Which 1720 speculative collapse involved shares of the South Sea Company in Britain?

The 1720 speculative collapse involving shares of 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 the practical trading opportunity was far more limited than many investors imagined. The company also converted government debt into shares, creating a close relationship between public finance and speculation.

Its share price rose dramatically during 1720 as promoters encouraged enthusiasm and investors bought in expectation of further gains. The price then collapsed later that year, ruining many shareholders and damaging confidence in financial markets. Parliament investigated the scandal, and several company directors faced punishment or loss of property.

The South Sea Bubble is often taught alongside France’s Mississippi Bubble, which also burst in 1720 under John Law’s financial system. They were separate schemes. Tulip mania, another commonly confused example, occurred in the Netherlands during the 1630s and involved tulip bulbs rather than shares in a chartered company.