The 1720 market bubble involving the British trading company was the South Sea Bubble.
The South Sea Company received a government-backed monopoly over trade with Spanish South America and proposed taking over part of Britain’s national debt. Investors became fascinated by the company’s prospects, even though its actual commercial opportunities were far more limited than promotional claims suggested.
Its share price rose dramatically during 1720, alongside speculation in other ventures. Parliament passed the Bubble Act in June, restricting many joint-stock companies, and confidence later collapsed. The South Sea Company’s shares fell sharply, ruining investors and provoking political scandal.
The South Sea Bubble is often discussed with France’s Mississippi Bubble, which also burst in 1720, and with the earlier Dutch tulip episode. These events were different schemes and markets. The South Sea episode helped expose weaknesses in corporate promotion, government finance, and investor understanding of risk in Britain’s expanding capital markets.