Mississippi Scheme

French-American financial scheme of 1717 for the colonization and cultivation of the banks of the Mississippi River. Shares were issued and rapidly rose in value after reports that there were gold and silver mines in the area. By 1719 shares were selling at 40 times their face value. Investors then lost confidence, withdrawing their money, and the bank stopped payment.

The scheme was devised by John Law in Paris. The Compagnie des Indes undertook the management of the mint and farmed the revenue from the government, so that not only did the company control practically the whole colonial trade, but it also had in its hands the management of the currency and the finance of France. In 1720 Law made an attempt to amalgamate the company and the Banque Royale. In December 1720 he escaped from France.