Which 1720 speculative collapse followed the bursting of Britain’s South Sea Company bubble?

The 1720 speculative collapse that followed the bursting of Britain’s South Sea Company bubble was the South Sea Bubble.

The South Sea Company received a government-backed monopoly over trade with parts of Spanish America in exchange for assuming government debt. Investors became excited by exaggerated expectations about the company’s commercial prospects, and its share price rose dramatically during 1720. Prominent figures, including members of the British elite, participated in the speculation.

When confidence failed, the share price collapsed. Investors who had borrowed to buy shares faced ruin, and the scandal produced parliamentary investigations and public outrage. The company’s directors were accused of corruption and improper influence, while the government attempted to contain the financial damage.

The South Sea Bubble unfolded alongside John Law’s Mississippi Bubble in France, but the two were separate schemes. The episode became an enduring example of speculative bubbles, crowd psychology, and the dangers of buying assets mainly because prices are rising.