France’s 1720 financial collapse is known as the Mississippi Bubble.
The episode centered on the Mississippi Company, associated with Scottish financier John Law. The company held a monopoly over French trade and colonization claims connected with Louisiana, while Law also controlled parts of France’s banking and monetary system. Promotional claims about the territory’s wealth helped drive extraordinary demand for company shares.
Share prices rose rapidly in 1719 and early 1720, attracting investors who hoped to become rich through resale. The price could not be supported by the company’s actual profits and resources. When confidence broke, investors rushed to sell, and the shares collapsed. Law’s monetary experiments and the company’s close relationship with the French state made the crash especially disruptive. The Mississippi Bubble is often discussed alongside the South Sea Bubble, but they were separate schemes in different countries. Both illustrate how monopoly privileges, easy credit, promotion, and speculation can combine to inflate an asset price far beyond realistic earnings.