What speculative bubble burst in Britain during 1720, causing the South Sea Crash?

The speculative bubble that burst in Britain during 1720 was the South Sea Bubble.

The South Sea Company received a government-backed monopoly over trade with Spanish South America, although its actual commercial prospects were limited. In 1720, the company proposed converting part of Britain’s national debt into shares. Excitement, easy credit, and aggressive promotion pushed the share price from about £128 in January to more than £1,000 in August.

The price then collapsed as investors sold and confidence disappeared. Many aristocrats, merchants, and ordinary savers suffered heavy losses. Parliament investigated the company and uncovered corruption involving politicians and officials. The crash also damaged other ventures that had attracted money during the speculation.

The South Sea Bubble is often confused with the Mississippi Bubble, which occurred in France at roughly the same time. Both were connected to John Law’s financial schemes and the expansion of paper finance, but they were separate episodes.