Mississippi Scheme,plan formulated by John LawLaw, John,
1671–1729, Scottish financier in France, b. Edinburgh. After killing a man in a duel (1694) he fled to Amsterdam, where he studied banking. Returning to Scotland (1700), he proposed to Parliament plans for trade and revenue reforms and published
..... Click the link for more information. for the colonization and commercial exploitation of the Mississippi valley and other French colonial areas. In 1717 the French merchant Antoine Crozat transferred his monopoly of commercial privileges in LouisianaLouisiana
, state in the S central United States. It is bounded by Mississippi, with the Mississippi River forming about half of the border (E), the Gulf of Mexico (S), Texas (W), and Arkansas (N). Facts and Figures
Area, 48,523 sq mi (125,675 sq km). Pop.
..... Click the link for more information. to Law, who, with the sanction of the French regent, Philippe II, duc d'Orléans, organized the Compagnie d'Occident. Its shares first depreciated in value but rose rapidly when Law, director of the new royal bank, promised to take over the stock at par at an early date.
In 1719 the company absorbed several other organizations for the development of the Indies, China, and Africa, and Law thus controlled French colonial trade. The consolidated company, renamed the Compagnie des Indes (but commonly known as the Mississippi Company), was given, among other privileges, the right of farming the taxes. It then assumed the state debt and finally was officially amalgamated (1720) with the royal bank. Public confidence was such that a wild orgy of speculation in its shares had set in. The speculation received a strong impetus from Law's advertising, which described Louisiana as a land full of mountains of gold and silver. One story told of a fabulous emerald rock on the Arkansas River, and an expedition promptly set out to find it.
Overexpansion of the company's activities, the almost complete lack of any real assets in the colonial areas, and the haste with which Law proceeded soon brought an end to his scheme. A few speculators sold their shares in time to make huge profits, but most were ruined when the "Mississippi Bubble" burst in Oct., 1720. In the governmental crisis that followed, Law's financial system was abolished, and he fled the country (Dec., 1720). Although a failure in its financial aspects, the Mississippi Scheme was responsible for the largest influx of settlers into Louisiana up to that time.