The 1719-20 stock euphoria: a pan-European perspective

Stefano Condorelli

MPRA Paper from University Library of Munich, Germany

Abstract: The French Mississippi Bubble, British South Sea Bubble and Dutch Windhandel were part of a 1719-20 pan-European equity boom that involved many more countries than hitherto thought. Drawing on extensive archival research, the paper establishes that speculation and stock euphoria spanned from Portugal to Russia, and from Sicily to Sweden. As such, it demonstrates that 1720 European financial markets were largely driven by common forces. Comparing all the projects (successful or unsuccessful) for joint-stock companies promoted around 1720, the paper underlines three aspects that shed new light on this first transnational financial bubble. First, these projects bring to the fore a two-speed Europe: while the most advanced economies focused on innovative business sectors (in particular marine insurance), the least developed were catching up with a model that was more than one century old, namely the privileged company for long-distance trade and colonization. Second, French and British experiments with public debt engineering (that fuelled the Mississippi and South Sea Bubbles) were emulated throughout Europe; in almost every country there were schemes geared to improving public finances. Third, the timing of the global equity boom was more diachronic than previously thought, suggesting that contemporaries did not expect that a stock market crash somewhere should necessarily generate a contagion effect.

Keywords: Financial history; early modern history; European economic integration; South Sea Bubble; Mississippi Bubble; financial crisis synchronicity; joint-stock companies; public debt-for-equity swap; marine insurance; long-distance trade; financial innovation. (search for similar items in EconPapers)
JEL-codes: F31 F36 G01 G15 H63 M13 N23 N43 (search for similar items in EconPapers)
Date: 2014-07, Revised 2015-12
New Economics Papers: this item is included in nep-his
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://mpra.ub.uni-muenchen.de/82821/1/MPRA_paper_82821.pdf revised version (application/pdf)

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