Which 1720 British financial scheme collapsed in the crash known as the South Sea Bubble?

The South Sea Company collapsed in the 1720 crash known as the South Sea Bubble.

Founded in 1711, the company received a British government contract connected with trade and the conversion of government debt. Its commercial prospects were exaggerated, while political influence and enthusiastic promotion helped drive its shares to extraordinary prices.

Shares rose dramatically during 1720, attracting wealthy investors and members of the public. When confidence weakened, selling accelerated. The collapse ruined many investors and produced a political scandal in Britain, with investigations revealing corruption and misleading practices.

The South Sea Bubble is commonly grouped with the Mississippi Bubble in France, which also burst in 1720. They were related episodes in a wider period of speculative finance, but the South Sea Company was the British company at the center of this particular crash. The episode helped establish “bubble” as a lasting term for speculative price manias.