Compagnie Perpétuelle des Indes

Settlement in the Louisiana colony is not exclusively French; in the 1720s, German immigrants settle along the Mississippi River in a region referred to as the German Coast; specifically, from east to west, in St. Charles, St. John the Baptist, and St. James parishes of present-day Acadiana.

The four settlements along the coast are Karlstein, Hoffen, Meriental, and Augsburg.

Originally, the Germans had settled at the Arkansas Post, but the conditions were intolerable.

The area's name is derived from the large population of German pioneers who are settled there in 1721 by John Law and the Company of the Indies.

When the company folds in 1731, the Germans become independent landowners.

Scottish businessman John Law, who believes that money is only a means of exchange that does not constitute wealth in itself, and that national wealth depends on trade, had in August 1717 acquired a controlling interest in the then derelict Mississippi Company and renamed it the Compagnie d'Occident (or Compagnie du Mississippi).

Its initial goal had been to trade and do business with the French colonies in North America, which includes much of the Mississippi River drainage basin, and the French colony of Louisiana.

As he bought control of the company he had been granted a twenty-five-year monopoly by the French government on trade with the West Indies and North America.

The company had in 1719 acquired the Compagnie des Indes Orientales, the Compagnie de Chine, and other French trading companies and became the Compagnie des Indes (or Compagnie Perpétuelle des Indes).

Law had exaggerated the wealth of Louisiana with an effective marketing scheme, which had led to wild speculation on the shares of the company in 1719.

The scheme was to have the success of the Mississippi Company combine investor fervor and the wealth of its Louisiana prospects into a sustainable joint-trading company.

The popularity of company shares were such that they sparked a need for more paper bank notes, and when shares generated profits the investors were paid out in paper bank notes.

In 1720, it acquires the Banque Royale, which Law had founded as Banque Générale in 1716.

In an attempt to replenish the French treasury, the regency has tried a number of original financial experiments, notable among which is Law’s famous financial system, and now appoints Law Controller General of Finances to attract capital.

As the creditors buy shares in the company with their Bonds and debt papers, the whole government debt becomes property of the company (debt-for-equity transaction) and the company becomes property of the former creditors, but effectively controlled by the government.

Initially, the government pays an annual three percent interest to the company, which amounts to forty-eight million livres.

Through these transactions the French government has successfully unloaded their whole gigantic debt of one thousand percent of the annual budget (perhaps two hundred percent to four hundred percent of GDP) and is now basically debt free. (Compare this with the debt acquisition by The South Sea Company of England that acquires eighty percent of the fifty million pound government debt during 1720. The South Sea Company reaches a highest share price of 1one thousand pounds in August 1720, a few months later than the Compagnie des Indes.)

Louisiana receives a large influx of French settlers, France’s colonial and national economies are stimulated, and many speculators become millionaires.

Shares have risen from five hundred to fifteen thousand livres, but by summer of 1720, there is a sudden decline in confidence.

A capital flight by French investors, similar to what is happening in London with the South Sea Company’s stock, bursts the Mississippi Bubble in October.

When by the end of 1720 opponents of the financier attempt en masse to convert their notes into specie, forcing the bank to stop payment on its paper notes, the Regent Philippe II of Orléans dismisses Law, who flees to Venice.

With the collapse of the Mississippi Company's market capitalization—a ninety-seven percent decline—during 1720 and 1721, causing the ruin of many aristocrats, the price of its shares falls back to five hundred livres and the company seeks bankruptcy protection.

Louis XV had been betrothed in 1721 to his first cousin, Marianne Victoria of Bourbon, daughter of Philip V of Spain and his second wife Elizabeth Farnese.

The eleven-year-old king had found no interest in the arrival in Paris of his future wife, the three-year-old Spanish infanta, who only bored him.

The young king and the court had in June 1722 returned to Versailles, where they will stay until the end of the reign.

Louis XV had in October of the same year been officially crowned in Reims Cathedral.

The king, as he turns thirteen on February 15, 1723, is declared of majority by the Parlement of Paris, thus ending the Régence.

The king leaves the Duke of Orléans in charge of state affairs.

Cardinal Dubois, close confident of the regent, had made prime minister in 1722, but on the the death of Dubois in August 1723, Orléans becomes first minister; however, he himself dies in December of the same year.

Following the advice of his aged tutor, André-Hercule de Fleury, Louis appoints his cousin Louis Henri, Duke of Bourbon, Prince of Condé, to replace the late Orléans.

Louis grants fresh privileges to the Mississippi Company, which had reorganized and opened for business in 1722.

Among these are the monopoly of sale of tobacco and coffee, and the right to organize national lotteries.

It can again tap the capital markets and raise capital by issue of shares and bonds.