Which 1720 British financial bubble collapsed after speculation in the South Sea Company?

The 1720 British financial bubble that collapsed after speculation in the South Sea Company was the South Sea Bubble.

The South Sea Company was founded in 1711 and received a monopoly over British trade with Spanish South America, although its real commercial opportunities were far more limited than many investors imagined. In 1720, the company proposed converting part of Britain’s government debt into its shares, helping spark extraordinary enthusiasm.

Share prices rose from about £128 in January 1720 to roughly £1,000 by August. Investors included aristocrats, merchants, and members of the political establishment. As confidence weakened, selling accelerated, and the price collapsed by the end of the year. Parliament investigated the affair, exposing corruption and improper influence.

The South Sea Bubble is often mentioned alongside France’s Mississippi Bubble, which also burst in 1720. They were separate schemes, though both reflected the era’s enthusiasm for company shares and ambitious colonial-trade stories. The episode helped shape later debates about financial regulation, insider dealing, and the dangers of speculative manias.