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Mississippi Bubble
(redirected from Mississippi Company)

   Also found in: Encyclopedia, Wikipedia 0.01 sec.
Mississippi Bubble
An 18th-century speculative bubble resulting from the Mississippi Company, which had a charter from the King of France for overseas trade with the Louisiana Territory and elsewhere. The Company's founder, John Law, promoted the trade of the stock, which was guaranteed indirectly by the King. The company issued notes (through the Banque Royale) until the government admitted it did not have sufficient coinage to cover the notes it had printed. This resulted in a bank run and the burst of the bubble in 1720. The Mississippi bubble was one of the first times a bank issued paper money.


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Ferguson points out that the first financial "bubble" burst nearly 300 years ago, when John Law, a Scot who mishandled finance for France, helped plant the seeds for the infamous French Revolution through an enterprise in the swamps of our southern United States (then a French territory) known as the Mississippi Company.
Even though the book appears to have been completed at least six months ago, by examining the equity markets and the asset price bubbles that have punctuated their history-from John Law's Mississippi Company and "the bubble that launched the 18th century" to Kenneth Lay, who authored the scandalous Enron saga-"the bubble that ended the 20th century", Ferguson explores the herd instinct.
Law kept issuing shares in the Mississippi Company to investors, who snapped them up with money lent to them by Law through the Banque Royale.
 
 
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