This year, the ICF is looking back at the South Sea Bubble of 1720 which was the first global financial bubble that occurred 300 years ago in Paris, London and the Netherlands. On our South Sea Bubble 1720 project website, we share newspaper clippings from the Leydse Courant, a Dutch newspaper published in the 1720's, which documents some of the economic news at the time and the historical moments of the financial bubble from November 20, 1719 through December 31, 1721.
Many of the things that happened during the 1720 bubble, such as illness and food shortages, mimic what is occurring today during the Covid-19 pandemic which is currently causing worldwide economic duress.
On this date 300 years ago: 22 April 1720. Paris, France.
Below we share a newspaper clipping about the news in Paris from the 22 April 1720 edition of the Leydse Courant in which John Law specified he would treat depositors equally, so he suspended convertibility. Meanwhile the French were struggling with inflation.
Paris, April 22. Yesterday the convertibility and payment of bank letters in cash was ended. The previous days so many were paid that there were fears of exhaustion of the treasury. There is a suspicion that considerable sums are secretly mobilized to obstruct the operations of the bank. It is said that Mr. Law indicated that the operation of his system would stall, being a sequence of various operations focused on a single cause, and that he being a supporter of uniformity, was seen to not to implement his decisions and undo like his predecessors.
Marquisinne of Simiane is dangerously ill with chicken pox.
High food prices continue. Because of the regulation that bans the slaughter of lams and calves, the price of capons has increased so much that one has to pay 25 ecus for a dozen. Other poultry and game has proportionally risen in price. One expects these price increases to persist for 4 or 5 more months.
Click here for more information about the South Sea Bubble of 1720 project housed on the ICF’s website.
For the financial history enthusiasts: the Yale ICF will tweet various newspaper clippings and information about the South Sea Bubble of 1720 throughout the year. Check out our hashtag: #ICF_FinancialHistoryFriday for more!
Frehen, Rik and Goetzmann, William N. and Rouwenhorst, K. Geert, New Evidence on the First Financial Bubble (July 27, 2012). Journal of Financial Economics, Volume 108, Issue 3, June 2013, Pages 585-607. Available at SSRN: https://ssrn.com/abstract=1371007