this book unless you are MIGHTILY interested in late 17th and early 18th centuries financials. Not a fun book to read!
I would not recommend this book unless you are MIGHTILY interested in late 17th and early 18th centuries financials. Not a fun book to read!
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