Which French company’s 1720 collapse formed part of the wider Bubble crisis alongside the South Sea Bubble?

The Mississippi Company’s 1720 collapse formed part of the wider Bubble crisis alongside the South Sea Bubble.

The company was associated with Scottish financier John Law, who promoted a large French trading and financial enterprise linked to the Mississippi region of North America. Its shares rose rapidly as investors became convinced that the company’s colonial prospects and financial arrangements would produce exceptional wealth.

The boom was supported by an expanding paper-money system and intense speculation in Paris. Confidence eventually broke, and the company’s share price collapsed in 1720. The crisis damaged trust in Law’s financial system and contributed to his fall from power.

The Mississippi Company and the British South Sea Company were separate enterprises, although their bubbles occurred at roughly the same time and are often discussed together. Another common mix-up is assuming that the company’s name meant it controlled all trade along the Mississippi; its real commercial results did not match the extraordinary expectations built into its valuation.