The First Stock Operator

John Law one of the most interesting characters of its century, announced its project: The Mississippi Company. Its purpose was to bring back fantastic treasures from Mississippi river. The Mississippi flowed through Louisiana territory, first visited by French explorer & later claimed by French. The French People back home thought Louisiana was another Mexico, rich in gold & silver deposits just waiting to be carried away. Law himself had never been to Mississippi, but he did a convincing sales job to make the public believe that the fantastic story is true.

Like fans at a rock concert, people rushed near Law’s bungalow. Everyone wanted to  buy shares at any cost. Waving their new French money (the Equity shares), they fell over themselves trying to get Law’s representative’s to accept their applications. The price of the shares rose & rose, until Law’s Company was worth more, on paper, then all the gold in circulation. And still the buyers kept coming.

There was hardly a person alive in France who didn’t catch the Mississippi fever and dream of Mississippi gold that didn’t really exist. There was no Wall Street journal to tell them that Law’s scheme had no chance of success. In fact, whenever people questioned him or his company, they were shipped out of town, to distant prisons.

Whenever crowds of people bet their life savings on a hopeless theory, its called a “Mania” or a “Bubble.” The pattern is always the same. Frantic investors pay ridiculous prices in order to get part of opportunity, and sooner or later, the prices come crashing down. After the Mississippi “bubble” burst, people released Law’s company was a sham and Law himself was nothing more than a Financial Wizard of Oz, investors tried to unload their shares and found no buyers. They lost their life savings, the French Economy collapsed, and the banking system collapsed along with it. As quickly as Law had become a French Hero, he became a French corruptor.