Which 1720 French stock-market bubble and crash was associated with John Law’s Mississippi Company?

The 1720 French stock-market bubble and crash associated with John Law’s company was the Mississippi Bubble.

John Law, a Scottish financier, helped establish a paper-money and banking system in France and gained control of the Mississippi Company. The company promoted expectations of enormous wealth from its claimed trading privileges in Louisiana. Investors bought shares aggressively, and the price rose far beyond what the company’s real business could justify.

Confidence collapsed in 1720 when investors sought to convert paper claims into reliable money and doubts spread about the company’s prospects. The share price fell sharply, damaging Law’s financial system and forcing him to leave France. The episode contributed to distrust of paper money and speculative joint-stock schemes.

The Mississippi Bubble was contemporaneous with Britain’s South Sea Bubble, but the companies and governments were different. Both crises occurred in 1720 and are frequently discussed together as early examples of financial bubbles. The name refers to the company and its speculation, not to a modern stock exchange.