=178. Dangers of the new system of business; promotion of unprofitable enterprises.=—The appeal of joint stock companies to the public through the medium of the stock exchange proved to be so effective in gathering capital that a great many worthless undertakings were floated. When times were good, that is, when enterprises had proved successful, when people had saved money for investment and looked with confidence to the future, almost anything in the shape of a company could get subscribers to its stock. The reader should note that there were two sides, one good and one bad, to the new methods by which commerce was being developed. The facility of getting capital from a great number of subscribers made possible more and larger undertakings than had been known before, and was an unmixed benefit when the new undertakings were devised to fill a real need of society. There was, however, a separation before unknown between the subscriber and the undertaking; the contributor of capital might be entirely ignorant of the economic basis of the enterprise, and might sink his money for a return which came late or not at all. There was thus a chance for the diversion of the capital of society to worthless purposes; the business organization had become more powerful, but at the same time more delicate and subject to derangement. We find in this period the beginning of commercial crises marked by the misdirection of invested capital, disappointment of investors, and distrust and lethargy, until spirits rose with the recovery of lost ground, and good times began again. =179. Description of the “Bubble Period” in England.=—Commercial crises occurred in all of the advanced countries during this period. We shall not, however, attempt an enumeration of them here, but shall use the available space for a description of the most important crisis, that which affected both England and France about 1720. The crisis in England was closely connected with the course of the South Sea Company, which had been established in 1711 as a trading corporation. The company had secured the right to export slaves to the Spanish colonies, had developed a promising whale-fishery, and was thought to be a large and flourishing concern. It was then transformed into a financial company, with the bold plan of assuming the whole national debt, for which it made extravagant offers. “The large sum offered by the company, which made success impossible, stimulated the imaginations of the people, who fancied that a privilege so dearly purchased must be of inestimable value, and the complication of credulity and dishonesty, of ignorance and avarice, threw England into what it is scarcely an exaggeration to term a positive frenzy.”