In the South Sea Bubble of 1720, which British company’s collapse became the scandal’s namesake?

The South Sea Bubble of 1720 centered on the collapse of the South Sea Company.

The company was founded in 1711 to trade with Spanish South America, but its commercial prospects were limited by war and Spain’s control of the region. Its most important business became the conversion of government debt into company shares. Investors were attracted by promotion, political connections, and rapidly rising prices rather than by proven trading profits.

Parliament approved a major debt-conversion scheme in 1720, and the share price rose dramatically during the year. The boom spread to other ventures, many of them fraudulent or unrealistic. When confidence weakened, selling accelerated and the price collapsed, ruining many investors and damaging prominent politicians.

The South Sea Bubble is often discussed alongside France’s Mississippi Bubble, which burst during the same period. They were separate schemes, although both showed how easy credit, speculation, and persuasive promotion could inflate asset prices.