The Mississippi Bubble was a speculative financial mania in France centered on the Mississippi Company, a trading and colonial monopoly founded by the Scottish economist John Law in 1717 to develop France's Louisiana territory. Law's scheme combined the company with a new national bank issuing paper currency, driving Mississippi Company shares from a few hundred livres to roughly 10,000 livres by the peak of speculation in 1720. The resulting expansion of the money supply produced severe inflation, and when investors began cashing out shares for specie the price collapsed, falling to around 1,000 livres by December 1720. The company was placed under government receivership in April 1721 and Law fled France for Brussels and then Venice. The episode, unfolding in the same years as Britain's South Sea Bubble, remains a foundational case study in the economics of speculative bubbles and the dangers of unbacked paper money issuance.
Facts
Event DatePrecision reflects the second half of 1720 share price collapse; the scheme ran from 1717 and was placed under government receivership in April 1721. Connections
Associated With
South Sea Bubble, Events Contemporaneous speculative bubbles of 1719-1720, often studied together as twin episodes of early paper-money mania.
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1. Wikipedia
Wikimedia FoundationAssociated With: Tulip Mania, Tulip mania (Wikipedia), Social Mania and Legacy sectionQuote, Associated With: Tulip Mania, Tulip mania (Wikipedia), Social Mania and Legacy section
Nearly a century later, during the crash of the Mississippi Company and the South Sea Company in about 1720, tulip mania appeared in satires of these manias.
John Law's Company (Wikipedia)
Mississippi Company
After a stock market collapse of the company's shares in the second half of 1720 (the Mississippi Bubble), the company was placed under government receivership in April 1721.
In Group: Early Modern Speculative Manias, Lead
John Law's Company, founded in 1717 by Scottish economist and financier John Law, was a joint-stock company that occupies a unique place in French and European monetary history, as it was for a brief moment granted the entire revenue-raising capacity of the French state.
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