What was the name of the 1720 British stock-market bubble involving a trading company?

The 1720 British stock-market bubble involving a trading company was the South Sea Bubble.

The South Sea Company received expanded commercial 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 America, even though the company’s realistic trading prospects were much smaller than popular speculation suggested.

Promoters, easy credit, and widespread enthusiasm helped drive prices upward. Parliament passed the Bubble Act in 1720, restricting unauthorized joint-stock companies, but the South Sea Company itself remained central to the speculation. When confidence broke, the share price collapsed and many investors were ruined.

The episode is often discussed alongside France’s Mississippi Bubble, which also burst in 1720. South Sea directors and connected politicians faced investigations, while the scandal damaged public trust in financial promoters. It is an early example of how expectations, leverage, and herd behavior can inflate asset prices.