John Law’s Mississippi Company was central to France’s 1720 market crash.
John Law, a Scottish financier serving as France’s controller general of finances, reorganized the Mississippi Company and linked it to a broad scheme involving colonial claims, banknote issuance, and government debt. Expectations about wealth from Louisiana helped drive intense demand for company shares.
The share price rose dramatically during 1719 and early 1720, but confidence weakened when investors questioned the company’s profits and the value of its colonial prospects. A rush to convert shares into money followed, and the bubble collapsed later in 1720.
The episode is known as the Mississippi Bubble. It occurred at roughly the same time as Britain’s South Sea Bubble, but the companies and political systems were different. John Law fled France after the collapse, while the crisis damaged confidence in paper money and speculative finance.