The Mississippi Bubble was the 1720 collapse of the overvalued Mississippi Company scheme in France.
Scottish financier John Law controlled the company, which held a French monopoly connected with trade and colonization in North America. Law also helped create a bank and a paper-money system, linking the company’s shares to broader reforms of French public finance. Optimism about colonial wealth drove enormous demand for its stock.
Shares rose dramatically in 1719 and early 1720, attracting investors from across French society. The system depended heavily on confidence in paper money and the company’s future earnings. When investors began demanding metal currency and selling shares, confidence broke down. The company and its related monetary system collapsed in 1720.
The Mississippi Bubble is frequently confused with the South Sea Bubble, which happened in Britain in the same year. Both crises involved state finance, monopoly privileges, rapid speculation, and a spectacular loss of confidence.