The Mississippi Bubble was the 1720 French speculative scheme whose collapse formed part of the first major stock-market crash. It centered on the Mississippi Company, reorganized under John Law’s financial system and granted a monopoly over trade with French Louisiana.
Law’s company absorbed French public debt and issued shares, while paper money and easy credit supported a dramatic rise in its price. Investors crowded into shares in Paris, expecting the company’s American territory to produce immense wealth. The promised riches were greatly exaggerated, and confidence broke when holders tried to convert paper claims and shares into reliable money.
The collapse occurred in the same year as Britain’s South Sea Bubble, but the two were separate schemes. The Mississippi Company did have real colonial operations, yet its share price reflected speculation far beyond its commercial earnings. The episode damaged confidence in paper money and helped make John Law a lasting figure in the history of financial bubbles.