The 1720 French financial bubble centered on John Law’s Mississippi Company was the Mississippi Bubble.
John Law, a Scottish financier, helped establish a paper-money system and reorganize French public finances during the regency of Philippe II, Duke of Orléans. The Mississippi Company claimed valuable trading rights in French Louisiana and absorbed other French companies. Investors bought shares enthusiastically, driving prices far above realistic expectations.
The company’s shares became closely linked with Law’s banknotes. When confidence in the company’s profits and the paper currency weakened, investors rushed to exchange paper assets for metal coin. The resulting collapse in 1720 destroyed fortunes and discredited Law’s financial system.
The Mississippi Bubble is sometimes confused with the South Sea Bubble, which collapsed in Britain during the same year. Both were fueled by ambitious company schemes, public debt, speculative buying, and unrealistic expectations about overseas trade.