What was the 1720 French speculative bubble involving the Mississippi Company called?
Answer
Mississippi Bubble
The 1720 French speculative bubble involving the Mississippi Company was called the Mississippi Bubble.
Scottish financier John Law promoted the Mississippi Company, which held a monopoly over French trade with Louisiana. Law also gained control of France’s banking system and issued paper money, helping drive intense demand for company shares. Prices rose dramatically before confidence collapsed in 1720.
The company’s shares fell sharply when investors tried to convert paper claims into precious metal and doubts spread about the value of its commercial prospects. The episode damaged confidence in paper currency and in Law’s financial system, prompting his flight from France.
The Mississippi Bubble is often compared with England’s South Sea Bubble, which also peaked and collapsed in 1720. They were separate schemes, although both were part of the same wider European investment mania.