Mississippi Company

[2] The rise and fall of the company is connected with the activities of the Scottish financier and economist John Law who was then the Controller General of Finances of France.

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.

Rather than reduce spending, the Duke of Orléans, Regent for Louis XV, endorsed the monetary theories of Scottish financier John Law.

In 1716, Law was given a charter for the Banque Royale under which the national debt was assigned to the bank in return for extraordinary privileges.

The key to the Banque Royale agreement was that the national debt would be paid from revenues derived from opening the Mississippi Valley.

Bénard de la Harpe and his party left New Orleans in 1719 to explore the Red River.

[citation needed] The Mississippi Company arranged ships to bring in 800 more settlers, who landed in Louisiana in 1718, doubling the European population.

[citation needed] Prisoners were set free in Paris from September 1719 onwards, and encouraged by Law to marry young women recruited in hospitals.

[16] Law exaggerated the wealth of Louisiana with an effective marketing scheme, which led to wild speculation on the shares of the company in 1719.

[17] In 1720, the bank and company were merged and Law was appointed by Philippe II, Duke of Orléans, then Regent for Louis XV, to be Comptroller General of Finances[18] 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 exceeded the value of the amount of metal coinage it held.