Which 1720 bubble burst after the Mississippi Company’s shares collapsed in France?

The 1720 bubble that burst after the Mississippi Company’s shares collapsed in France was the Mississippi Bubble.

The Mississippi Company, controlled by Scottish financier John Law, received extensive privileges connected with French colonial trade and government finance. Law’s system linked the company with paper money and public debt, encouraging speculation in its shares. Prices rose dramatically in 1719 and early 1720.

Confidence failed when investors sought to convert paper wealth into more reliable assets and the company could not meet redemption pressure without destabilizing the system. Share prices fell sharply, ruining many speculators and discrediting Law’s financial experiment. Law fled France in December 1720.

The Mississippi Bubble occurred in the same year as Britain’s South Sea Bubble, but the schemes were separate. Both used company shares, government debt, and grand commercial expectations to attract investors. The French episode is also sometimes called the Mississippi Scheme, while the company itself continued to exist under changing arrangements after the collapse.