The Mississippi Bubble by Charles Mackay - Non fiction - ECONOMICS AUDIOBOOK The Mississippi Company of 1684 became the Company of the West in 1717, and expanded as the Company of the Indies from 1719. This corporation, which held a business monopoly in French colonies in North America and the West Indies, became one of the earliest examples of an economic bubble. In May 1716, the Banque Générale Privée ("General Private Bank"), which developed the use of paper money, was set up by convicted murderer and millionaire gambler John Law. It was a private bank, but three quarters of the capital consisted of government bills and government-accepted notes. In August 1717, he bought the Mississippi Company to help the French colony in Louisiana. In the same year Law conceived a joint stock trading company called the Compagnie d'Occident (or, The Mississippi Company). Law was named the Chief Director of this new company, which was granted a trade monopoly of the West Indies and North America by the French government. The bank became the Banque Royale (Royal Bank) in 1718, meaning the notes were guaranteed by the king, Louis XV of France. The Company absorbed the Compagnie des Indes Orientales, Compagnie de Chine, and other rival trading companies and became the Compagnie Perpetuelle des Indes on 23 May 1719 with a monopoly of commerce on all the seas. Simultaneously, the bank began issuing more notes than it could represent in coinage; this led to an economic inflation, which was eventually followed by a bank run when the value of the new paper currency was halved. The Mississippi Bubble itself. Law exaggerated the wealth of Louisiana with an effective marketing scheme, which led to wild speculation on the shares of the company in 1719. The scheme promised success for the Mississippi Company by combining investor fervour and the wealth of its Louisiana prospects into a sustainable joint-trading company. The popularity of company shares were such that they sparked a need for more paper bank-notes, and when shares generated profits the investors were paid out in paper bank notes. In 1720, the bank and company were united and Law was appointed by Philippe II, Duke of Orleans, then Regent for Louis XV, to be Comptroller General of Finances to attract capital. Law's pioneering note-issuing bank thrived until the French government was forced to admit that the number of paper notes being issued by the Banque Royale were not equal to the amount of metal coinage it held. The "bubble" burst at the end of 1720, when opponents of the financier attempted to convert their notes into specie en masse, forcing the bank to stop payment on its paper notes. By the end of 1720 Philippe d'Orléans, regent of France for Louis XV, had dismissed Law from his positions. Law then fled France for Venice. (Adapted from Wikipedia) Time Chapter Reader 0:00:00 The Mississippi Scheme Part 1 ink tree 0:30:36 The Mississippi Scheme Part 2 MorganScorpion 1:01:37 The Mississippi Scheme Part 3 MorganScorpion Sourced from Librivox

• published: 23 Jan 2014
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