Exploring the pathways of our lexicon
The "Bubble" That Keeps on Bubbling
"We have to turn the page on the bubble-and-bust mentality," President Obama said in a recent weekly address. After the economic ruin of the housing bubble, it's hard to argue with that sentiment. But "bubbles" have long been with us — the metaphor of the bubble has been applied to fragile financial schemes for nearly three centuries, originating as a literary device.
In my latest "Word on the Street" column for the Wall Street Journal, I explain how many histories of the term bubble in its financial sense start with a poem written by Jonathan Swift in December 1720 soon after the "South Sea Bubble" burst, devastating those who invested in the South Sea Company:
The nation then too late will find,
Computing all their cost and trouble,
Directors' promises but wind,
South Sea at best a mighty bubble.
Digging into a British newspaper archive (the 17th and 18th Century Burney Collection Newspapers, to be precise), I found that bubble had been bubbling up for a year before Swift wrote his poem, during which time not only the South Sea Company but also John Law's Mississippi Company had lured investors with the promise of great returns on trade with North American colonies. These were the two original economic bubbles — some predecessors, notably "tulip mania" in the 1630s, followed a similar boom-and-bust pattern, but they didn't get called "bubbles."
The earliest use of the "bubble" metaphor that I found in the archive appears in the Dec. 12, 1719 issue of The Weekly Journal or Saturday's Post, a newspaper published by Nathaniel Mist, a vocal opponent of the ruling Whig administration. A correspondent known as "Anti Bubble" writes to Mr. Mist about "new bubble," "old bubble," and "hubble bubble," before asking: "Now, good Mr. Journalist, tell us, since Bubbles are so much in Fashion, what Bubble will come upon the Stage next? and how must an honest Man do among them all, that he may not be bubbled out of his Money?"
Strong circumstantial evidence points to "Anti Bubble" being none other than Daniel Defoe, fresh off of writing Robinson Crusoe. Defoe, like Swift and other writers, found much to satirize in the mad rush for profit in "Exchange Alley." He frequently wrote for Mist's Weekly Journal under various pen names, and literary historians point to his use of the "Anti-Bubble" or "Anti-Bubbler" pseudonym in later newspaper items.
The "Anti Bubble" piece evidently inspired a response in another London journal, The Weekly Packet:
To all Old Bubbles, New Bubbles, Hubble-Bubbles, Anti-Bubbles, with the Bubblers, and the Bubbled, by what Name or Title soever known or distinguish'd. Whereas many worth Subscriptions are carrying on for the Publick Good of this good Town...
—Weekly Packet, Dec. 19-26, 1719
The original writer (presumably Defoe) returned to the topic a few weeks later:
It is some Time since I wrote to you about Bubbles, the new Name which I think is deservedly given to our Companies taking in Subscriptions by Millions, for Insurance of Ships, which I gave you some Account of at that Time, by the Names and titles of Old Bubbles, and New Bubbles, &c. Since this, a very happy Experiment has been made upon the Town, to let them see how easy it is in this Age, to bubble Mankind.
—Weekly Journal or Saturday's Post, Jan. 9, 1720
In these early examples, bubble appears in both a new sense as a noun and an older sense as a verb, meaning "to trick, deceive": the sketchy entrepeneurs who created these bubbles could lead someone to be "bubbled out of his money," or could even "bubble Mankind." This verb usage had been percolating for several decades: the earliest citation I've come across appears in Richard Head's 1665 satire The English Rogue: "I met with a person that bubbled me at hazard, not leaving me a penny."
The Oxford English Dictionary suggests that the verb bubble comes from an earlier non-financial use of the word as a noun meaning "anything fragile, unsubstantial, empty, or worthless; a deceptive show," going back to the late 16th century. Given the word's history as both a noun and verb suggesting flimsy, worthless premises, it's little wonder that writers like Defoe and Swift found it to be the perfect figure of speech to describe the speculative frenzies of the day.
A colleague at the Wall Street Journal, Jason Zweig, pointed to a potential literary forerunner in a piece for the Total Return blog last year:
In my opinion, it's entirely possible that a famous passage in Shakespeare's Macbeth – written in 1607 – was inspired by the boom and bust in American joint-stock companies. In Act I, Scene 3, when the three witches, or "weird sisters," disappear before explaining their prophecies, Banquo cries, "The earth hath bubbles, as the water has, and these are of them. Whither are they vanish'd?" Macbeth answers, "Into the air, and what seem'd corporal melted as breath into the wind. Would that they had stay'd!"
Shakespeare, for whom words were always freighted with multiple meanings, could well have intended this passage to draw painful laughs of recognition from the merchants in his audience. Many of these people had likely bought into the joint-stock bubbles that financed the American colonies – including the Virginia Co., which had set a tentative foothold in "Jamestowne" in 1606, just a few months before Macbeth's debut.
I'm not convinced that this Shakespearean "bubble" is in the same lineage as the later bubbles of Defoe and Swift, since there's still no evidence that bubble was understood in a financial sense before 1719. More persuasive is Zweig's suggestion that English bubble might have been modeled on Dutch windhandel, or "dealing in wind," used to describe "trading in securities that weren't in the speculator's possession." More than a century before the South Sea and Mississippi trading companies were causing headaches for British and French investors, there was "wind-trading" (short-selling) of Dutch East India Company stock. Citing a 1688 description of wind-trading on the Amsterdam exchange, Zweig concludes that the image of "pumping up prices by puffing them full of air is the most logical derivation of the financial term 'bubble.'"
In contemporary times, the bubble metaphor has grown more elaborate. We have subtypes of bubbles, such as the echo bubble, when a rally after the popping of a stock-market bubble leads to another, smaller bubble. And now we have modern proverbial wisdom built out of bubbles. Barry Popik's volumnious website includes such financial aphorisms as "A bubble is a bull market in which you don't have a position" and "Bubbles are for bathtubs." Despite Obama's exhortations, I suspect bubble will keep bubbling along.
Update: Ian Preston notes a financial usage of bubble from 1700, two decades before Defoe and Swift used it. The satirist Edward Ward (commonly known as Ned Ward) used the word in an imagined "Dialogue Between the Author and the Printer" at the beginning of Labour in Vain:
Printer. What Title do you design to give this Book?
Author. Labour in Vain: Or, What Signifies Little or Nothing.
Printer. Then I'm like to make a very hopeful Bargain this Morning; and grow Rich like a Jacobite, that would part with his Property, for a Speculative Bubble.
It's hard to know if Ward intended bubble to mean what it would later come to refer to, but it's notable that Ward joined Defoe and Swift in making light of the speculative frenzy of 1720, in a satirical poem entitled "A South-Sea Ballad, Or, Merry Remarks Upon Exchange-Alley Bubbles."
And you can hear more bubble talk in my appearance on WNYC's "The Leonard Lopate Show."