The earliest large-scale commercial fraud case in human history is considered to have occurred in the so-called "Mississippi Plan" at the beginning of18th century, and in Paris, France from17 to 1720. The planner was john ross, who was a household name at that time and is still frequently mentioned by economists. It is necessary to briefly introduce the life of the protagonist first, and then talk about this wonderful historical fraud case, which investors must know very well.
Playboy john ross
John ross? John Law) 167 1 was born in Edinburgh, the Scottish capital, and was born into a bank family that also operated gold jewelry. We don't need to check his family background. We bought a large piece of land from John's father and gave it the name of his family, which shows that he is indeed a banker who made a fortune. The land owned by the Roche family is called Lauriston, which is located in the midwest of Lothian County, and it is still recorded in the exquisite map of Scotland.
John is the eldest son of the Roche family. At the age of fourteen, he worked in the family bank, and the grandson of the eldest son inherited his ancestral business. This has been a tradition in Britain for thousands of years. So it is completely reasonable for him to follow his father in the bank. From the only relevant information, we know that John is good at mental arithmetic and has a strong interest in banks, especially credit. /kloc-at the age of 0/7, he had a deep understanding of the operation of Scottish banking.
At the age of seventeen (1688), John's nature as a "second ancestor" began to emerge. He likes fancy clothes and hangs out with women, so in a short time, he got the nickname "Bo". John's bad habits were exposed this year. It turned out that his old father died of a sudden illness and suddenly became "out of the king's control", from "losing the key to holding 10 thousand" to "holding 10 thousand with the key" His colorful career as a liar also began in this year.
After completing his father's funeral, he even handed over the management of the bank and property to the staff who had followed his father for many years and went to London to "explore" alone.
Young, handsome, rich and completely independent, john ross lived a life of gambling and whoring in London. In the first few years, the God of Wealth was very kind to him. He can say that he will win every bet, and he has never missed the pursuit of women ... but this opportunity has also planted his uncontrollable gambling and arrogant personality of wanting to possess beautiful women. His fate has been predictable so far-he lost everything for a woman in the casino (E. vllliers, later became a countess; This is beside the point. He dueled with his opponent, e. Wilson, and shot him on the spot. He was accused of murder and sentenced to death by the family of the deceased, which was later changed to life imprisonment. During the appeal, john ross escaped from prison and became a wanted man. However, British law can do nothing about it, because just two or three days after his escape, he has arrived in the Netherlands. John Ross is 26 years old.
Do not accept repeated innovation.
He wandered in Europe for three years, during which he devoted himself to studying the European banking system, especially Amsterdam, the most developed country at that time, and wandered in casinos and brothels at night. Because he has rich practical experience in the British banking system, he has a lot of experience under mutual confirmation. 1700, his proposal and reasons for establishing a trade commission? Published in Edinburgh. Unfortunately, it has not attracted widespread attention. Historians did not say whether he sneaked back to Scotland or just sent the manuscript back.
Although the "reasons and suggestions for establishing a trade bureau" received a cold response, the Scottish government ignored London's judgment and had no intention of bringing john ross to justice, which gave him the courage to return to his hometown to visit relatives. After studying in Europe for three years, john ross is now full of plans. Soon after, he publicly put forward the proposal of organizing a "land bank". Opponents of this plan called it Sha Bank, which can be said to be the pioneer of credit fund-raising. His idea is to issue some common shares to subscribe for land at a specific price within a certain period of time. What attracts investors is that the par value of shares is lower than the market price of land, for example, 10 yuan per square foot of land, and the price of common stock that can subscribe for one square foot of land is 9 yuan. As for whether investors can make a profit, it depends on the land price when the subscription expires. Of course, due to the imperfect information, the author can't know the detailed conditions and operation flow of this plan, but briefly describe it, we should know that this method is the "ancestor" of the once popular "warrant".
Probably because of its novelty and john ross's reputation, the Scottish Parliament decided to oppose the implementation of this plan in Scotland after a whole three-month debate, which was a heavy blow to john ross. It is conceivable that if the plan is sold and his request to London for pardon of his murder is approved, he will not cross the English Channel again and return to Europe, and the Mississippi Plan will have no reason!
In the next 14 years, john ross lived a typical playboy life in Holland, Germany, Belgium (then called Flanders), Hungary, Italy and France. His main source of income is gambling tables. Although the history books do not record whether he "played tricks" at the gambling table, he was deported by the governments of Venice and Genoa, which is considered to be related to his "misconduct" in the casino.
When he was in Paris, he was also listed as persona non grata and the police set a time limit for him to leave the country. Fortunately, by this time, he had met two nobles who had been in power for a while, and they came forward to vouch for him, so that he could stay in France.
The confidant who was in power for a while was ordered.
