Which French market panic of 1720 followed the collapse of John Law’s Mississippi Company?

The French market panic of 1720 followed the collapse of John Law’s Mississippi Company, creating the Mississippi Bubble.

John Law’s company held a monopoly over French trade with territories associated with the Mississippi River. Its shares rose dramatically as investors bought into optimistic claims about colonial wealth and a broader financial system based on paper money. Law also controlled the Banque Générale, later linked to the Banque Royale, making the scheme unusually connected to the state’s finances.

In 1720, confidence failed as investors sought to convert paper and shares into more reliable assets. The share price collapsed, fortunes were destroyed, and Law fled France. The episode damaged trust in paper currency and speculative finance for years.

The Mississippi Bubble is often discussed alongside England’s South Sea Bubble, which also collapsed in 1720. They were separate schemes in different countries, although both reflected the era’s enthusiasm for joint-stock companies, government finance, and overseas trade. The term “Mississippi Bubble” refers to the French episode, not the English South Sea crisis.