What 1720 speculative bubble collapsed after Parliament’s South Sea Bubble Act?

The South Sea Bubble was the 1720 speculative bubble that collapsed after Parliament’s South Sea Bubble Act.

The South Sea Company received a government-backed monopoly over trade with Spanish South America, although its actual commercial prospects were limited. Investors were also attracted by a plan to convert government debt into company shares. As prices soared, promoters encouraged increasingly speculative purchases, and many buyers borrowed to participate.

Parliament passed the Bubble Act in June 1720, restricting joint-stock companies without a charter. Confidence broke later that year, and South Sea shares collapsed, ruining investors from aristocrats to members of the scientific community. The episode is often paired with France’s contemporaneous Mississippi Bubble, but they were separate schemes. The scandal prompted parliamentary investigations and lasting criticism of financial promotion.