Looking back in history, it’s not hard to find examples of business failures.
What makes these six ventures stand out as some of the most disastrous are the heft of their consequences, which include rebellions, countless deaths, incredible floral price inflation, and even two countries uniting.
Business Insider spoke with a number historians and authors about several of these unsuccessful companies and ventures that cropped up between the 14th and 18th centuries.
And while many of them noted that the actual economic damage these historical ventures wrought was typically nothing compared to more modern financial crashes, these companies still went down in history as disasters:
The Medici Bank (1397-1494)
The Palazzo Medici Riccardi
Over the course of its long, opulent history, Florence’s Medici dynasty produced three Popes, two queen regents of France, and a bank that became one of the largest and most powerful financial institutions in Renaissance Europe.
In many ways, the Medici Bank resembled any modern bank. It loaned money, held deposits, and opened branches around Europe under one central holding company. The Economist reports that some of the bank’s innovations included banning loans to notoriously flaky princes and kings and granting each branch manager a stake in the business.
The bank also closely aligned itself with the Vatican. According to the Economist , over half of the bank’s revenue originated from the Pope until 1434. Around that time, the Medici Bank truly began to soar under the leadership of Cosimo de’ Medici. The bank’s dominance in the financial realm allowed the Medici to unofficially seize control of the Republic of Florence.
The Medici Bank was one of the most powerful, internationally-minded institutions of its time. Writing for Forbes , ” The Montefeltro Conspiracy” author Marcello Simonetta discusses Harvard professor Raymond De Roover’s 1963 book ” The Rise and Decline of the Medici Bank ,” which argues that the financial institution heralded the focus on private ownership that came to define modern capitalism.
The Economist highlights the bank’s immense power in Renaissance Italy: “On one occasion, the records show, the bank got the elevation of a cleric to a bishopric delayed until his father, a cardinal (yes), had repaid his own and his son’s debts.”
However, the good times didn’t last forever. Not every head of the Medici family was as savvy as Cosimo. According to Simonetta , after his death, both the bank and the Medici clan began to “overstretch” themselves.This resulted in a thwarted, but ultimately damaging, conspiracy by the rival Pazzi family.
As the heads of the Medici family became less competent over the years, the bank’s influence continued to wane.
Things got so bad that the bank actually began raiding Florence’s treasury — even defrauding a charitable fund devoted toward dowry payments, as de Roover points out in an article for The Journal of Economic History titled ” The Decline of the Medici Bank .”
The Medici Bank finally collapsed in 1494, done in by ineffective leaders, tenuous cash reserves, and France’s invasion of Italy.
Virginia Company (1606-1624)
A reconstruction of the Godspeed, one of the ships that first sailed to Jamestown.
In the 16th century, England began looking outward. The country had become a major commercial power under Queen Elizabeth I, fostering the rise of many large mercantile operations like the East India Company.
In 1606, King James I issued a charter for yet another trade-based, joint-stock venture: the Virginia Company.
Business Insider spoke with ” Land as God Made It ” author and Jamestown Rediscovery Foundation president Dr. James Horn about the rise and fall of the Virginia Company, the business venture behind Jamestown, England’s first permanent settlement in North America.
The Virginia Company attracted major investors, including one of James’s top ministers Robert Cecil, the Earl of Salisbury.
Horn said that the venture was largely driven by two main goals: finding natural resources and precious metals. Products like sassafras, silk, wine, and citrus fruits could make a killing in England and reduce its economic dependence on other European countries. Meanwhile, the English wanted to secure their own source of precious metals — like the Spanish had in Peru and Mexico.
The company was split into two branches, centered in Plymouth and London, respectively.
The Plymouth faction established a colony in present-day Maine, which folded almost immediately. Meanwhile, the the London Company launched an expedition to Virginia in 1607. It got off to a rocky start. For about the first decade, life in Jamestown was marked by disease, starvation, and war with the Powhatan Confederacy.
However, Horn said it’s important not to label the Virginia Company as a poorly organized mess. Before Jamestown, every English settlement in the New World had been eventually lost — Roanoke being the most famous example.
“The people in the company did know what they were doing,” Horn told Business Insider. “They didn’t find what they were looking for — gold, silver, and so on. That shouldn’t surprise us, but it shouldn’t surprise us either that it was considered quite possible that such mines could exist.”
Things began to pick up when tobacco became Virginia’s primary cash crop.
“Tobacco is the real game changer,” Horn says.
However, the explosion in tobacco production also caused rifts within the Virginia Company, with Parliamentarian Edwin Sandys and the Earl of Warwick Robert Rich squabbling over the direction of the colony. The latter led a faction that mostly was just looking for a positive return on investment.
