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

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

The South Sea Company received special trading privileges and promoted a plan to convert government debt into company shares. Speculation drove its stock price from about £128 in January 1720 to nearly £1,000 in August. The price then collapsed by the end of the year.

The company’s actual commercial prospects did not justify the market valuation. Investors were also encouraged by easy credit, promotional claims, and a wider boom in speculative joint-stock companies. Parliament responded with the Bubble Act of 1720, which restricted companies operating without a royal charter or parliamentary authorization.

The South Sea Bubble is often discussed alongside the Mississippi Bubble in France, which also collapsed in 1720. Neither event was a modern stock-market crash in the electronic-index sense, but both became enduring examples of speculative bubbles, leverage, and crowd psychology.