Which 18th-century British bubble burst after Parliament passed the Bubble Act in 1720?

The South Sea Bubble was the 18th-century British financial bubble that burst after Parliament passed the Bubble Act in 1720.

The South Sea Company received a government-backed monopoly over trade with parts of Spanish South America, although its practical trading opportunities were limited. Its shares rose dramatically in 1720 as investors expected profits and were encouraged by complex debt-conversion arrangements involving the British government.

Speculation spread beyond the company itself. Many new ventures sought money from the public, and Parliament responded with the Bubble Act, formally the Royal Exchange and London Assurance Corporation Act 1719. The act restricted joint-stock companies operating without a royal charter or legal authority.

When confidence collapsed later in 1720, South Sea shares plunged and many investors suffered severe losses. The episode led to investigations and political scandal. It is often discussed alongside France’s Mississippi Bubble, which collapsed in the same broad period, but they were separate schemes and companies.