Which French financial scheme collapsed in 1720 after shares in the Mississippi Company soared?

The French financial scheme that collapsed in 1720 after Mississippi Company shares soared was the Mississippi Bubble.

Scottish financier John Law reorganized French finance through the Banque Générale and the Compagnie d’Occident, later known as the Mississippi Company. The company claimed valuable trading rights in French territories in North America, and investors became excited by exaggerated expectations of wealth.

Law’s bank issued paper money that helped finance share purchases, causing the company’s price to rise dramatically. The boom attracted investors from across Europe, but the projected profits did not match the speculation. When confidence weakened, holders rushed to exchange shares and paper money for more reliable assets.

The system collapsed in 1720, damaging Law’s reputation and forcing him to leave France. The Mississippi Bubble occurred at roughly the same time as Britain’s South Sea Bubble, but the two were separate schemes in different countries.