What was the main company behind the South Sea Bubble, which collapsed in Britain in 1720?

The South Sea Company was the main company behind Britain’s South Sea Bubble, which collapsed in 1720.

The South Sea Company was established in 1711 and received a government-backed monopoly over trade with Spanish South America, although the commercial opportunities were far smaller than many investors expected. It also took on substantial British government debt, tying its fortunes closely to public finance.

In 1720, enthusiasm for the company drove its share price dramatically higher. Investors were attracted by promotional claims, speculation, and the belief that the company’s political connections guaranteed success. When confidence weakened, the price collapsed, ruining many shareholders and causing a political scandal.

The South Sea Bubble occurred alongside France’s Mississippi Bubble, associated with John Law. These episodes are sometimes grouped with earlier manias such as Dutch tulip speculation, but they involved different markets, institutions, and economic conditions.