The Mississippi Bubble was the 1720 French speculative bubble centered on the Mississippi Company.
John Law’s company received a monopoly over French trade connected with the Mississippi region and became linked to a broader financial system using paper money and bank credit. Shares rose dramatically as investors expected enormous profits from colonial commerce. The expectations far exceeded the company’s actual economic performance, and confidence collapsed when holders tried to exchange paper claims and shares for hard money.
The episode is often paired with Britain’s South Sea Bubble, which also burst in 1720, but they were separate schemes in different countries. The Mississippi Bubble contributed to a severe loss of confidence in paper finance in France. It was not a modern stock-market crash in the sense of a broad electronic index decline, but it is one of the earliest famous examples of a speculative financial collapse.