Which 18th-century French speculative bubble collapsed in 1720 alongside the South Sea Bubble?

The Mississippi Bubble was the 18th-century French speculative bubble that collapsed in 1720 alongside the South Sea Bubble.

The bubble centered on the Mississippi Company, which was associated with John Law and received extensive privileges from the French government. Law promoted the company’s prospects in North American trade and helped establish a paper-money and banking system intended to support economic expansion.

Shares rose dramatically as investors bought into claims about the company’s commercial opportunities. The boom attracted people from across French society, but the share price became detached from realistic business results. Confidence eventually broke, and investors rushed to exchange shares for money and precious metals.

The collapse damaged trust in paper currency and speculative finance in France. Britain experienced a parallel episode through the South Sea Bubble, which also burst in 1720. Mississippi Bubble is the standard name for the French episode; it is not the same event as Britain’s South Sea Bubble.