Which French company’s shares collapsed in 1720 during the Mississippi Bubble?

The Mississippi Company’s shares collapsed in 1720 during France’s Mississippi Bubble.

The company was originally associated with the Mississippi Company founded by John Law and was later consolidated with other French trading enterprises. Law’s system gave the company valuable privileges connected with trade and colonial development, while his bank issued paper money. A rapidly expanding supply of credit helped investors buy shares and pushed prices far above levels justified by the company’s commercial prospects.

When confidence weakened, shareholders rushed to sell and to exchange paper claims for specie. The financial system could not satisfy those demands indefinitely. Share prices fell sharply, banknotes lost credibility, and Law’s experiment in monetary and corporate finance unraveled.

This episode is distinct from England’s South Sea Bubble, even though both peaked in 1720. The Mississippi scheme was French and centered on John Law’s system; the South Sea Bubble was an English crisis involving the South Sea Company. Both became classic examples of speculative bubbles.