IDEAS home Printed from https://ideas.repec.org/a/afc/cliome/v1y2007i2p115-144.html
   My bibliography  Save this article

The Crash of 1882 and the Bailout of the Paris Bourse

Author

Listed:
  • Eugene N. White

    (Department of Economics, Rutgers University and NBER, New Brunswick, NJ 08901, USA)

Abstract

The crash of the French stock market in 1882 presented the Paris Bourse with its worst crisis of the nineteenth century. Its structure was similar in key respects to today’s futures markets, with a dominant forward market leading the Bourse to adopt a common fund to guarantee transactions and liquidity. While this mutualization of risk protects clients and brokers from idiosyncratic shocks, it is generally assumed that it also provides considerable protection against systemic shocks, as no twentieth century exchange has been forced to shut down. Using new archival data, this paper shows how a stock market crash overwhelmed the Bourse’s common fund. Only an emergency loan from the Bank of France, intermediated by the largest banks, prevented a closure of the Bourse.

Suggested Citation

  • Eugene N. White, 2007. "The Crash of 1882 and the Bailout of the Paris Bourse," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 1(2), pages 115-144, July.
    • Handle: RePEc:afc:cliome:v:1:y:2007:i:2:p:115-144
    as

    Download full text from publisher

    File URL: http://www.springerlink.com/content/p23031h12416q8n4/fulltext.pdf
    Download Restriction: no
    File URL: http://www.springerlink.com/content/p23031h12416q8n4/fulltext.html
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Markus K. Brunnermeier & Isabel Schnabel, 2014. "Bubbles and Central Banks: Historical Perspectives," Working Papers 1411, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz, revised 31 Oct 2014.
    2. Hautcoeur, Pierre-Cyrille & Riva, Angelo & White, Eugene N., 2014. "Floating a “lifeboat”: The Banque de France and the crisis of 1889," Journal of Monetary Economics, Elsevier, vol. 65(C), pages 104-119.
    3. Oosterlinck, Kim & Accominotti, Olivier & BRIERE, Marie & Burietz, Aurore & Szafarz, Ariane, 2020. "Did Globalization Kill Contagion?," CEPR Discussion Papers 14395, C.E.P.R. Discussion Papers.
    4. Frederic S. Mishkin & Eugene N. White, 2014. "Unprecedented Actions: The Federal Reserve’s Response to the Global Financial Crisis in Historical Perspective," NBER Working Papers 20737, National Bureau of Economic Research, Inc.
    5. Angelo Riva & Eugene N. White, 2010. "Danger on the Exchange: How Counterparty Risk Was Managed on the Paris Bourse in the Nineteenth Century," NBER Working Papers 15634, National Bureau of Economic Research, Inc.
    6. Riva, Angelo & White, Eugene N., 2011. "Danger on the exchange: How counterparty risk was managed on the Paris exchange in the nineteenth century," Explorations in Economic History, Elsevier, vol. 48(4), pages 478-493.
    7. Andrea Attar & Catherine Casamatta & Arnold Chassagnon & Jean-Paul Décamps, 2019. "Multiple Lenders, Strategic Default, and Covenants," American Economic Journal: Microeconomics, American Economic Association, vol. 11(2), pages 98-130, May.
    8. Guillaume Bazot & Michael D. Bordo & Eric Monnet, 2014. "The Price of Stability: The balance sheet policy of the Banque de France and the Gold Standard (1880-1914)," NBER Working Papers 20554, National Bureau of Economic Research, Inc.
    9. Stefano Ugolini, 2014. "Comment on: “Floating a “lifeboat”: The Banque de France and the crisis of 1889” by P.C. Hautcoeur, A. Riva, and E.N. White," Post-Print hal-01293759, HAL.
    10. Pierre-Cyrille Hautcoeur & Amir Rezaee & Angelo Riva, 2023. "Competition between securities markets: stock exchange industry regulation in the Paris financial center at the turn of the twentieth century," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 17(2), pages 261-299, May.
    11. Calomiris, Charles W. & Flandreau, Marc & Laeven, Luc, 2016. "Political foundations of the lender of last resort: A global historical narrative," Journal of Financial Intermediation, Elsevier, vol. 28(C), pages 48-65.
    12. Raphaël Hekimian, 2017. "The French banking sector during the interwar: What lessons can be drawn from the stock market?," EconomiX Working Papers 2017-3, University of Paris Nanterre, EconomiX.
    13. David le Bris, 2018. "What is a market crash?," Economic History Review, Economic History Society, vol. 71(2), pages 480-505, May.
    14. Bazot, Guillaume & Bordo, Michael D. & Monnet, Eric, 2016. "International shocks and the balance sheet of the Bank of France under the classical gold standard," Explorations in Economic History, Elsevier, vol. 62(C), pages 87-107.
    15. Jérémy Ducros & Angelo Riva, 2014. "The Lyon Stock Exchange: A Struggle for Survival (1866-1914)," PSE Working Papers halshs-00960528, HAL.
    16. Jérémy Ducros & Angelo Riva, 2018. "The Lyon Stock Exchange: The Survival of the Fittest (1866-1914)," Working Papers halshs-01800720, HAL.
    17. Raphaël Hekimian, 2017. "The French banking sector during the interwar: What lessons can be drawn from the stock market?," Working Papers hal-04141670, HAL.

    More about this item

    Keywords

    Stock market crash; Microstructure; Mutualization of risk; Bailout;
    All these keywords.

    JEL classification:

    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:afc:cliome:v:1:y:2007:i:2:p:115-144. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/afcccea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.