Which 1720 British stock-market bubble collapsed when the South Sea Company’s shares plunged?

The 1720 British stock-market bubble that collapsed around the South Sea Company was the South Sea Bubble.

The South Sea Company received a government monopoly over trade with Spanish South America, although its actual trading prospects were limited. Its shares rose dramatically as investors bought into optimistic claims, speculation, and a broader wave of joint-stock promotion. The company’s share price reached about £1,000 in August 1720 before falling sharply.

Parliament passed the Bubble Act in 1720 amid the crisis, restricting many companies that operated without a charter. The collapse damaged investors and exposed misleading promotion, but it was not the only bubble of that year: France’s Mississippi Bubble also failed in 1720 under John Law.

A common mix-up is treating the South Sea Bubble as a purely modern stock-exchange crash. It was an early financial bubble involving government debt conversion, a chartered company, speculative trading, and public confidence rather than a modern electronic market.