The Mississippi Bubble collapsed in France in 1720.
The episode centered on financier John Law and the Mississippi Company, which held a monopoly over French trade and colonization claims in North America. Law also helped create a banking system and promoted the use of paper money. Investors exchanged government debt and other assets for company shares, driving prices upward.
Confidence weakened when investors tried to convert paper assets and shares into more dependable forms of wealth. The share price fell sharply, and the financial system built around Law’s institutions unraveled. France then suffered a severe loss of confidence in paper money and speculative finance.
The Mississippi Bubble is often paired with Britain’s South Sea Bubble because both peaked in 1720. They were separate schemes in different countries, although both used ambitious overseas-trade stories and public enthusiasm to support soaring share prices.