The Duke of Orleans, one of the two guarantors, is a well-known homosexual. Whether they have a skill or not is not recorded in the history books. Only the Duke regarded john ross as his confidant and appreciated his financial knowledge very much. Through his connections, John Ross proposed to the then Chancellor of the Exchequer a plan to issue paper money to revive the French economy, but his plan was stillborn because French King Louis XIV refused to meet him because he was not a Catholic. Frustrated, under the introduction of French friends, he went to Italy, to the door of Duke Savoy's house, and sold him his "land bank" plan. The latter does not intend to adopt this plan on the grounds of insufficient financial resources. However, he strongly advised john ross to return to France and give advice to the French emperor. In his opinion, the French must be interested in his plan. In fact, due to the death of French King Louis XIV in 17 15, the Crown Prince was only seven years old and the Duke of Oran was the Regent, which benefited john ross a lot? On the other hand, due to Louis' extravagance and waste, there has been a large deficit. At that time, the national debt was as high as 3.9 billion francs (then called River), but the income was only14.2 billion. In this harsh environment, the Regent's first task is how to increase the revenue of the national treasury, and among many "unrealistic" suggestions such as declaring the country bankrupt, the French government finally adopted john ross's plan.
Of course, his plan seems nothing new now, but it was very novel in the eighteenth century. John ross suggested that the government set up a bank in the name of the French king and issue paper money to make up for the shortage of metal coins; These banknotes are secured by the reputation of the French dynasty and mortgaged by land. When the government was discussing his plan, john ross translated his works into French and published them, and used the media to establish himself as a "financial expert".
17 16 on may 5th, the French government issued a decree allowing john ross to set up an ordinary bank, whose main business is to issue paper money, discount bills and accept deposits.
So far, john ross has rich experience in financial affairs. Under his skillful management, the reputation of this bank is booming. Before long, the value of paper money it issued was even higher than that of metal coins. The reason for this is that the French government keeps announcing the depreciation of metal coins-the depreciation of metal coins on the banknotes issued by Roche is equal to the continuous appreciation of the latter. It is understandable that the French government hypnotized john ross first, and then the French people went crazy for him.
Just as the French were about to be infatuated, john ross made a public statement and suggested that the government legislate to punish bankers who did not redeem the banknotes he issued! This has greatly increased people's confidence in john ross, and it is inevitable that his banknotes will become more popular.
"Mississippi Plan" was introduced.
From a modern point of view, what john ross has done is nothing more than creating inflation. Under his fierce printing of banknotes, the economy was really thriving at that time. Most importantly, the French government had enough banknotes to repay its debts. So, in less than a year, the Central Bank of john ross opened branches in cities all over the country.
John ross's success naturally made the French government appreciate it very much, and its status was in full swing, which was self-evident. However, the French government even gave up metal coins because of its superstitious belief in paper money, which enabled the government to print paper money at will and issue paper money "printing more paper money" when the regent needed it. As a result, according to a statistic, the paper money issued by the French government at that time was as high as one billion francs, which led to the uncontrollable financial crisis in the future.
In this favorable atmosphere, john ross's "Mississippi Plan" came out. Mississippi is a state in the southern United States, named after the Mississippi River, the largest river in the world. /kloc-At the beginning of the 7th century, the French went south from Canada and occupied the west bank of the Mississippi River, and named it Louisiana. I don't want to repeat the history of the early American frontier here, because knowing this "festival" is enough to understand the development of this story.
John ross's plan is Aglac Duranis of Louisiana, so it should be developed vigorously; Compagnie d'Occident, which he founded in August of 17 17, was willing to undertake the task of "promoting colonial affairs", and he asked the French government to allow him the right to manage land and taxes. The French government listened to john ross's words, and his company obtained the patent development rights of Mississippi River, Ohio River and Missouri River; The company is divided into 200,000 shares of 500 francs each.
In today's words, this is a public offering of shares. Due to the cooperation of weather, geography and people, and the flood of paper money, new shares have caused a comprehensive and unprecedented buying frenzy. The reputation of the central bank is abroad, and john ross's "teeth are golden"; On the other hand, the French government fully supports it. Today, land development patents will be issued, tomorrow, gold mining patents will be issued, and the tobacco industry will be granted exclusive rights the day after tomorrow. It is natural that people's confidence in john ross's company has greatly increased under the extremely favorable situation that good news is flying all over the sky.
17 19 At the beginning of this year, the French government approved A. Crozat Company, a subsidiary of "Western Company", to obtain the patent right to operate in East India, China and South China Sea. To this end, the company issued 50,000 new shares, each with a par value of 100 francs.
Use magic to snap up stocks
The French people's confidence in john ross is so strong that the number of applicants for issuing 50,000 new shares is as high as 300,000, which is very surprising in the society of1the early 8th century. In order to win the prize, investors including Qin Wang and Guizhou waited all night in front of John Ross's mansion, and some even rented a house nearby to prepare for a "long-term application"; The businessman turned around and set up a temporary tent in the nearby open space. It turned out to be "full rent". As more and more people apply for new shares, the share price of A. Crozat is rising every day!
