Adam Smith’s postmortem of the South Sea Company

Thus far this week (see here and here), we have seen Adam Smith’s survey of two historic overseas trading firms organized as joint-stock companies: the Royal African and Hudson’s Bay companies. Today, we turn to Smith’s survey of the ill-fated South Sea Company. Smith devotes four paragraphs to this infamous chapter in the history of mercantilism: paragraphs 22 to 25 of the last part of his 1784 pamphlet (Part #13). Smith begins his survey of the ill-fated South Sea Co. (para. 22) by telling us what he is not going to do — he is not going to rehash the “knavery and extravagance” that led to the so-called South Sea bubble: “The knavery and extravagance of their stock-jobbing projects are sufficiently known, and the explication of them would be foreign to the present subject.” (Smith 1784, p. 63) Instead, the Scottish scholar is going to provide what he thinks was the root cause of the collapse of the South Sea Company: “The South Sea Company never had any forts or garrisons to…