The Mississippi Bubble of 1720: How It Unfolded

The Mississippi Bubble of 1719–1720 was John Law’s attempt to convert France’s war debt into equity in the Company of the Indies, sending company shares from about 250 livres in May 1718 to around 10,000 at the January 1720 peak. This documentary traces the system from Louis XIV’s roughly 2.8 billion-livre debt inheritance through Law’s General Bank, the Louisiana monopoly, successive privilege acquisitions, and the August 1719 conversion of about 1.5 billion livres of government claims into company shares. I walk through the mother-daughter-granddaughter subscriptions, the banknote expansion from about 40 million to 1 billion livres, and the price-support flywheel that created more paper money every time the company bought its own stock. Then the climax: the May 21, 1720 decree that cut shares and notes, its repeal six days later, Law’s dismissal, the July 17 bank suspension, and the 1721 Visa that turned surviving claims back into public debt. I also cover François Velde’s finding that peak shares were overvalued by a factor of 2 to 5, that the company had real monopolies and operations — including participation in the forced transport of enslaved Africans to Louisiana — and that the lesson is institutional credibility, not a proof that paper money can never work.

Chapters
0:00 – May 1720: The Broken Promise
0:37 – France’s Debt and John Law
2:17 – Louisiana and the Company
3:42 – Debt Conversion and the Share Boom
5:30 – Banknotes and the Fatal Flywheel
6:53 – Policy Reversals and Collapse
7:51 – The Cleanup
8:21 – What Failed and the Lesson

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*Disclosure: This is not financial advice and should not be taken as such. The information contained in this video is an opinion. Some of the information could be wrong. This channel is owned and operated by Ryan O’Connell Finance LLC. Some of the links above are affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through and make a purchase.