Paris Bourse crash of 1882

The Paris Bourse crash of 1882 was a stock market crash in France, and was the worst crisis in the French economy in the nineteenth century. The crash was triggered by the collapse of l'Union Générale in January. Around a quarter of the brokers on the bourse were on the brink of collapse. The closure of the exchange was prevented by a loan from the Banque de France which enabled sufficient liquidity to support settlement.

Causes

l'Union Générale rose from 500 francs a share in 1879 to over 3,000 francs at its peak. Investors saw the booming market for new securities and jumped into the forward market. Speculators also printed counterfeit money; they renewed their forward contracts in hopes for a continuous rise in prices.

As the market grew, interest rates began to rise and lenders began demanding a premium – a warning that a collapse would occur because investors would repay their loans not wanting to pay this premium and not take out any loans from high interest rates.This could mean the bank lost a lot of money and did not get any more, causing it to be very overvalueated and crash. These events are very similar to the events leading up to the American 1929 boom. As this happened, the price of l'Union Générale began to deteriorate. The bank failed to repay all its money and falsified public reports, so the price would not crash completely. Between January 5, 1881 and January 14, 1881 the cash price of a share dropped from 3,040 to 2,800 francs.

During

The crash led to a recession which lasted until the end of the decade. Immediately after the crash, the bank’s founder attributed its downfall to conspiratorial aims of Jewish-German banks and Freemasons, intent of destroying banks which backed conservative, Catholic political agendas.

It is now generally accepted that there was no conspiracy to destroy the bank, however, it remains unclear why the collapse of the bank was so devastating.

During the 1882 crash, 14 of 60 stock brokers appeared to be in imminent danger of failure and 7 were completely bankrupt. The famous painter Paul Gauguin had been working as a stock broker until the crash, after that, he decided to dedicate to painting full-time.

References

White, Eugene, The Crash of 1882 and the Bailout of the Paris Bourse, Springer-Verlag, 2006.

Stock market crashes

17th century	Kipper und Wipper period Tulip mania Bubble

18th century	The Mississippi Bubble South Sea Bubble of 1720 Panic of 1792 Panic of 1796–97

19th century	Panic of 1819 Panic of 1825 Panic of 1837 Panic of 1847 Panic of 1857 Black Friday (1869) Panic of 1873 Paris Bourse crash of 1882 Panic of 1884 Encilhamento Panic of 1893 Panic of 1896

20th century	Panic of 1901 Panic of 1907 Depression of 1920–21 Wall Street Crash of 1929 Recession of 1937–38 1971 Brazilian markets crash 1973–74 stock market crash Souk Al-Manakh stock market crash (1982) Japanese asset price bubble (1986–1991) Black Monday (1987) Rio de Janeiro Stock Exchange collapse Friday the 13th mini-crash (1989) Dot-com bubble (1995–2000) 1997 Asian financial crisis October 27, 1997, mini-crash 1998 Russian financial crisis

21st century	Economic effects arising from the September 11 attacks (2001) Stock market downturn of 2002 Chinese stock bubble of 2007 United States bear market of 2007–09 Financial crisis of 2007–08 Dubai debt standstill European debt crisis 2010 Flash Crash August 2011 stock markets fall 2011 Bangladesh share market scam 2015 Chinese stock market crash

See also: List of stock market crashes and bear markets

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