Which 1720 speculative collapse in France is known as the Mississippi Bubble?

The 1720 speculative collapse in France is known as the Mississippi Bubble. It centered on the Mississippi Company, which was granted a major trading monopoly in French Louisiana and other parts of North America.

Scottish financier John Law promoted the company while also developing France’s paper-money system. Investors were attracted by exaggerated reports of the territory’s riches and by the ability to buy shares with banknotes. Share prices rose dramatically in 1719 and early 1720, creating a speculative frenzy in Paris.

Confidence collapsed when investors tried to exchange paper assets for precious metal and doubts spread about the company’s profits. The share price fell sharply, damaging Law’s bank and public confidence in France’s financial system. The Mississippi Bubble is often compared with the South Sea Bubble in Britain, which also peaked and collapsed in 1720, but the two were separate schemes in different countries.