John Law's Company

The collapse did not just hit stockholders.

It rippled through banks and credit markets, sparking a banking panic reminiscent of earlier financial crises in Paris, where the infamous Mississippi Company burst.

London's merchants saw their loans called in and their liquidity vanish.

The social consequences were stark.

Had no further steps been taken, it is possible that little mischief might have accrued, but the bank began to speculate.

There was joined to it a company called the Mississippi Company for trading with the French colony of Louisiana, now one of the United States.

It was believed that the profits of this trade would be enormous, and Law represented that if the country obtained a monopoly, the profits should be used to wipe out the whole national debt of France.

A rush was made for the shares of the company, which consequently rose in value until they are said to have reached forty times their original value.

The gambling spirit pervaded the whole nation for a couple of years, at the end of which time the inevitable reaction followed upon the splendid vision of prosperity.

Law, it is said, had issued banknotes for eighty times the value of all the coin in France.

But from the Mississippi Company no profits accrued.

At length a panic set in.

It was a company.

They called it the Mississippi Company.

They were building out something in America.

Europeans lost their mind.

Had no further steps been taken it is possible that little mischief might have accrued, but the bank began to speculate.

There was joined to it a company called the Mississippi Company for trading with the French colony of Louisiana, now one of the United States.

It was believed that the profits of this trade would be enormous, and Law represented that if the country obtained a monopoly the profits should be used to wipe out the whole national debt of France.

A rush was made for the shares of the company, which consequently rose in value until they are said to have reached forty times their original value.

The gambling spirit pervaded the whole nation for a couple of years, at the end of which time the inevitable reaction followed upon the splendid vision of prosperity.

Law, it is said, had issued banknotes for eighty times the value of all the coin in France.

But from the Mississippi Company no profits accrued.

At length a panic set in.

One, people have always been gamblers.

You look back in history, the South Sea bubble, the Mississippi bubble, people trading throughout history, you know.

It goes back to ancient

times.

Across the channel, the Scottish economist John Law had convinced the French government to back paper currency with speculative rights over land and trade in Louisiana, a territory the French technically owned, but virtually nobody had visited.

Law's Mississippi Company became France's equivalent of the South Sea Company.

It collapsed in the same year, and the resulting trauma was so severe that France didn't trust paper banking for another century.

Some historians argue that this long-term poisoning of the French confidence in financial innovation helped set up the social and economic conditions that eventually produced the revolution 69 years later.

I can't think of his first name.

And the point, it goes over the South Sea Bubble and John Law's Mississippi Bubble.

And what you take from that is when these things happen, you have to keep applying new credit.

You have to keep supplying new credit to keep the thing going.

Had no further steps been taken, it is possible that little mischief might have accrued, but the bank began to speculate.

There was joined to it a company called the Mississippi Company for trading with the French colony of Louisiana, now one of the United States.

It was believed that the profits of this trade would be enormous, and Law represented that if the country obtained a monopoly, the profits should be used to wipe out the whole national debt of France.

A rush was made for the shares of the company, which consequently rose in value until they are said to have reached forty times their original value.

The gambling spirit pervaded the whole nation for a couple of years, at the end of which time the inevitable reaction followed upon the splendid vision of prosperity.

Law, it is said, had issued banknotes for eighty times the value of all the coin in France.

But from the Mississippi Company no profits accrued.

At length a panic set in.