The Mississippi Company’s collapse formed the European side of the 1720 speculative bubble alongside the South Sea Bubble.
The company was reorganized in France under Scottish financier John Law, who promoted its supposed commercial opportunities in the Mississippi territory. Law’s system combined company shares, paper money, and a state-backed financial structure. Share prices rose rapidly as investors chased easy profits.
Confidence eventually broke. Holders rushed to exchange shares for more reliable assets, while doubts spread about the company’s actual commercial prospects and the value of the paper currency supporting the scheme. The share price collapsed in 1720, helping trigger a wider French financial crisis.
The British South Sea Bubble unfolded separately but during the same year, producing a parallel speculative disaster. The two events are often discussed together because both involved aggressive promotion, rising share prices, and a sudden loss of confidence. The Mississippi Company is also known as the Mississippi Bubble in many historical accounts.