JUDY WOODRUFF: Our economics correspondent Paul Solman has spent much of this year trying to make sense of the current financial news of our day. But, tonight, he has a holiday story connected with the economic conditions of another era.
MAN: One, two, three.
PAUL SOLMAN: The Handel and Haydn Society rehearsing "The Messiah" at Boston Symphony Hall.
Artistic director Harry Christophers:
HARRY CHRISTOPHERS, artistic director, Handel and Haydn Society: It's become a holiday piece, hasn't it? You know, every major city, in, fact village, from small town in the states, you all do "Messiah," just as the same as in England. Everybody does it.
PAUL SOLMAN: Everybody does it because everybody else buys tickets. "The Messiah" is a sort of savior of cash-strapped classical music.
WOMAN (singing): Rejoice. Rejoice. Rejoice greatly.
PAUL SOLMAN: In fact, the link between "The Messiah" and money goes back a long ways. It turns out composer George Frideric Handel, whose names means "market" in German, wasn't only a musical wiz, but an entrepreneurial one.
F.M. SCHERER, Harvard University: The dominant pattern in the 17th century, as Handel got started, was, you either worked for the church or you worked for the nobility.
PAUL SOLMAN: Harvard's Mike Scherer has written a classic on classical music and economics: "Quarter Notes and Banknotes." Opera was the road to independence from the patronage of court and clergy, he says.
F.M. SCHERER: And the composers competed as freelances to have their -- compositions chosen to be operas.
PAUL SOLMAN: Handel, on royal retainer in London, jumped into the game, according to MIT musicologist Ellen Harris.
ELLEN HARRIS, MIT: His first opera is "Rinaldo," 1711, and it was a huge hit. He probably would have gotten a flat fee for writing the opera. And that probably was about 200 pounds. And he would have had a benefit night, so he could take the box office from that one night, could have brought in 500, 600 pounds.
PAUL SOLMAN: The currency conversion Web site Measuring Worth calculates that would be something like 800,000 pounds today, well over a million dollars, out of which, however, Handel had to pay most of the expenses of production.
ELLEN HARRIS: Paying for the orchestral musicians, paying for sets, paying for costumes. Opera has never been a really good moneymaker. We know this today.
PAUL SOLMAN: Furthermore, in England back then, it was an art form imported from abroad.
ELLEN HARRIS: And with the importation of opera came the importation of these stupendous singers, both the women singers and the castrati, who had these extraordinarily high voices.
PAUL SOLMAN: Daniel Taylor is neither a castrato, nor a woman, of course, but a countertenor.
ELLEN HARRIS: Their breath control was enormous, and they had large ranges, and they had enormous flexibility, so they could sing these long, long runs. And they were really the superstars of the day.
PAUL SOLMAN: Expensive, and to the English, somewhat off-putting.
HARRY CHRISTOPHERS: The British public didn't like these -- these people who were strutting along and being pain in the necks and everything.
So, Handel, always the businessman, always the opportunist, thought, right, I'm going to solve this one. I'm going to write -- I'm going to change it to oratorio.
PAUL SOLMAN: Oratorios, like "The Messiah," required no sets, no costumes, cheaper singers.
ELLEN HARRIS: He began using exclusively English singers. So, he had a very different cost ratio to his performances. And it's only with the oratorios that he began making really big money.
PAUL SOLMAN: And it's "The Messiah" that marks the turning point.
ELLEN HARRIS: It's with "Messiah" that he goes exclusively to oratorio performance. And he never does another opera after "Messiah."
PAUL SOLMAN: But it wasn't just Handel cashing in that caught our attention. It was the success of Handel, the investor, in the hot-money security of his day, the South Sea Company, formed to help finance the nearly broke English crown.
ELLEN HARRIS: The plan was that they would be largely responsible for transporting African slaves from the African coast to the West Indies or to the colonies.
But that certainly wasn't happening in the 1710s and '20s. And they basically had no capital.
PAUL SOLMAN: What they did have was a promise of future returns somewhere, somehow. So, shares in the South Sea Company were in a sense the mortgage-backed securities of Georgian England. And people mobbed to buy them in London's exchange alley.
ELLEN HARRIS: It's not so different from the kind of dodgy debt that people were investing in here in the past five and 10 years, where there was no there there, and this idea that this was the route to becoming rich quickly. And Handel was as -- you know, he was young. He was an eager beaver. He saw all the upper class doing it.
PAUL SOLMAN: Isaac Newton did it.
ELLEN HARRIS: Everyone did it.
PAUL SOLMAN: Because the securities kept rising in value. Like this lord, sharing his winnings with his servants, Handel, who left London on business, cashed out. Soon after, the South Sea bubble burst. Panic reigned. Investors were dropping like stones. They were under water.
ELLEN HARRIS: And Handel wasn't involved in that, because he got his money out.
PAUL SOLMAN: In the next few years, the South Sea Company, backed by the equivalent of our Fed, reorganized itself, jailing the directors, and creating a new bond issue paying a secure, government-backed 3 to 5 percent for now safety-conscious investors, like George Frideric Handel.
So, does that suggest he sobered up after the bubble burst, and that's why he changed his investment strategy?
ELLEN HARRIS: Yes. He was willing and eager to take a risk, and won early on. And then, when everything fell apart, and the rebuilding process begins, he doesn't hesitate a minute to reinvest in the market, but he uses a more conservative strategy by going for bonds, rather than for stock. And he does that for the rest of his life.
PAUL SOLMAN: But, for all her love of Handel and his investment history, Ellen Harris thinks our use of "The Messiah" to tell you about it might be something of a stretch.
ELLEN HARRIS: It's like saying he lost his popular base of support, and so...
(singing): He was despised, despised and rejected.
But then, he died a rich man.
But, you know, that's not what "The Messiah" is about.
CHORUS (singing): Hallelujah. Hallelujah.
PAUL SOLMAN: To us, however, George Frideric Handel's art and business success is a cause for celebration.
CHORUS (singing): Hallelujah.
F.M. SCHERER: Handel was unusually successful and ended up leaving a fortune on the order of 20,000 pounds sterling, which, in those days, was a lot of money.
PAUL SOLMAN: Many millions, in fact, supporting charities to this very day and setting an example for composers forever after.