The 1720 French financial scheme that collapsed after John Law’s Mississippi Company shares soared and plunged was the Mississippi Bubble.
John Law’s company held a monopoly over French trade with territories along the Mississippi River and became linked to France’s paper-money system. Investors bought shares expecting enormous profits from colonial trade, and the price rose dramatically during 1719 and 1720.
Confidence broke when investors tried to convert paper assets and shares into more dependable money. The company’s inflated valuation could not be supported by its real economic activity, and the share price fell sharply. The Mississippi Bubble is commonly paired with Britain’s South Sea Bubble, which also collapsed in 1720. They were related in timing and speculative psychology, but they involved different companies, governments, and financial systems.