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

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.