Perhaps the best place to begin our selective history of business logistics, and logistical thought, is with the tale of one of the first and, arguably, the most spectacular business failure in modern history: the South Sea Bubble.

The South Sea Bubble — which, like many bubbles, including the recent much-discussed dot.com Bubble, was attributable to a combination of logistical ignorance, hubris, and downright fraud — is the name history has given to the volcano-like failure of the world’s first great international trading company and wholesaler, the South Sea Trading Company. Founded by Robert Harley, an enterprising London businessman, the company gained immediate fame when, in 1711, he and his partners managed to persuade the British government, then deeply in debt, to give them a monopoly over certain of Britain’s lucrative trade routes with South America and the South Sea Islands in return for assuming the bulk of that debt, which then stood at more than 10 million pounds, in addition to an annual payment to the Crown of 600,000 pounds.

Thus blessed, enriched, and glamorized, the chartered company, and its small fleet of ships became a provisioner to England of diverse South Sea spices, South American fruit and tobacco, and all sorts of other exotic, and expensive, stuff. In this way, it also became, one could say, the world’s first brand name. The hype surrounding the company grew even bigger in 1718 when the king himself became governor of the company, creating new confidence in the enterprise, which yielded its initial investors returns reminiscent of the dot.com Bubble. The American colonists fell under the company’s magic spell just as readily as did their fellow subjects back home in England. The South Sea Company was the company. If you were a Boston or New York merchant and you ordered something from the South Sea Company, you could rely on it delivering the goods on time, give or take a week or two, allowing for the moods of the seas. Somewhere in the middle of the growing bubble of misinformation and hype around the company, there was a company.

With that sort of reputation, in addition to the very sight of the company’s original directors reveling in their new-found lucre, other investors soon became interested in getting in on what seemed like a sure thing. In 1719, eight years after the company was chartered, they got their chance when His Majesty’s government approved a further agreement under which the government’s creditors could exchange their claims on the Crown in return for stock in the famous firm, which had continued to prosper, although that prosperity now, too, was also considerably buttressed by speculation. A swarm of such creditors rushed to buy stock. They were joined by a large number of ordinary citizens in Britain and the American colonies, who hitched their dreams to its colors, thereby pushing the value of South Sea stock from 128.5 to 1,000 pounds in a matter of months. The frenzy was on.

Unfortunately, these hapless investors were, by now, largely banking on a phantom. Unbeknownst to the public, as a result of a combination of bad seas, poor communications, along with a generous helping of mismanagement and malfeasance, the company’s once relatively reliable system for the purchase and delivery of its cornucopia of goods had also broken down. By the time anyone realized the extent of the logistical, bad information bubble, which now fed into the speculative bad information bubble, it was too late to do anything about it.

Of course, if the company had had a few Pagonis-like Ghostbusters in its employ, and the British government, which had chartered the company, had had a proper stock control apparatus, both types of bad information at the South Sea bubble could have been avoided. A telegraph system also might have helped. As it was, the fastest means of communicating a problem in a global company in those days was via ship, which, alas, wasn’t very fast. Still, buyers and suppliers on both sides of the Atlantic, blithely unaware of the logistical rot at the heart of the company—as well as the increasing corruption surrounding it—continued to place their orders with the company, and purchased stock in it. And so the bubble grew and grew.

The fledgling London press, then at the start of its scandal-mongering days, eagerly rushed into the information breach, and reported the true state of the company’s affairs. Although some of the company’s original investors—as well as a number of corrupt government ministers—managed to enrich themselves, most wound up losing their investment. Many were left in ruins; some committed suicide. In the wake of the bubble burst, the House of Commons was forced to convene an official court of inquiry into the sordid affairs. Its scathing report, which was issued in 1721, attributed the fiasco to a combination of greed, gullibility—and bad information. The South Sea Company itself, which continued to sail the seas until the mid-19th century, was allowed to retain its charter, but only after completely revising its way of operations, including its logistical reporting procedures. However the system, as well as the idea, of having chartered companies had been gravely weakened.