“Sandys was not so hooked on gold and silver at this point,” Horn said.“He’s looking for a mixed economy that would encourage people to become hardworking, prosperous, and involved with the commonwealth in Virginia and England.”
The success of the colony also attracted negative attention from King James, an early critic of tobacco. Relations further crumbled as he sought to form a marriage alliance with Spain — which actively resented England’s presence in the New World.
Mass casualties during the Powhatan Uprising of 1622 helped seal the company’s fate. Within two years, the Crown had dissolved the Virginia Company and seized the settlement as a royal colony.
“What brought the company down ultimately was the politics,” Horn said.
Tulip mania (1636 – 1637)
German tulips in full bloom.
Imagine if a single tulip bulb cost ten times your annual salary.
Well, in 1637, that was the situation in the Netherlands. The country was gripped in a so-called “tulip mania” (which will also be the backdrop of the upcoming period film ” Tulip Fever ,” set to open in February 2017).
Reliable economic data from the time period is somewhat limited, and historians still debate whether or not the phenomenon counts as an early economic bubble.
Business Insider spoke with author Mike Dash about his book ” Tulipomania ,” which documents the floral frenzy. In the 17th century, the Dutch Republic was flourishing after breaking away from Spain and establishing successful trade ventures like the Dutch East India Company.
During this time, the financial prosperity and staunch Calvinist faith of the Netherlands began to intertwine.
“Pretty much the only thing you were allowed to do, in order to show off your wealth, involved things that could be considered the creation of God,” Dash said. “Beautiful flowers are a gift from God. It’s perfectly acceptable to have a beautiful flower garden outside your country house that you can now afford because you’ve become rich from the spice trade.”
Another cultural quirk of the country involved widespread gambling.
“The Dutch were the biggest gamblers in Europe, essentially,” Dash said.“You would find people doing absolutely insanely dangerous things, like taking a bet on the exact appearance of a pillar in Rome and then going to Rome to find out who’s right. The most dramatic example I found involved Dutch soldiers actually stopping in the middle of a battle to take a wager on who was going to win the battle that they were actually fighting in.”
These national interests in betting and horticulture set the stage for the tulip fever. Tulips had only been introduced to Europe around the 1550s.Some were infected with a mosaic virus, which caused petals to burst out in vivid colors and patterns.
“The tulips that we see today are actually only sort of a pale imitation of the types of flowers that were actually around at the time of the tulip mania,” Dash said.
Tulip mania can’t really be considered a business — the bulbs were not traded on the stock market — but rather an economic phenomenon. An interest in tulips trickled down from the wealthiest merchants and began to catch on within the general population. Artisans quit their jobs to sell bulbs.
According to Dash, individuals became wrapped up in the quest to acquire the most beautiful blooms — stealing plants and dousing bulbs in red wine in an attempt to dye the petals. Because tulips take a long time to grow and are difficult to cultivate, the quality of the flowers was often spotty.
The mania swelled for some time. Things finally came to a head in March of 1637.
“To be fair to these people, they had no real conception of how bubbles tend to burst,” Dash said. “As far as they were concerned, this was a commodity where the price had just risen constantly for years and there were — if you don’t understand economics, at least — no obvious reason why it wouldn’t continue to do so.”
Tulip prices began to crash when buyers simply stopped showing up at bulb auctions. By the end of the panic that ensued, the market was gone.
Despite tulip mania’s inclusion in Charles Mackay’s 1841 ” Extraordinary Popular Delusions and the Madness of Crowds ,” Dash said that the fall out has largely been over-dramatized.
In the end, courts stopped hearing tulip-related cases, growers lost a lot of money, and most people just went back to their old jobs — including painter Jan van Gayen, a prolific landscape painter. Dash identifies van Goyen’s experience as a silver lining of the mania — many of his works would not exist had he succeeded in his tulip hustle.
Company of Scotland (1695-1707)
The flag of Scotland.
In 2014, Scotland voted against becoming an independent country.However, in the wake of this year’s Brexit , there are whispers that a second referendum will take place in the future.
How exactly did Scotland and England become welded together in the first place? The union dates back to the turn of the 18th century — and a risky business gamble known as the Darién scheme that drained around a quarter of the Kingdom of Scotland’s liquid assets.
How did Scotland lose around 20% of its money in one fell swoop? Well, the 1690s were a tough time for the country. Famine crept into the land.The 9 Years War raged within its borders. The economy went bust.
Enter the Company of Scotland. Led by trader and banker William Paterson, the venture featured numerous Presbyterian lairds (small landowners) who had recently returned from exile in the Netherlands.Together, they launched a masterful marketing campaign that used poetry and patriotic appeals to raise funds for a Scottish colony in the New World.
