However, it created the first stock bubble, which had great implications for French history when it burst. Ferguson explains how a Scot named John Law brought the idea to France in the early-18th century and, for a time, had great success with his Mississippi Company. Chapter 3 begins with a definition of stock market bubbles before describing the creation of the first joint-stock company in the Netherlands in order to fund risky trading expeditions by sea during the 17th century. To end Chapter 2, he discusses their role in post-World War I Germany and in the economic crisis in Argentina in the late 20th century.
Ferguson highlights the important role bonds played in the defeat of Napoleon Bonaparte of France and the defeat of the Confederacy during the US Civil War. Like credit, bonds began in northern Italy, where they were first used by governments to fund wars. Ferguson ends the chapter with the evolution of banking in the UK and the US during the 19th and early 20th centuries.Ĭhapter 2 gives an overview of the rise and development of bonds Chapter 3 does the same for stocks. Important innovations to the banking system made in northern Europe (the Netherlands, Sweden, and England) are discussed next. He then turns to the rise of credit in the 13th century and of banking in the following century, both in the city-states of northern Italy. Ferguson relates the history of the Spanish conquistadors and their defeat of the Incan Empire in the 16th century, resulting in Spain’s access to vast quantities of gold and silver for use as money. Chapter 1 discusses the nature of money and the rise of banking and credit.
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