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00:00The Mississippi Bubble. A larger-than-life tale connected to the Scottish economist and businessman
00:04John Law. He served as Comptroller General of Finances under the Duke of Orleans, who was
00:09regent for the then five-year-old King of France, Louis XV. In 1717, Law established the Bank Royale.
00:15The bank had been funded mainly by John Law and baby Louis, and three-quarters of its capital
00:20consisted of government bills, effectively making it the nation's first central bank. Law also
00:24established the Mississippi Company, funded by the bank. The Mississippi Company was a nationalized
00:29monopoly, giving 25 years of exclusive trading rights in North American French colonies. Trading
00:33lucrative minerals, it ushered in an unprecedented period of prosperity for the French. Well, at
00:38least on paper it did. French began taking loans against their exposure to the Mississippi Company,
00:42which was skyrocketing in value. The share price went from about 500 livers to 10,000 in just one
00:47year, and just a year later, it completely collapsed. Law fled France, and the primary shareholder,
00:53the French government, defaulted on its debts, ruining lenders around the world, cementing the
00:57story economists would then coin.
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