Which 1720 speculation collapse involved the South Sea Company in Britain?

The 1720 speculation collapse involving Britain’s South Sea Company was the South Sea Bubble.

The South Sea Company received a government-backed monopoly over trade with Spanish South America, although its actual trading prospects were limited. In 1720, it proposed converting large amounts of British government debt into company shares. Political influence, promotional claims, and easy credit helped push the share price sharply upward.

Shares rose from about £128 in January 1720 to roughly £1,000 in August. The price then collapsed, ruining many investors and triggering investigations into bribery and corruption. Parliament passed the Bubble Act in 1720, restricting the formation of joint-stock companies without a charter.

The South Sea Bubble was part of a wider speculative episode that also included France’s Mississippi Company. It is not the same event as Dutch Tulip Mania, which occurred in the seventeenth century and involved bulb contracts. The South Sea collapse is remembered as an early example of a financial bubble driven by leverage, promotion, and unrealistic expectations.