The Mississippi Company became the symbol of France’s 1720 Mississippi Bubble, one of the earliest major stock-market crashes.
The company, formally associated with John Law’s Compagnie d’Occident, received a monopoly over trade and development connected with French Louisiana. John Law also controlled France’s Banque Générale, later the Banque Royale, linking company shares, bank money, and government finance.
Speculation drove the share price sharply upward in 1719 and 1720. Investors were attracted by stories of immense wealth in Louisiana, although the colony’s actual economic prospects could not support the expectations reflected in the share price. As confidence weakened, holders rushed to sell, and the bubble collapsed.
The Mississippi Bubble is often discussed alongside Britain’s South Sea Bubble, which burst in the same period. They were separate schemes in different countries, although both combined government finance, monopoly privileges, paper money, and intense public speculation.