Which French trading scheme collapsed in 1720 during the Mississippi Bubble?

The Mississippi Company’s trading scheme collapsed in 1720 during the Mississippi Bubble.

The company, associated with Scottish financier John Law, received valuable commercial privileges connected with France’s Louisiana colony and other overseas ventures. Law also linked the company to a broader financial system that included a bank and the management of government debt. The arrangement encouraged investors to exchange government securities for company shares.

Share prices rose dramatically in 1719 and early 1720. Public excitement, easy credit, and promotional claims attracted both wealthy investors and ordinary savers. Confidence weakened when doubts emerged about the company’s profits and when investors tried to convert paper wealth into cash. The resulting selling pressure caused the share price to collapse.

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 involved speculative enthusiasm, company privileges, and close connections between finance and government debt. The French episode damaged confidence in paper money and helped end Law’s financial experiment.