“I think the fundraising went well beyond people’s expectations,” ” Price of Scotland ” author Douglas Watt told Business Insider. “The Darién scheme is often perceived as being a disaster but, in fact, the way in which this company was able to raise so much money was very impressive.”
However, this initial success may have set the company up to make overly risky choices later on. Watt describes Paterson as an ideal investment banking figure — excellent at promoting the sale of company shares, but not suited to managing the actual colonial venture.
Without commissioning any sort of advance party, the Company of Scotland sent off its first expedition of around 1,200 people to the New World. Paterson accompanied the 1698 mission. The objective was to colonize the Isthmus of Panama on the Gulf of Darién, an excellent spot to access Caribbean trade.
Once the expedition arrived, things seemed to get off to a positive start.Most of the letters back home painted a picture of an earthly paradise.
“That very quickly gives way to a vision of hell and suffering,” Watt said.
Yellow fever, malaria, and starvation quickly took a toll on the settlers.Neighboring Spanish and English colonies refused to trade with the interlopers. The settlement was deserted, with ships either struggling back home or scattering to ports in the Caribbean. Paterson himself led a desperate flight to New York.
Meanwhile, back in Scotland, the company discovered that one of Paterson’s associates had disappeared with 10% of their capital.
However, the worst was still yet to come. Before news of the bleak situation could even reach home, the Company of Scotland had already launched a re-supply mission and a second expedition in 1699, which both arrived in Panama to discover a deserted settlement. The second attempt also ended in disaster — with the Spanish actually attacking the fort at Darién and forcing the Scots to return home.
“A couple of years after the colony, there was no money left,” Watt said.
As the country learned of the massive loss of life and capital, a blame occurred across Scotland. Riots broke out. Many blamed their southern neighbors for the disaster, as English colonies in the Caribbean had refused to help the Darién settlers on orders of their crown.
The issue of the Darién scheme is often cited as a primary factor in Scotland’s decision to sign into the 1707 Acts of Union. Many members of the Scottish elite had personally invested in the colonial venture. As part of the Acts of Union, England granted a large sum of money to Scotland.
“That can be seen as a big sweetener — or, as you like, bribe — to get that unpopular treaty through the Scottish Parliament and secure the union between Scotland and England,” Watt said.
So, the disastrous Darién scheme was such a drain on Scotland’s economy that it forced the country to unite with England and form Great Britain.
South Sea Company (1711-1853)
At the beginning of the 18th century, England found itself mired in debt from the War of Spanish Succession and the Great Northern War.
That’s how the South Sea Company was conceived in 1711 — as a means of managing national debt and paying back the contractors who supplied the English navy.
“When you buy a share, you’re buying into a stream of low risk, government guaranteed funding but you’ve also got this potential for trading profits on top,” ” The South Sea Bubble ” author Dr. Helen Paul told Business Insider.
That’s because the business model also included holding a monopoly on trade with South America. The company was to increase profits by trading slaves and goods with the Spanish colonies in the Americas — despite the fact that England and Spain were at war until 1713. This proved to be an impossible goal. When war broke out with Spain yet again in 1719, the company’s South American assets were lost and the company became more focused on improving the national debt.
As South Sea Company stocks rose, naive investors began to flood the market.
“Sometimes it’s a good idea to bring in more people to the stock market, but they’re you’re bringing in people with no background to the stock market,” Paul said. “As money is made by some people, that brings in more naive investors and you get overpricing and over-enthusiasm.”
Paul explained that these individuals would gather in “Exchange Alley” — a cramped alleyway between coffee houses and wig makers in London — to trade shares. Ladies who became involved in the stock market would often meet their brokers nearby.
Things reached a boiling point in 1720, when the South Sea Bubble popped.
Paul said that there are many myths surrounding the event, including stories of the economy being thrown into complete chaos and famed scientist Isaac Newtown losing a good amount of money in the bubble.
“You have situations where some people complain that they’ve lost a lot of money,” Paul said. “But we don’t really know about the average investor. We only know about the extreme examples.”
Paul said that the bubble bursting also unleashed an outpouring of prejudice against foreigners, Jews, women, and financiers.
“Financiers were not popular,” she said. “They never had been. There was no understanding of what financiers did. There were religious strictures against it. The landed economy was understood to be the right economy. Finance was wrong.”
Accusations of fraud began to circulate around Parliament. In the ensuing fallout, Chancellor of the Exchequer John Aislabie was tossed into the Tower of London. Paul said that this was more of a symbolic move than anything else; Aislabie survived and retired to his Yorkshire estate Studley Royal, where he developed its now famous water gardens .
“You get a lot of huffing and puffing, politically,” Paul said. “There’s a big outcry. The Bank of England has to step in to steady the situation. But there’s also a lot of political theater… really, most people don’t understand what’s actually happened. It’s a bit like now.”
