Which 1720 English bubble crash involved the South Sea Company?

The South Sea Bubble was the 1720 English bubble crash involving the South Sea Company.

The South Sea Company received a government-supported monopoly over trade with parts of Spanish America, although its actual trading prospects were far less impressive than promotional claims suggested. In 1720, its shares rose dramatically as investors speculated on future profits and as the company became involved in plans to convert government debt.

The boom encouraged the creation of other speculative ventures, including companies with implausible or deliberately vague business descriptions. Parliament passed the Bubble Act in 1720, partly to restrict unauthorized joint-stock companies. Confidence then collapsed, South Sea shares plunged, and many investors suffered substantial losses.

The episode is often discussed alongside France’s Mississippi Bubble, which also burst in 1720 under John Law’s financial system. They were separate schemes, however. The South Sea crisis affected prominent figures and prompted parliamentary investigations into corruption, making it one of the best-known early examples of a speculative market bubble.