What 1720 financial bubble and collapse involved the South Sea Company in Britain?

The 1720 financial bubble and collapse involving Britain’s South Sea Company was the South Sea Bubble.

The South Sea Company was established in 1711 and received a government-backed monopoly over trade with parts of Spanish South America. In practice, its commercial prospects were far more limited than many investors believed. The company also took on a major role in converting government debt into shares, helping fuel enthusiasm for its stock.

Share prices rose dramatically during 1720 as investors chased the promise of easy wealth. The company’s stock reached about £1,000 per share before confidence collapsed later that year. Prices then plunged, ruining many investors and creating a political scandal in Britain. Parliamentary investigations uncovered corruption and improper promotion connected with the scheme.

The South Sea Bubble is commonly discussed alongside France’s Mississippi Bubble and the Dutch Tulip Mania. Those episodes were separate events, although all became enduring examples of speculative bubbles followed by severe losses.