But the most absurd and preposterous of all, and which showed, more completely than any other, the utter madness of the people, was one, started by an unknown adventurer, entitled "company for carrying on an undertaking of great advantage, but nobody to know what it is."

Were not the fact stated by scores of credible witnesses, it would be impossible to believe that any person could have been duped by such a project. The man of genius who essayed this bold and successful inroad upon public credulity, merely stated in his prospectus that the required capital was half a million, in five thousand shares of 100 pounds each, deposit 2 pounds per share. Each subscriber, paying his deposit, would be entitled to 100 pounds per annum per share.

How this immense profit was to be obtained, he did not condescend to inform them at that time, but promised, that in a month full particulars should be duly announced, and a call made for the remaining 98 pounds of the subscription. Next morning, at nine o'clock, this great man opened an office in Cornhill. Crowds of people beset his door, and when he shut up at three o'clock, he found that no less than one thousand shares had been subscribed for, and the deposits paid. He was thus, in five hours, the winner of 2,000 pounds. He was philosopher enough to be contented with his venture, and set off the same evening for the Continent.

He was never heard of again.

- Charles Mackay, Extraordinary Popular Delusions And The Madness Of Crowds

NetJ.com and the New Economy

Lest you think this couldn't happen in our time, check out this article about a column by Michael Lewis, in the February 7, 2000 edition of the New York Observer.

The February 7 column concerned a company called NetJ.com. Like a number of failed Australian mining companies which have, without changing their corporate status, made themselves over as dot-coms to better sell their stock, NetJ.com had no real business as a dot-com. In fact, NetJ.com had no business whatsoever - not that this niggling fact kept its stock from increasing seven-fold in late 1999, early 2000.

Assuming the Bloomberg machine was mistaken about NetJ conducting no business whatsoever, Lewis writes, "I went to the documents filed by NetJ.com with the Security and Exchange Commission. There I found the following confession: 'The company is not currently engaged in any substantial business activity and has no plans to engage in any such activity in the foreseeable future.'"

Laughable as it seems, Lewis notes that NetJ.com does what most Internet companies do: raise capital and make up the business as they go along. "That is the beauty of NetJ.com," he observes. "By doing nothing, it has avoided ruling out the possibility of not doing something else."