Which 1720 British bubble burst when the South Sea Company’s share price collapsed?

The 1720 British bubble that burst when the South Sea Company’s share price collapsed was the South Sea Bubble.

The South Sea Company received valuable-looking privileges linked to trade with Spanish America, although its realistic commercial prospects were far smaller than public enthusiasm suggested. A scheme to convert government debt into company shares helped fuel speculation, and its price rose dramatically during 1720.

As investors rushed to participate, the company and other ventures attracted money based more on expectation than sustainable earnings. Parliament passed the Bubble Act in 1720, targeting unauthorized joint-stock companies, but confidence soon failed. The South Sea Company’s shares collapsed, ruining many investors and causing a political scandal.

The South Sea Bubble is often discussed alongside France’s Mississippi Bubble and the Dutch tulip episode. Those were separate speculative episodes, even though all became classic examples of financial bubbles.