The 1720 French speculative collapse centered on John Law’s Mississippi Company was called the Mississippi Bubble.
John Law, a Scottish financier serving France’s regent, created a bank and promoted the Mississippi Company, which claimed valuable trading rights in French Louisiana and other territories. The company also became involved in managing French government debt. Investors rushed to buy shares, and the price rose far beyond what the company’s actual trade could justify.
Confidence broke in 1720 when holders tried to convert paper wealth into cash and precious metals. The company and bank could not sustain the inflated valuations, and the share price collapsed. Law fled France, while many investors suffered severe losses. The Mississippi Bubble and Britain’s South Sea Bubble occurred in the same year and are frequently compared, but they were separate national schemes. Both demonstrate how monopoly claims, government debt, expanding credit, and crowd psychology can drive a financial bubble.