John Law created the Mississippi Company scheme linked to France’s 1720 financial crash.
Law was a Scottish financier who became France’s Controller General of Finances. He established the Banque Générale, later transformed into the Banque Royale, and promoted the Compagnie d’Occident, commonly called the Mississippi Company. The company received valuable colonial and commercial privileges and was used to help manage French government debt.
Paper money and company shares expanded rapidly as the public became convinced that Louisiana held enormous wealth. Share prices rose far beyond realistic expectations. When confidence weakened, investors tried to exchange paper claims for hard money, causing the system to unravel in 1720.
The Mississippi Bubble was not the same event as Britain’s South Sea Bubble, although both collapsed in 1720 and influenced one another psychologically. Law fled France after the failure, and public suspicion of paper money remained strong for generations. The company’s promised wealth was especially misleading because Louisiana’s actual economic output could not justify the speculation.