John Law created the Mississippi Company scheme behind France’s 1720 Mississippi Bubble.
John Law was a Scottish financier and economic theorist who became influential in France under the regent Philippe II, Duke of Orléans. In 1716, he established the Banque Générale, later reorganized as the Banque Royale. He also developed the Mississippi Company, which held a monopoly over French trade in parts of North America.
Law linked company shares, paper money, and government debt in an ambitious financial system. Investors were attracted by stories of immense wealth in Louisiana, even though the colony’s actual economic output did not justify the market’s expectations. Share prices rose dramatically before confidence collapsed in 1720.
The resulting crash damaged public trust in paper money and financial innovation. Law fled France, and the company’s failure became one of the best-known speculative bubbles in European history. The Mississippi Bubble occurred in the same year as Britain’s South Sea Bubble, but the schemes were organized in different countries.