Which 1720 English company collapse was part of the South Sea Bubble?

The South Sea Company’s collapse was central to the South Sea Bubble of 1720. The company had been granted rights connected to trade with Spanish South America, but its realistic commercial prospects were far smaller than the excitement surrounding its shares.

The company promoted a plan to convert government debt into company stock. As confidence grew, investors bought shares at rapidly rising prices, often encouraged by optimistic claims and easy credit. The enthusiasm spread beyond the company itself, producing a wider speculative boom in England.

South Sea shares reached an extraordinary peak in 1720 before the bubble burst. As prices fell, investors and institutions suffered severe losses. Parliament investigated the scandal, and several company directors were punished for corruption and deception.

The same year also saw the collapse of John Law’s Mississippi Company in France. These events are sometimes grouped together as Europe’s great 1720 bubbles, but the English episode takes its name from the South Sea Company.