The 1720 British financial bubble whose collapse became an early stock-market crash was the South Sea Bubble.
The South Sea Company received a government-backed arrangement to manage part of Britain’s national debt, and its shares rose dramatically during 1720. Investors were attracted by optimistic claims about the company’s commercial prospects and by the broader speculative mood surrounding new joint-stock ventures.
When confidence broke, the share price collapsed. The episode ruined many investors and produced political scandal, because influential figures had promoted or benefited from the scheme. Parliament investigated the company’s conduct, and the crisis became one of the best-known financial disasters of eighteenth-century Britain.
The South Sea Bubble occurred alongside the Mississippi Bubble in France, which was associated with John Law’s financial system. They were separate schemes, although both collapses reflected the same era’s enthusiasm for speculative paper wealth.