The 1720 British bubble that collapsed after South Sea Company shares soared was the South Sea Bubble.
The South Sea Company received a government monopoly over trade with Spanish South America, although its actual commercial opportunities were limited. In 1720, the company proposed converting large amounts of British government debt into its shares, attracting investors with extravagant expectations and aggressive promotion.
Its share price rose dramatically during the year before confidence failed. Parliament’s Bubble Act followed the collapse and restricted the formation of joint-stock companies without a charter. The episode became one of the best-known early financial bubbles.
The South Sea Bubble is often discussed alongside France’s Mississippi Bubble, which also burst in 1720. They were separate schemes, although both were connected to John Law’s financial system and the speculative mood of the period.