Chapter 51: Chapter 51: Paris Angel Company Goes Public
In 1717, the financial juggernaut John Law established the Mississippi Company to solve France’s massive debt. He obtained exclusive rights to operate the Louisiana colony from the French Government, and subsequently, the company began offering shares.
Because there were rumors of abundant gold mines in the Mississippi River basin, and the company successively gained the rights to operate more of France’s overseas colonies, the stock price steadily increased.
From the initial offer of 500 livres per share, it soared to a peak near 20,000 livres. Yes, don’t miss a single zero, the stock price increased by 40 times!
John Law believed the opportunity to resolve France’s 1.5 billion national debt had arrived. Starting in 1719, he issued additional shares five times in a row, leveraging the skyrocketing stock prices with the issuance of banknotes by the Royal Bank, and he truly managed to wipe out the French Government’s debt in one fell swoop!
Of course, it was impossible to earn 1.5 billion livres within three years; all the money was piled up by the stock market bubble.
In 1720, as a large number of prospectors came back empty-handed, the legend of the Mississippi gold mines began to crumble, bringing with it a crash in the Mississippi Company’s stock price. People panicked and sold their shares en masse, causing the stock price to plummet below 200 livres.
The ruling French powers at the time, led by the Regent, the Duke of Orleans, hastily retracted all privileges granted to the Mississippi Company. The company went bankrupt, and the bubble of several billion livres vanished overnight, an amount equivalent to more than thirty years of France’s fiscal revenues!
Countless people who had invested in the Mississippi Company’s stock were ruined, plunging the entire country of France into a severe economic crisis. The whole commercial and industrial sectors came to a halt, leaving only agriculture barely alive, which also led to the subsequent rise of French agrarianism.
John Law left behind a disaster and fled to Brussels, while France would not recover for decades.
At the same time, a similar “South Sea Company” incident occurred in England, and the British Government promptly enacted the Bubble Act, which strictly regulated the sale of company shares.
France followed suit, enacting its guidelines that any company intending to offer shares publicly had to pass through a Cabinet review and receive the King’s signature for approval, which typically took over a decade to grant permission for one company to go public, with very stringent oversight.
Of course, none of this was a problem for Joseph.
The Finance Minister and the Minister of the Interior had long been developed into beneficiaries of the Paris Angel Company’s stock, and the King and Queen were insiders.
Additionally, Joseph assured in Cabinet meetings that the Paris Angel Company’s stock price would never exceed 30% of the company’s actual value, that the publicly offered shares would not surpass 40% of the total shares, and that the company would provide funds to support the stock price if it fell to a certain level.
Confident that all financial risks had been eliminated, Louis XVI readily signed the proposal for the Paris Angel Company to go public.
Actually, Joseph still had much wiggle room in this. What really is the company’s actual value? For a store with daily sales of 120,000 livres, valuing it at 5 million livres doesn’t seem excessive, right? So, the Paris Angel Company could easily be valued at tens of millions of livres.
Of course, Joseph did not want to fish the pond dry; messing up the stock market wouldn’t benefit anyone.
After all, the Industrial Revolution needed significant capital support, and a healthy stock market was necessary to ensure industrial development.
Besides, allowing another incident like the Mississippi Company to happen could spell doom much earlier than expected.
In front of Paris City Hall, a wooden platform half a person’s height had already been set up early.
The platform was adorned with numerous ribbons and garlands, as if celebrating a festival. A banner at the top of the platform read “Paris Angel Company Stock Offering Event.”
Chairs filled the area around the platform, and on the platform itself were the counters of stock traders, as well as clerks dispatched by various banks to provide services.
Most conspicuous was a large, smooth wooden board on the left, with the words “Trading Records” engraved at the very top, destined to display trading information in the future.
The entire trading scene covered an area as large as two modern football fields.
Due to John Law’s sensational maneuvers, the French people had grown wary of stock trading, and the securities exchange was deserted, crumbling, and cramped after decades.
Therefore, Joseph simply set up the trading location outside City Hall.
At 10 a.m., with the uplifting sound of trumpets, people began to scatter flower petals around, and Brent climbed onto the wooden platform and announced loudly, “Paris Angel Company’s stock is now officially on public offering! Anyone can invest here.”
Immediately, an assistant displayed the document signed by the king granting permission for the stock sale to everyone.
Then, one by one, officials from the Paris City Hall took the stage to offer their congratulations for the listing of the Paris Angel Company.
But investors could not wait any longer. They paid no attention to the officials and swarmed toward the trading counter, shouting loudly at the traders the number of shares they wanted to buy, almost knocking Brent to the ground with their bustle.
This spectacle had not been seen in France for decades. Even when some major banks issued stocks, people were extremely cautious, and there were few buyers.
However, Paris Angel had thoroughly prepared in advance, not only with overwhelming newspaper publicity but also with the actual exclusive stores that appeared all around Paris, where everyone could see the bustling scenes of renovation.
Just yesterday, three new Paris Angel stores in Paris opened simultaneously, practically emptying the streets. Numerous ladies and misses emerged from the shops squeezing through the doors with their purchases, their faces brimming with excitement and satisfaction.
It was said that in places like Reims and Marseille, there were even more Paris Angel Exclusive Stores, and even England was preparing to open new stores.
Moreover, Paris Angel Company promised that if the stock price fell below 80% of the issuing price, the company would immediately use its own funds to buy back all the shares.
At the same time, the stock price would not exceed the actual value of the company by 30%.
All these were evidence that there would be no bubble in Paris Angel Company! No risk at all!
Seeing the booming business of those exclusive stores, everyone was convinced that the stock dividends would be substantial, and they determined this was a rare investment opportunity. Just buy, that’s all!
Soon, an employee of the stock exchange wrote down the first transaction information on the wooden board displaying trade records—
Purchase, Paris Angel Company, 2 livres, 30 shares, total 60 livres.
Then came the second transaction—
Purchase, Paris Angel Company, 2 livres, 105 shares, total 210 livres.
The third transaction,
The fourth transaction,
The fifth transaction…
Paris Police Headquarters had sent over sixty officers to the trading scene to maintain order, barely keeping the situation under control. The surrounding reporters’ eyes widened as they recorded this astonishing moment.
At 9 p.m., Brent and the Crown Prince’s personal accountant raced to the Palace of Versailles, excited.
In the Crown Prince’s reception room, Brent handed a trading report from the exchange to Joseph with somewhat trembling hands.
The nearby accountant immediately exclaimed excitedly, “Your Highness, a total of 773,000 shares have been sold, amounting to 1.55 million livres!”
The main issue was that due to the limitations of this era, stock trading relied entirely on manual operations, which were very inefficient. The maximum speed traders could fill out forms and banks could reconcile accounts was 2,000 transactions per day, resulting in a total of just over 700,000 shares.
Outside the City Hall, people kept arriving to purchase stocks, leading to jam-packed conditions, but only a small portion who had arrived early to queue up actually completed the transactions.
Joseph praised Brent for his work, then calmly instructed, “Transfer all the funds to the Bank of France Reserve. As I said before, you do not need to report back to me until the funds reach 6 million livres.”