The 1720 British speculative bubble that collapsed around overseas trade was the South Sea Bubble.
The South Sea Company received a government monopoly over trade with Spanish South America and proposed converting government debt into company shares. Expectations about profitable commerce helped drive its share price upward in 1720, even though the company’s actual trading opportunities were far more limited than promotional claims suggested.
When confidence broke later that year, the share price collapsed. Investors across British society suffered losses, and the scandal implicated politicians and company directors. Parliament investigated the episode, and the Bubble Act of 1720 restricted the creation of joint-stock companies without a royal charter or parliamentary authorization.
The South Sea Bubble is often discussed alongside France’s Mississippi Bubble, which collapsed in the same period under John Law’s financial system. They were related episodes of European speculation, but they involved different companies, governments, and markets. The crash helped establish “bubble” as a lasting term for speculative overvaluation.