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The Crash of 1882 and the Bailout of the Paris Bourse

  • Eugene N. White


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

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.

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Article provided by Association Française de Cliométrie (AFC) in its journal Cliometrica, Journal of Historical Economics and Econometric History.

Volume (Year): 1 (2007)
Issue (Month): 2 (July)
Pages: 115-144

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Handle: RePEc:afc:cliome:v:1:y:2007:i:2:p:115-144
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