Mississippi Bubble

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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The event is now known as the Mississippi bubble, and was one of the first examples of a financial bubble.
Shih compared the rapid inflation of Bitcoin to famous historic economic bubbles, like Tulip mania, the Mississippi Bubble, the South Sea Bubble, and the Dotcom Bubble, and stated that if the Bitcoin bubble bursts it may be the largest bubble to ever pop in history.
Famous historical examples are the Dutch Tulip Mania (1634-7), the Mississippi Bubble (1719-20), the South Sea Bubble (1720) and the Roaring 20s that preceded the 1929 crash.
In 1716, John Law organized France's Mississippi bubble along the same lines, retiring France's public debt by selling shares to create slave-stocked plantations in the Louisiana territories.
In France, John Law's Mississippi Bubble led to a speculative mania and a spectacular collapse that bankrupted thousands and drove the monarchy, once and for all, away from efforts to establish public credit.
This Commentary explains the two schools of thought and shows how both can describe a famous historical episode known as the Mississippi bubble.
Then, a century later, thousands of Frenchmen lost their savings in what became known as the "Mississippi Bubble," a scheme that promised investors unbelievable riches from huge gold and silver deposits in Louisiana and from out of the Arkansas River which was said to contain a fabulous emerald rock.
At present, his research in financial history includes one project on capital movements during the South Sea and Mississippi Bubble episodes and another on the micro-structure of stock markets in the nineteenth century.
It bids fair to make the tulip mania and the Mississippi bubble look like temporary blips on an otherwise sound financial scene.
A representative sample must stand in for all of their brethren: John Law's Mississippi Bubble; the Boston Ponzi scheme; the IOS affair of the 1970s; and BCCI.
In 1720 the South Sea Bubble collapsed in Great Britain, while in France, the Mississippi Bubble did the same.
The Mississippi Bubble, or Mississippi Scheme, devised by John Law to promote and finance French colonization in Louisiana ruined thousands of investors.
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