France’s stock exchange experienced the 1720 bubble known as the Mississippi Bubble.
The Mississippi Bubble developed around the Mississippi Company, which was associated with John Law’s financial system in France. Law promoted the company’s claims to trade and develop parts of French Louisiana, while his bank issued paper money and the company absorbed various French commercial privileges and debts. Optimism pushed the company’s share price dramatically higher in 1719 and 1720.
The boom depended on confidence in expanding paper credit and the company’s future prospects. When investors began demanding coin rather than paper and selling shares, the system became difficult to sustain. The share price collapsed in 1720, damaging confidence in paper money and in speculative company promotions.
The Mississippi Bubble occurred at roughly the same time as Britain’s South Sea Bubble, but the two were separate schemes in different countries. France’s episode is especially associated with John Law, whose monetary experiment combined banking, government finance, and colonial-company speculation.