Scottish economist John Law founded the company behind France’s 1720 Mississippi Bubble.
Law established the Banque Générale in 1716 and later gained control of the Mississippi Company, which promoted trade and colonization in French Louisiana. The company also absorbed major French tax and debt-collection functions. A money-creation system and enthusiastic speculation pushed its share price sharply higher.
Confidence collapsed in 1720 when investors sought to convert paper claims into coin and the company’s commercial prospects failed to justify its valuation. The share price fell dramatically, and Law fled France. The Mississippi Bubble is often discussed with Britain’s South Sea Bubble because both occurred in 1720, but they involved different companies and governments.