Which 1720 British stock-market scandal became known as the South Sea Bubble?

The 1720 British stock-market scandal involving the South Sea Company became known as the South Sea Bubble.

The South Sea Company received a monopoly over British trade with parts of Spanish South America, although its realistic trading prospects were much smaller than promotional claims suggested. Investors bought shares eagerly after the company proposed converting government debt into company stock.

Share prices rose rapidly during 1720, attracting wealthy investors and imitators. Parliament later investigated the collapse and found extensive bribery and corruption among officials and company directors.

The episode is not the same as France’s Mississippi Bubble, which also collapsed in 1720. The South Sea crisis damaged public confidence and led to legal restrictions on joint-stock promotion, although British financial markets eventually recovered.