Which French company’s collapse formed the central episode of the Mississippi Bubble in 1720?

The Mississippi Company’s collapse formed the central episode of France’s Mississippi Bubble in 1720.

The company was reorganized under John Law, a Scottish financier who also controlled France’s Banque Générale, later the Banque Royale. It received a monopoly over trade with French territories in North America, especially the Mississippi region, while its shares became part of a much larger scheme for managing French government debt.

Speculation drove the share price to extraordinary levels in Paris during 1719 and early 1720. Confidence then broke as investors sought to convert paper wealth into hard currency. The company and bank could not sustain the promises implied by the rising prices, and the shares collapsed.

The Mississippi Bubble is often paired with Britain’s South Sea Bubble because both peaked and burst in 1720. The crisis damaged public trust in paper money and in John Law’s financial system, although Law’s reforms also influenced later central banking and public-finance ideas.