Dear all,

As far as the 1720 speculative bubbles (John Law system collapse and 
the South Sea Bubble) are concerned, the analysis of James Steuart 
(1767) seems remarkable.

In contrast to most contemporary writers - particularly David Hume 
and Adam Smith - Steuart had a balanced opinion about these two 
financial experiments. He considered them worthwhile, since they were 
attempts at public debt restructuring by reducing its expense and 
increasing its liquidity. According to this author, on one hand, a 
well managed public debt (a liquid public debt) creates favourable 
macro-economic conditions for the development of banking activity and 
direct financing; on the other hand, if the credit and financial 
markets run smoothly, this contributes to the liquidity of the public 
debt and to state solvency

For Steuart, the failure of these two financial experiments is rather 
due to a mismanagement of currency, a violation of credit rules and 
the adoption of contestable dividend and financial information policy.

I am submitting a paper entitled "Public Credit and liquidity in 
James Steuart's Principles" to the next ESHET conference that 
precisely examines this question.

Best regards

Nesrine Bentemessek