It is really unprecedented for investors to approach john ross in order to get a "rights issue". It is said that the passage outside john ross's residence is crowded with people who dream of making a fortune all day long, and a "new industry" has emerged, that is, "renting humpbacks". Facts have proved that it is too time-consuming and laborious for investors to fill out the form and submit it to the "IPO Application Office" in john ross's residence as soon as possible. So, a group of unemployed hunchbacks rented themselves out and used their hunchbacks as writing desks to fill out forms. Although they stooped, their backs, like this city, became an ancient miracle. There is a distinguished lady who sits in a sedan chair every day, waiting for john ross's carriage; When she saw john ross's car coming, she pretended to be a "traffic accident" with a sedan chair bearer, and the lady called for help. John ross got off and asked, and the latter took the opportunity to exert all his skills, but john ross didn't stop until he promised to "share allotment". As for inviting people to set fire to force john ross to make a dash for the door, countless "applicants" tried to stop the door and even bribed the concierge to "seduce" john ross. In short, the "applicants" at that time were full of tricks, and they would not give up until they reached the goal of "distribution". Modern investors have to admit defeat.
Speculation frenzy exposes life.
Now, we often hear stories of doctors being careless in diagnosis because of stock trading. However, if the storyteller points out the doctor's first and last names, most of them are silent. Of course, this is because the narrator doesn't want to incur libel, or it may just be a slap in the face and there is no factual basis. In any case, in john ross's time, this kind of incident did happen. It is said that M. Dechirac, a famous doctor in Paris at that time, entered the market at the peak of the bull market, and his share price fell every day, and he was in a bad mood and emotional. One day, one of his regulars (Duchess) was ill in bed and invited him to make house calls. He felt his pulse and muttered, "Get down! Descent! God, how did you fall so badly! " (it fell! It fell! Oh, my God! Oh, my God! It keeps falling! ) Patients and their families changed color when they heard the news, thinking that their blood pressure had dropped or their pulse was weak. ...
There is also a story about an investor and his servant who sold 250 shares of A. Crozat at the opening price of 8000 francs. When the servant arrived at the exchange-john ross's residence, the stock price had risen to 10000 francs, so the servant pocketed part of the "premium" and resigned at the same time when he returned to his master, because the difference between the two was 500,000 francs (about 20,000 pounds-called the golden pound at that time), which was enough for the servant to return home. As for the stories of the cloakroom maid in the upper class and even the personal servant of the bankrupt big speculator, they are all famous and have surnames, but we don't have space to accommodate them.
When Parisians are crazy about john ross's stocks, social security is also in chaos, and street robberies and murders occur every day; Among them, there are the farce of poor people speculating in stocks, the farce of developed nobles vying for their daughters, and the scandal of nobles being sentenced for failing to speculate in stocks. In a word, the novelty of Hong Kong's stock market in recent years is far less than that of France in18th century.
The kingdom of paper has been challenged
The stock market boom brought "internal economic overheating", which also happened in Paris at that time ... The number of people who poured into Paris from all over France for speculation and consumption is estimated to reach 300,000 to 400,000; In this case, the owner is the biggest beneficiary. In order to alleviate the shortage of buildings, the Regent ordered the establishment of a military camp on Tongtu Avenue and rented it to these "pilgrims" for the night!
John ross is the biggest beneficiary of this investment frenzy. He not only bought real estate all over France, but also became the object of the royal family. At this time, although he has been married for a long time and has children, his affairs seem to happen every day. At one time, it was said that all the ladies in Paris had disappeared, so they went to john ross's reception room to wait for his "good luck". This is of course an exaggeration, but the popularity of john ross among women can be seen.
We are not going to describe here the "shock" caused by this investment frenzy in Paris; In a word, the wealth on paper planned by john ross, including printing banknotes and stocks indiscriminately, has made the French government and people unite and immersed themselves in a luxurious and wasteful life. I believe readers already know the result.
1720, the prosperity of this kind of building on the sand pile began to appear problems. Some sober people in the French parliament warned that the indiscriminate issuance of paper money would bring disaster; But the Regent turned a deaf ear to this, because he thought that if issuing 500 million francs can make the economy prosperous, then issuing another 500 million francs can't make the economy prosperous, and since it has this effect, why not issue 10 billion instead of 500 million? John ross certainly knows the difference between the two, but at this moment, he can't help himself. He hopes that his stock will go up every day, and the new shares he issues will become hot. How can this phenomenon continue? The only way is to keep handing out money. As a result, the circulation of paper money and the stock price chased each other, and it goes without saying that an uncontrollable financial crisis was planted.
