The Paris Bourse suffered a famous crash in 1720 after the collapse of John Law’s Mississippi Company.
John Law’s Mississippi Company became the center of a huge speculative boom in France. The company claimed rights connected with trade and development in French Louisiana, and its shares rose dramatically as investors expected extraordinary profits. The boom was supported by Law’s broader experiment with paper money and a bank-backed financial system.
When confidence failed in 1720, investors rushed to sell. The price of Mississippi Company shares collapsed, damaging the financial system and ruining many speculators. The episode is often grouped with Britain’s South Sea Bubble, although the two companies and markets were separate.
The Paris Bourse was the French exchange associated with this market activity. The crash also demonstrated a recurring financial pattern: easy credit, persuasive future-growth stories, rising prices, and a sudden loss of trust can combine to produce a self-reinforcing collapse.