The Mississippi Company became central to the 1720 Mississippi Bubble, one of the earliest major stock-market crashes. Scottish financier John Law reorganized the company and promoted shares linked to France’s claimed territories in North America.
Law also controlled France’s bank and used paper money and credit to support a broad financial system. Investors were attracted by optimistic reports about the wealth of the Mississippi region, even though the company’s actual commercial prospects could not justify the soaring share price.
Shares rose dramatically in 1719 and 1720, attracting people from across French society. When confidence broke, investors rushed to sell. The share price collapsed, paper money lost credibility and Law fled France in 1720. The episode damaged public trust in paper finance for many years.
The Mississippi Bubble is often compared with Britain’s South Sea Bubble, which also peaked and collapsed in 1720. They were separate companies and schemes. The Mississippi Company’s story belongs primarily to France and to Law’s experiment with a bank-supported paper-money economy.