John ross's paper kingdom is like an ice palace, shining in the light; But as soon as the sun shines and the hot air blows, it becomes a pool of water stains in an instant, and there is not even a residue left!
In fact, at the beginning of 1720, there were signs that john ross's paper kingdom was challenged. Unfortunately, he and the Regent were carried away by the victory, which did not arouse their vigilance and took corresponding measures. Prince de Kong Di failed to ask john ross to issue a batch of new shares at par value, so he "squeezed out" his bank. Although we don't know how much money the prince proposed at that time, we can imagine that the amount was quite amazing from the fact that he had to transport banknotes in three carriages. Although john ross managed to cope with the past, he thought that if everyone followed suit, the bank would not close down, so he turned to the Regent for help. The latter listened to john ross's words and ordered the prince to refund 75% of the withdrawals-this is the "initiator" of the government's restrictions on withdrawals when there is something wrong with the bank.
A possible banking crisis was quelled by a law, but john ross didn't learn the lesson and took strict measures to prevent similar incidents from happening again. In this case, some smart people who can't see that stocks can't rise endlessly and paper money can't be issued endlessly began to quietly "ship goods while they are high" in the market, and converted the proceeds into foreign currency or gold and silver, and stored them in foreign countries (mainly Britain and the Netherlands) or hoarded them. Because of the precedent of Prince Decante, everyone throws stocks to withdraw money from banks, and even smuggles "soft" exports, all of which are carried out in extreme secrecy. As a result, when someone in the city makes such a legend, the crisis is on the verge!
Slowly, the French Parliament noticed that the loss of gold, silver and jewels was becoming more and more serious, and some members moved to investigate it, but after many days of argument, there was no conclusion, so the Regent asked john ross for advice. John ross's opinion, which seems ridiculous now, was actually passed by Congress. His suggestion is that Congress should pass a law to devalue metal coins by 5%. His intention is obvious, hoping to restore people's confidence in the appreciation of paper money; However, the market reaction was not good, so Congress persistently devalued the coin again 10%. Unfortunately, a series of perverse actions by the government have deepened people's doubts about the financial system, and the outflow of gold, silver and jewelry has worsened. In order to save the crisis, Congress finally passed a decree prohibiting people from holding metal coins worth 500 francs (20 pounds), and if they exceed this amount, they will be confiscated. As for the whistleblower, half of the amount can be confiscated. Under these laws, France entered a chaotic era, and people reported to each other. Make chickens and dogs restless, everyone is in danger, and sow the seeds of political crisis; On the other hand, the theory of "bad money drives out good money" put forward by Sir Gladson in the middle of16th century fully shows that people would rather collect metal coins illegally than hold more and more printed banknotes!
As for the situation of "bad money driving out good money" in France at that time, I don't intend to describe it in detail, because most of these incidents are similar, but the degree is different. In short, the French government's efforts to maintain the purchasing power of paper money are futile. In this case, the share price of A. Crozat Company began to fall. It seems that more and more people don't believe that business in Louisiana will bring profits. In order to reverse the declining confidence, john ross recruited 6,000 miners, claiming to send them to Louisiana to mine "discovered gold mines". In order to strengthen the publicity effect, john ross sent two sets of work clothes, chisels and other tools to these miners who were going overseas-in fact, many of them went bankrupt because of stock speculation-and organized them to March in the streets of Paris, stating that they would "leave soon". Unfortunately, these people themselves have no confidence in gold mining, so at least two-thirds of them secretly sell their work clothes and tools, and then desert to escape; As for about 2,000 gold prospectors who went to the New World, their fate was tragic, as if they had been doomed long ago.
Just as these miners marched, the share price of A. Crozat really stopped falling and rebounded, because many people believed that "the gold mine was discovered".
Good luck is over.
The formation of the "Mississippi" tragedy is mainly due to the fact that when the problem is found wrong, the initiator is responsible for the rescue plan, which makes the situation worse and worse. This is inevitable. I'm not saying that john ross deliberately worsened the situation, but that his plan lacked self-knowledge and self-confidence.
So far, the Regent still obeys john ross's orders. 1720 1 On May 5th, he was also arranged to convert to Roman Catholicism. Because of this, john ross is qualified to be the chief financial auditor.
1720 At the beginning of May, the statistics released by the Ministry of Finance showed that the banknotes issued at that time were 2.6 billion francs, but less than half of them were metal coins. In other words, the government has enough power to extract people's wealth (enough paper money to buy people's hidden gold), but "people's eyes are discerning" and they refuse to exchange coins for soft coins. Congress held many meetings and held heated debates, and john ross, as the finance minister, was said to know nothing about it. On May 2 1, the Regent's official residence issued a decree to devalue paper money by 50% in the next few years, but Congress refused to register this decree. Therefore, the Regent withdrew his authorization and issued a statement on the 27th, declaring the decree of 2 1 day invalid!