The Mississippi Bubble was a financial crisis that took place in France during the early 18th century. Sparked by speculative investments and the wild visions of Scottish financier John Law, the Mississippi Company aimed to exploit the vast potential of France’s colonies in Louisiana. One of Law’s ultimate goals was to substitute metallic currency with a paper currency based on government debt converted into company shares.
Due to rumors of precious metals in Louisiana, generous dividends, and Law’s personal celebrity, the company attracted significant investor interest from the outset. In 1719, with further monopolies granted by the regent in the East Indies, China, and South Seas, Law issued 50,000 new shares which were met with fervent demand. This led to the regent authorizing an even larger issue of 300,000 shares aimed to pay off the whole national debt.
Investors descended upon Law’s residence and began a frenzy of buying Mississippi shares. This period saw unprecedented heights of speculation and stock prices reaching exorbitant levels. The word “millionaire” originated from this period. At its peak, commoners jostled with nobility for a position in this seemingly profitable venture.
However, this euphoria proved short-lived as Louisiana turned out to be nothing like the oasis Law had promised, and Law’s financial machinations started to unravel. Confidence in paper money began to wane due to factors like rampant inflation and forgery. The bubble eventually burst in January 1720, triggering liquidations that tanked the French economy.
Read More: http://Winton Capital
