Exorcising the Ghosts of Racial Capitalism from the South Sea Bubble: Pent-up Racist Liquidity and the Recent Four-Year Stock Surge

“Racial Capitalism”:

The development, organization, and expansion of capitalist society pursued essentially racial directions, so too did social ideology. As a material force, then, it could be expected that racialism would inevitably permeate the social structures emergent from capitalism. I have used the term “racial capitalism” to refer to this development and to the subsequent structure as historical agency.

— Cedric Robinson, Black Marxism: The Making of the Black Radical Tradition¹

“Liquidity”:

The Interchangeability of assets and money (OED definition d), viz:

“The liquidity of the Bank of England is secured by its Power of printing notes, and the interchangeability of its Deposits with cash is absolute”

(R.G. Hawtrey, Currency and Credit)

This special issue of Eighteenth-Century Studies commemorates the 300^th anniversary of the Mississippi and South Sea Bubbles, failed investment schemes in France and Britain, the bailouts for which had begun in Fall 1720.² These separate national fiscal schemes are important to consider together; as Trevor Jackson writes herein, “the bubbles in Paris and London were linked by practices, people, and capital into a single financial event, with repercussions from Louisiana to Lisbon to Leipzig” (33). This event is topical in our present time because it is the central founding moment in “racial capitalism” in the English-speaking world, as the assets of the corporations at the center of the financial gambling, the Mississippi Company and the South Sea Company, were in the slave trade and speculation in colonized lands. The South Sea Company’s monopoly over that trade, for its part, had been designed by the Treaty of Utrecht of 1713–1714, which settled the War of the Spanish Succession (1701–1714) and ceded Britain the sole right (the “Asiento”) to trade slaves from Africa to Spanish and Portuguese America. The asiento system had been the Spanish practice of the crown granting such monopolies in exchange for short-term loans for state financing from merchants and bankers. What Britain did in 1720 was not so different. England imitated Spain in that the South Sea Act of March was intended to allow private holders of British government bonds and annuities to convert those state financial assets into shares in the private South Sea Company in what we would now call a “debt for equity swap.” Given that British government debt had ballooned due to a military spending binge since 1688, it could be said that what John Brewer calls the “fiscal-military state” and the slave trade—the two great engines of the Atlantic economy—were being united in 1720.³

The stock certificates of the Company and other speculative ventures created what David Liss has called “a conspiracy of paper”—the prolific circulation of inscribed words and numbers backed by one material asset: the bodies of enslaved persons.⁴ As I have written elsewhere, it was not uncommon in the British Atlantic world for paper currencies and other financial documents to have been backed by a “gold standard” consisting of people.⁵ Stock certificates and other forms of paper value at the time were therefore like the “mortgage-backed securities” of the 2008 Financial Crisis that counted on the ever-increasing value of land as the asset supporting the propagation of such paper. Speculators in the slave trade thought that this asset could only go up in value given that the Atlantic economy was centrally dependent on slave labor, and bought South Sea stock on the basis of this barbaric confidence. Stock certificates, as a genre of what Catherine Ingrassia, Mary Poovey, and others have termed “paper credit,” were therefore both a monetization of the national debt and slave-backed private currency.⁶ Their circulation and eventual devaluation, however, functioned to decrease monetary liquidity across the Atlantic world in the Bubble’s decade-long disastrous aftermath. The loss of circulating coin led to the development of colonial paper currencies, some of which were backed by the bodies of the enslaved, and to theories of what money “is” by George Berkeley, Benjamin Franklin, and many others...