France’s stock exchange saw the Mississippi Bubble collapse in 1720.
The Mississippi Company, controlled by Scottish financier John Law, received a French monopoly over trade in the Mississippi region and later absorbed major parts of France’s colonial and tax-collection system. Law’s bank issued paper money, and investors bought company shares with extraordinary enthusiasm. The share price rose dramatically in 1719 and 1720 before confidence in the company and the currency collapsed.
The resulting panic forced the company’s shares down and damaged France’s financial system. John Law fled France, and the episode left a lasting distrust of paper money and speculative finance. The Mississippi Bubble occurred at the same time as England’s South Sea Bubble, but the companies and governments involved were different. Both episodes are early examples of a market boom driven by monopoly promises, debt arrangements, easy credit, and expectations that could not be sustained.