Which 1720 French financial bubble collapsed after John Law’s Mississippi Company boom?

The 1720 French financial bubble that collapsed after John Law’s Mississippi Company boom was the Mississippi Bubble.

John Law developed a system combining a bank, paper money, tax collection, and the Mississippi Company, which claimed commercial opportunities in French Louisiana. Investors bought company shares in enormous numbers, and paper wealth expanded rapidly. The scheme became closely connected with the French government’s effort to manage its heavy debt burden.

Confidence eventually failed. Investors sought conversion of paper claims into more reliable assets, while the company’s expected profits could not justify its market valuation. Share prices then fell sharply, undermining Law’s system and forcing him from influence.

The Mississippi Bubble is frequently confused with Britain’s South Sea Bubble, which also collapsed in 1720. They were separate national episodes, although their timing and speculative character made them symbols of the same era’s financial mania.