Which 1720 British speculative collapse is commonly called the South Sea Bubble?

The 1720 British speculative collapse is commonly called the South Sea Bubble.

The South Sea Company received a government-backed monopoly over trade with Spanish South America and became the center of intense speculation in its shares. In practice, the company's commercial opportunities were far more limited than many investors expected. Its stock price nevertheless rose dramatically during 1720 as investors were attracted by promotional claims and easy credit.

When confidence weakened, the price collapsed. The failure ruined many investors and exposed corruption involving company promoters and political figures. Parliament investigated the episode, and several prominent people were punished or disgraced. The crisis also harmed the reputations of joint-stock companies more broadly.

The South Sea Bubble is often discussed alongside France's Mississippi Bubble, which burst in the same year. They were separate schemes, however, even though both involved speculative trading, ambitious financial promotion, and public participation. The episode helped establish “bubble” as a lasting term for a market mania followed by a sharp collapse.