She said that there’s not much evidence to indicate that the bubble caused a widespread economic crash: “Because the stock market was not so embedded in the wider economy, it’s not a devastating crash, like we’ve experienced recently. But any bursting of a bubble would panic some people.”
Believe it or not, the company actually survived the bubble for over a hundred years, eventually diving into the whaling business. While the company did cause a political fiasco, Paul argues that our memory of the crash over-exaggerates its lasting impact.
“People were furious to have lost money when, in some senses, that is the nature of the game,” Paul said. “When you put money into the stock market, you have to accept that things can go wrong.”
The Company of the West (1717-1731)
Unlike some of the other companies on this list, this final venture’s rise and fall mostly centers around one intriguing figure — John Law, an economist, banker, and finance minister of France who inadvertently wrecked the country’s economy.
Business Insider spoke with the Federal Reserve Bank of Chicago’s senior economist and research advisor François Velde, who has written about Law and his theories .
Born in 1671 to an Edinburgh family of bankers, Law’s early life reads a bit like a picaresque story. At the age of 23, he impaled another dandy in a duel. After being jailed, sentenced to hang, released, and then rearrested at the behest of the deceased’s family, Law escaped prison.
“It’s hard to follow him in the 20 years that followed but he seems to be bouncing around Europe,” Velde told Business Insider.
But the Scottish fugitive wasn’t just aimlessly stumbling across the continent. He was attempting to secure a charter and launch his own bank.
Law finally received his shot in Paris, just as the expensive War of Spanish Succession wrapped up. Faced with a devastating national debt and a stagnant economy, the Duke of Orléans — the regent for King Louis XV — needed to take drastic action.
Law provided him with a plan. He wasn’t simply seeking a bank charter — he was looking for a new way to run the economy.
“He was supporting his proposals with theoretical arguments,” Velde said. “He was an economist — that wasn’t a profession at the time.”
Law’s 1705 book ” Money and Trade Considered ” laid out several innovative theories, including the idea that a monetary system based on bank-issued notes was superior to one based on gold and silver coins.Nowadays, Velde said that Law is considered a proto-Keynesian by some.
“Reactions to him were polarized,” Velde said. “Either people disliked him very much and thought his theories were too abstract and dangerous, or they were easily seduced by him.”
Fortunately for Law, the Duke of Orléans fell into the latter category.
In May 1716, Law established the Banque Générale Privée (“General Private Bank”), which issued paper bank notes, made loans to business, and was financed through share offerings.
Next, Law purchased the Mississippi Company and rebranded it the Company of the West. He envisioned the venture as a joint-stock trading company that would focus on developing the French colony of Louisiana.The Company of the West acquired a monopoly on tobacco and trade with North America and the West Indies.
As the Company of the West acquired more businesses and saw its shares rise, a bubble began to form.
Meanwhile, Law’s bank went national and merged with the Company of the West in the summer of 1719. Law was appointed France’s financial minister the next year.
That’s when the banker began to run into trouble. Law began selling shares of the company to the public for state-issued public securities.
“He ends up pegging the price of the share at an unrealistically high level,” Velde said. “That was his big mistake. So people start selling their shares massively and turning them into notes. The quantity of money starts exploding. He’s basically lost control over the quantity of money.”
Foreign exchanges collapsed and inflation set in. Law began forcing individuals to exchange all their gold and silver coins in for notes. It wasn’t enough to prop up the demand for currency. Law then slashed the value of the notes, completely dissipating any confidence in the currency.
“That’s the point from which everything unravels,” Velde said. “Law is actually thrown in jail for a few days after that. Then the regent realizes that the only person who can get them out of that mess is the person who put them into it. He brings back John Law and essentially tells him, ‘Okay, save the system, somehow.'”
Law tried to fix the mess by reissuing government debt, buying up paper, and selling more shares in the Company. But in the end, the Company fell apart and the price of shares collapsed. By December of 1720, Law was forced to flee France.
When it comes to the immediate impact of the so-called Mississippi bubble, there’s not much data to examine, according to Velde.
“It may be that financial development was held back in France, but there were many other factors as well,” Velde said.
In the years that followed, France was forced to restructure its debt once more. Against all odds, the Company of the West actually survived the collapse, up until the end of the Seven Years War.
Velde said that it’s important to recognize that the so-called Mississippi bubble was different than other historical bubbles.
“This was not just a market where suddenly people just started bidding up the price of this or that share,” Velde said. “This was a big operation involving the government restructuring the national debt. John Law became minister of finance in 1720. At the apex of this operation, he was extremely powerful. He was director of the company and the minister of finance.”