Which 1720 French financial collapse was centered on John Law’s Mississippi Company?

The Mississippi Bubble was the 1720 French financial collapse centered on John Law’s Mississippi Company.

John Law, a Scottish financier, established a bank in France and promoted paper money and shares in a company associated with trade and colonization in French Louisiana. The company’s advertised prospects attracted intense speculation, and its shares rose far beyond what its underlying commercial activity could justify.

Law’s financial system linked banking, government debt, and company shares in ways that made confidence especially important. When investors began exchanging shares for more reliable forms of wealth, the system unraveled. Share prices fell sharply, paper money lost credibility, and Law fled France in 1720.

The Mississippi Bubble happened at roughly the same time as Britain’s South Sea Bubble, but they were separate episodes. Both collapses are early examples of how rapidly rising prices, promotional claims, and leveraged speculation can create a financial crisis. The name refers to the company and its supposed opportunities in the Mississippi region, not to a modern stock exchange.