Which 1720 bubble burst after the French Mississippi Company collapsed?

The Mississippi Bubble burst after the French Mississippi Company collapsed in 1720.

The Mississippi Bubble formed around the Compagnie du Mississippi, associated with Scottish financier John Law. The company received valuable trading privileges connected with French territories in North America, while Law also helped create a bank and expand the use of paper money. Investors bought shares in anticipation of enormous profits.

Share prices rose far beyond what the company’s underlying business could justify. In 1720, confidence broke down as investors tried to convert paper wealth into more reliable assets. The resulting collapse damaged the company, Law’s financial system, and public trust in paper currency.

The Mississippi Bubble is often discussed alongside Britain’s South Sea Bubble, which also burst in 1720. They were separate schemes in different countries, although both demonstrate how speculative enthusiasm, easy credit, and promotional claims can inflate asset prices.