Which 1720 financial bubble collapsed after shares of the South Sea Company plunged?

The financial bubble that collapsed after South Sea Company shares plunged in 1720 was the South Sea Bubble.

The South Sea Company had received a government-backed monopoly over British trade with parts of Spanish South America, although its real commercial prospects were much more limited than many investors believed. The company also took on government debt, helping create enthusiasm for its shares.

As the share price rose, promoters and investors pursued increasingly speculative schemes. Parliament passed the Bubble Act in 1720, targeting unauthorized joint-stock companies, but the measure did not prevent the South Sea speculation from continuing. By late summer, confidence broke and the share price collapsed, ruining many investors.

The South Sea Bubble is often discussed alongside John Law’s Mississippi Bubble in France, which also burst in 1720. They were separate schemes and markets, even though both reflected the era’s enthusiasm for paper wealth, government finance, and speculative company shares.