The French speculative episode centered on Mississippi Company shares and collapsing in 1720 was the Mississippi Bubble.
John Law, a Scottish financier, persuaded the French government to grant his company major trading privileges in North America. The company’s shares became the focus of intense speculation in Paris, while Law’s financial system also linked the company to a bank and paper-money scheme. Share prices rose far beyond what the company’s realistic commercial prospects could justify.
Confidence weakened when investors sought to convert paper wealth into hard currency. A rush to sell shares and withdraw money followed, and the price collapsed in 1720. Law lost political influence and eventually left France. The episode damaged public trust in paper money and speculative finance.
The Mississippi Bubble is often discussed alongside Britain’s South Sea Bubble, which also burst in 1720. They were separate schemes in different countries, although both reflected the era’s enthusiasm for monopoly companies, government finance, and rapidly rising share prices.