What was the name of John Law’s French financial scheme that collapsed in 1720?

John Law’s French financial scheme that collapsed in 1720 was called the Mississippi Bubble.

The episode centered on the Mississippi Company, which held French trading privileges in North America. Scottish financier John Law also controlled the Banque Royale and used paper money and company shares in a broad plan to reorganize France’s government debt. Investors were attracted by optimistic reports about the wealth of Louisiana.

Share prices rose rapidly in 1719 and 1720, creating a speculative frenzy in Paris. The system depended heavily on confidence in Law’s banknotes and the company’s future profits. When investors sought to convert paper and shares into more reliable forms of wealth, confidence failed and prices collapsed.

The Mississippi Bubble is often paired with Britain’s South Sea Bubble, which also burst in 1720. They were not the same event, however: the Mississippi scheme was French, while the South Sea Company was British.