Which 1720 scheme collapsed after John Law’s Mississippi Company lost investor confidence?

John Law’s Mississippi Company scheme collapsed in the Mississippi Bubble of 1720.

John Law, a Scottish financier, gained control of the company that held the French monopoly over trade in the Mississippi region. He also became responsible for France’s paper-money system through the Banque Générale, later renamed the Banque Royale. These arrangements encouraged investors to exchange government debt and other assets for company shares.

Share prices soared in Paris during 1719 and 1720, even though the company’s actual American trading prospects could not justify the speculation. As doubts spread, holders tried to convert paper wealth into coin and other assets. The monetary system could not sustain that demand, and both shares and banknotes collapsed.

The Mississippi Bubble occurred at nearly the same time as Britain’s South Sea Bubble. The two episodes are sometimes merged in popular accounts, but they were separate schemes in France and Britain.