What was the name of the 1720 British stock-market collapse linked to the South Sea Company?
Answer
South Sea Bubble
Answer
South Sea Bubble
The 1720 British stock-market collapse linked to the South Sea Company was the South Sea Bubble.
The South Sea Company received a government-backed monopoly over trade with Spanish South America, although its real trading prospects were far more limited than many investors believed. Its shares rose dramatically as political connections and promotional claims attracted buyers.
By late 1720, confidence collapsed and the share price plunged. Investors who had bought at inflated prices suffered severe losses, while the episode caused political scandal in Britain. Parliament investigated the company's affairs and found corruption involving officials and financiers.
The South Sea Bubble happened alongside the Mississippi Bubble in France, which involved John Law's Mississippi Company. The two episodes are often discussed together because both reflected speculative enthusiasm, easy credit, and unrealistic expectations rather than because they were one combined crash.
Source: Wikipedia · fact-checked Oct. 2026