Which 1720 stock-market collapse followed the failure of the South Sea Company scheme?

The South Sea Bubble was the 1720 stock-market collapse that followed the failure of the South Sea Company scheme.

The South Sea Company was established in England in 1711 and received a monopoly over British trade with Spanish South America, although its actual trading opportunities were limited. In 1720, the company proposed converting government debt into its shares, and Parliament approved the plan. Promotional claims and speculation pushed the share price sharply upward.

When confidence weakened later in 1720, the price collapsed. Investors across British society lost money, and the scandal damaged public trust in company promotion and political oversight. Parliament investigated, and several officials connected with the scheme faced serious consequences.

The episode is often grouped with the Mississippi Bubble in France, which also burst in 1720, but they were separate schemes. It is also distinct from Tulip Mania in the Dutch Republic, an earlier episode involving bulbs rather than shares in a chartered company. The term “bubble” became especially associated with speculative prices after these events.