The Mississippi Bubble burst in France in 1720, causing shares of the Mississippi Company to collapse.
The scheme was organized by Scottish financier John Law, whose Banque Générale and Mississippi Company became central to a sweeping financial experiment. The company claimed valuable prospects in French Louisiana, while its shares were also connected to the conversion of French government debt. Easy credit and aggressive promotion drove extraordinary demand.
Share prices rose rapidly in 1719 and early 1720. Investors crowded into Paris to trade, and paper money creation helped fuel speculation. When confidence weakened, holders rushed to exchange shares and banknotes for more tangible assets. The system unraveled, producing a severe collapse and damaging Law’s reputation.
The Mississippi Bubble is often paired with Britain’s South Sea Bubble because both collapsed in 1720. They were separate companies and national financial systems, however, even though both combined speculative share trading with public debt and expansive commercial promises.