In the 1720 South Sea Bubble, which company’s shares collapsed after speculative trading in Britain?

The South Sea Company’s shares collapsed during Britain’s 1720 South Sea Bubble.

The company was founded in 1711 to trade with Spanish-controlled South America, but its commercial prospects were limited. Its more important privilege was managing part of Britain’s government debt. In 1720, Parliament approved a plan allowing the company to convert government debt into company shares, encouraging a dramatic rise in its stock price.

Speculation spread beyond the South Sea Company. Numerous new ventures appeared, and investors bought shares in hopes of quick profits. Parliament passed the Bubble Act in June 1720, restricting unauthorized joint-stock companies, but confidence in the South Sea Company weakened later that year. The share price fell sharply, ruining many investors.

The South Sea Bubble is often discussed alongside France’s Mississippi Bubble, which also burst in 1720. A common mix-up is treating the South Sea Company as simply a trading company; its debt-conversion scheme and political connections were central to the bubble.