Which market crash began with the collapse of the Mississippi Company in France in 1720?

The collapse of the Mississippi Company in France in 1720 was the Mississippi Bubble.

The company was promoted by Scottish financier John Law, who also controlled France’s Banque générale and later the Banque royale. Investors bought shares in hopes that the company’s supposed wealth and monopoly rights in Louisiana would produce enormous profits. Law’s paper-money system encouraged rapid speculation and pushed share prices far above realistic business values.

Confidence eventually failed. Investors sought to exchange paper claims for precious metal and other assets, while doubts grew about the company’s actual prospects. Share prices collapsed in 1720, ruining many speculators and damaging confidence in Law’s financial system.

The Mississippi Bubble occurred alongside Britain’s South Sea Bubble, but they were separate schemes in different countries. Both demonstrated how monopoly privileges, easy credit, promotional storytelling, and crowd psychology could inflate financial assets. The French episode also showed that a market crash can undermine confidence in a currency and banking system, not merely destroy share prices.