In the 1720 South Sea Bubble, which company’s collapse devastated British investors?

In the 1720 South Sea Bubble, the collapse of the South Sea Company devastated British investors.

The South Sea Company was founded in 1711 and received a government-backed monopoly over British trade with parts of Spanish South America. In 1720, Parliament approved a plan for the company to assume a large share of the national debt, encouraging investors to buy its stock.

Its share price rose dramatically as enthusiasm, promotional claims, and easy credit attracted more buyers. The company’s actual trade prospects were far less valuable than the speculation suggested. When confidence weakened, the price collapsed, ruining many investors and exposing problems involving insider dealing and political influence.

The same year also saw the collapse of John Law’s Mississippi Company in France. That is why the two episodes are sometimes mentioned together, but the British bubble takes its name from the South Sea Company.