Which 1720 scheme collapsed after John Law’s bank and company lost public confidence in France?

The Mississippi Bubble collapsed after John Law’s bank and company lost public confidence in France in 1720. Law’s Mississippi Company promoted the economic potential of France’s claimed territory in North America and became the focus of intense speculation.

Law also controlled the Banque Générale, later reorganized as the Banque Royale, and used paper money and company shares to expand credit. Investors bought shares at rapidly rising prices, expecting enormous future profits from colonial trade and monopoly privileges.

The system depended heavily on confidence in both the company and the bank’s paper currency. When doubts spread, shareholders rushed to convert paper and shares into more trusted assets. The resulting sell-off caused the company’s price to collapse and damaged confidence in Law’s financial reforms.

The Mississippi Bubble is often compared with Britain’s South Sea Bubble, which also burst in 1720. They were separate schemes in different countries, although both were driven by monopoly claims, easy credit, and speculative expectations.