The Crown Prince of France - Chapter 51

Chapter 51: The Paris Angel Company Goes Public

In 1717, the legendary financial magnate John Law founded the Mississippi Company to address France's colossal debt. He secured exclusive rights to manage the Louisiana colony from the French government, and soon after, the company began issuing stock.

Rumors of abundant gold mines in the Mississippi River Valley, coupled with the company obtaining operational rights for more French overseas colonies, led to skyrocketing stock prices.

From an initial offering of 500 livres per share, the price soared to nearly 20,000 livres at its peak. Yes, you read that correctly—up by fortyfold! John Law believed he had found the solution to France’s 1.5 billion livres of debt. Starting in 1719, he issued five rounds of additional stock and utilized the soaring stock prices, in conjunction with the Royal Bank’s issuance of paper currency, to ostensibly clear France’s debt in one swoop.

Of course, it was impossible to amass 1.5 billion livres in profit within three years; the entire sum was built on a stock market bubble.

By 1720, as prospectors returned empty-handed, the myth of Mississippi gold mines unraveled, triggering a collapse in the Mississippi Company's stock prices. Panic-selling ensued, and the stock plummeted to below 200 livres per share.

The French Regent, the Duke of Orléans, hastily revoked all the Mississippi Company’s privileges. The company went bankrupt, and billions of livres in bubble wealth vanished overnight—a sum equivalent to more than thirty years of France’s fiscal revenues at the time.

Countless investors who had purchased Mississippi Company stock were ruined, plunging France into a severe economic crisis. Commerce and industry ground to a halt, leaving only agriculture clinging to life. This crisis laid the foundation for the subsequent rise of physiocracy in France.

John Law fled to Brussels, leaving chaos in his wake, and it took France decades to recover.

Around the same time, a similar debacle—the South Sea Company bubble—occurred in Britain. The British government responded by passing the Bubble Act, which strictly regulated public stock sales.

France followed suit, requiring all public stock offerings to be approved by the Cabinet and signed by the King, making it extremely difficult to list a company. On average, only one company was approved every decade, under rigorous scrutiny.

But none of this posed an obstacle for Joseph.

The Ministers of Finance and the Interior were already beneficiaries of the Paris Angel Company’s stock. The King and Queen themselves were also personally involved.

Joseph had further assured the Cabinet that the Paris Angel Company’s stock price would not exceed 30% above its actual value, public offerings would not surpass 40% of the total equity, and the company would buy back shares to stabilize the price if it fell below a certain threshold.

With these guarantees eliminating financial risks, Louis XVI swiftly approved the proposal for the Paris Angel Company to go public.

Joseph had also left room for maneuver. After all, who determined the company’s actual value? A single store with daily sales of 12,000 livres could reasonably be valued at 500,000 livres, couldn’t it? With this rationale, the entire Paris Angel Company could easily be appraised at tens of millions of livres.

However, Joseph had no intention of recklessly overexploiting the market. Disrupting the stock exchange would harm everyone involved.

After all, the Industrial Revolution required vast amounts of capital. A healthy stock market was essential for industrial growth.

Moreover, if another Mississippi Company-like disaster occurred, the Revolution might arrive prematurely.

...

In front of the Paris City Hall, a stage about half a man’s height had been erected.

The platform was adorned with colorful ribbons and wreaths, resembling a festival celebration. A banner at the top proclaimed: “Paris Angel Company Stock Offering.”

Chairs filled the area surrounding the stage. On the platform stood counters for stock brokers and representatives from various banks to facilitate transactions.

The most prominent feature was a massive, smooth wooden board on the left, engraved at the top with the words "Transaction Records," where trade data would be displayed.

The entire venue covered an area equivalent to two modern football fields.

Due to John Law’s infamous maneuvers, the French had grown wary of stock trading. Securities exchanges had become desolate, with their spaces deteriorating and shrinking over the decades.

Joseph had therefore chosen to hold the event outdoors in front of City Hall.

At 10 a.m., with the sound of a ceremonial fanfare, flower petals were scattered from above as Brent stepped onto the stage and announced loudly: “The Paris Angel Company officially begins its public stock offering! Anyone is welcome to invest here.”

An assistant immediately displayed the royal decree permitting the stock offering.

One by one, officials from the Paris City Hall ascended the stage to deliver congratulatory speeches on the company’s listing.

The eager investors, however, could no longer contain themselves. Ignoring the speeches, they surged toward the counters, shouting their desired stock quantities to the brokers. Brent himself was nearly toppled by the crowd.

This scene had not been witnessed in France for decades. Even during stock offerings by major banks, public participation had been cautious, with few buyers.

The Paris Angel Company, however, had thoroughly prepared. Newspapers blanketed the city with advertisements. Their stores, bustling with renovations, had become a common sight throughout Paris.

Just yesterday, three new stores opened simultaneously in Paris, attracting overwhelming crowds. Countless noblewomen and young ladies left the shops clutching their purchases, their faces glowing with excitement and satisfaction.

Rumors abounded that even more stores were opening in cities like Reims and Marseille, with plans for expansion to England.

Moreover, the Paris Angel Company promised to buy back shares if prices fell below 80% of the offering price and to ensure that prices would not exceed 30% of the company’s actual value.

Everything pointed to the Paris Angel Company as a bubble-free, risk-free investment!

Seeing the bustling business of their stores, investors were convinced that dividends would be generous. They saw the stock as a rare opportunity—one not to be missed.

Soon, a securities employee recorded the first transaction on the wooden board:

Purchase: Paris Angel Company, 2 livres, 30 shares, total 60 livres.

The second transaction followed:

Purchase: Paris Angel Company, 2 livres, 105 shares, total 210 livres.

Then came the third, fourth, and fifth transactions…

To maintain order, the Paris Police Department dispatched over sixty officers to the scene. This barely prevented chaos. Meanwhile, reporters gawked at the astonishing scene, jotting down every detail.

...

By 9 p.m., Brent and the Crown Prince’s personal accountant arrived excitedly at the Palace of Versailles.

In Joseph’s reception hall, Brent, his hands trembling, handed over a statement from the stock exchange.

The accountant, unable to contain his excitement, exclaimed, “Your Highness, a total of 773,000 shares were sold, amounting to 1.55 million livres!”

The sales had been limited by the manual nature of stock trading at the time. The efficiency of brokers filling out slips and processing payments through banks capped daily transactions at 2,000 trades, or around 70,000 shares.

Crowds outside City Hall had swelled, but only those who queued early in the morning managed to complete their transactions.

Joseph praised Brent and then calmly instructed, “Transfer all funds to the French Reserve Bank. Follow my previous instructions. You need not report back until the total reaches six million livres.”

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