Which 1720 French speculative collapse was caused by John Law’s Mississippi Company scheme?

The 1720 French speculative collapse caused by John Law’s Mississippi Company scheme was the Mississippi Bubble.

John Law, a Scottish financier, gained control of France’s Banque Générale and promoted the Mississippi Company, which held a monopoly over French trade with parts of North America. Investors bought shares enthusiastically, encouraged by expansive money creation and optimistic claims about the company’s potential wealth.

Share prices rose dramatically in 1719 and early 1720, then collapsed when confidence failed and investors sought to convert paper wealth into cash and precious metals. The collapse ruined many holders and damaged public trust in paper money and state-backed financial schemes.

The Mississippi Bubble is often confused with the South Sea Bubble, which unfolded in Britain during the same period. Both collapses occurred in 1720, but they involved different companies, governments, and markets. The Mississippi Company’s operations were centered in France, while the South Sea Company was British.