The collapse of the Mississippi Company contributed to France’s Mississippi Bubble crash in 1720.
The company was associated with John Law, a Scottish financier who became influential in France. It received extensive privileges connected with trade and the French colonial territory of Louisiana, while its shares became the focus of intense speculation.
Law’s financial system linked company shares, paper money, and government finance. Share prices rose far beyond what underlying trade could justify, attracting investors who expected further gains. Confidence eventually broke, and the price collapsed during 1720.
The episode is often discussed alongside England’s South Sea Bubble, which also burst in 1720. Although the two schemes were separate, both demonstrated the dangers of speculative bubbles, promotional enthusiasm, and financial systems built on rapidly rising asset prices.