What was the name of the 1720 British market collapse involving the South Sea Company?

The 1720 British market collapse involving the South Sea Company was called the South Sea Bubble.

The South Sea Company received trading privileges and assumed part of the British government’s debt. Its shares rose dramatically in 1720 as investors expected enormous profits from trade with Spanish-controlled South America. Those expectations were far greater than the company’s actual commercial opportunities.

As share prices climbed, people from many social classes joined the speculation, and other joint-stock ventures appeared. Parliament passed the Bubble Act in 1720, restricting some companies, but confidence in the South Sea Company eventually broke. The share price fell rapidly, ruining many investors.

The South Sea Bubble is often discussed alongside France’s Mississippi Bubble, which collapsed in the same year. Both episodes show how government debt conversion, promotional claims, easy speculation, and crowd psychology can combine in an early financial bubble.