France’s stock market crashed in 1720 after the collapse of the Mississippi Company scheme.
The Mississippi Company, controlled by John Law, promoted shares linked to French colonial and trading interests. Speculation drove the share price to extraordinary levels in 1719 and early 1720, while Law’s Banque Royale expanded the money supply and supported the scheme.
Confidence collapsed in 1720 when investors sought to convert paper wealth into precious metals and other assets. The company’s share price fell dramatically, ruining many speculators and damaging trust in paper money and financial institutions.
The episode is often compared with Britain’s South Sea Bubble, which also burst in 1720. Neither was a modern exchange crash in the same institutional sense as a twentieth-century Wall Street collapse, but both became classic examples of speculative bubbles and financial contagion.