John Law’s Mississippi Company scheme collapsed during France’s Mississippi Bubble of 1720.
Law was a Scottish financier who became controller general of finances in France. His Banque Générale, later transformed into the Banque Royale, issued paper money, while the Mississippi Company gained control of French trading privileges and absorbed government debt. Investors bought shares expecting great wealth from trade and colonization in North America.
Shares rose spectacularly in 1719 and early 1720, then fell when confidence in the company’s profits and the paper-money system weakened. Many investors tried to exchange paper notes and shares for hard money at once, creating a liquidity crisis. Law fled France after the scheme collapsed.
The company’s name referred to French commercial claims around the Mississippi River, not to a modern stock exchange. The Mississippi Bubble occurred alongside Britain’s South Sea Bubble, but each had its own company, government arrangements, and collapse.