Which 1720 French financial scheme collapsed after its paper money and company shares lost credibility?

The Mississippi Company bubble collapsed after its paper money and company shares lost credibility in 1720.

The company, associated with John Law, received a monopoly over French trade connected with the Mississippi and Louisiana territories. Law also controlled a bank that issued paper money. Investors bought shares in Paris as promotional claims and easy credit pushed prices far above realistic expectations.

Confidence weakened when holders tried to convert paper money and shares into hard currency. The bubble burst in 1720, causing a dramatic collapse in the company’s share price and damaging trust in Law’s financial system. Law fled France after the scheme failed.

The Mississippi Bubble is often paired with Britain’s South Sea Bubble, which also collapsed in 1720. They were separate companies and national episodes. The Mississippi Company’s advertised American trade prospects were vastly greater than the colony’s actual ability to generate profits.