Which 1720 company became a symbol of Britain’s first major stock-market crash?

The South Sea Company became a symbol of Britain’s first major stock-market crash in 1720.

The South Sea Company received a government-backed monopoly over British trade with parts of Spanish South America, although its realistic trading prospects were far smaller than many investors believed. Its shares rose dramatically as promoters encouraged confidence in the company’s future.

The bubble burst later in 1720. Share prices collapsed, ruining many investors and causing political scandal because influential figures had promoted or benefited from the scheme. Parliament investigated the affair, and the episode became one of the best-known examples of speculative mania.

The South Sea Bubble was part of a wider European financial crisis. France’s Mississippi Company also experienced a spectacular boom and collapse under John Law. The British government responded with the Bubble Act of 1720, which restricted the formation of joint-stock companies without a royal charter or parliamentary authorization. The South Sea Company continued for years afterward, but its speculative bubble had been destroyed.