Which 18th-century British company collapse triggered a major London stock-market panic in 1720?

The South Sea Company collapse triggered a major London stock-market panic in 1720.

The South Sea Company was established in 1711 to trade with Spanish South America and manage part of Britain’s government debt. Its shares rose dramatically in 1720 as investors expected enormous commercial profits, despite the company’s limited actual trading opportunities.

The resulting speculation became known as the South Sea Bubble. Share prices climbed to about £1,000 in August 1720 before collapsing later that year. Thousands of investors suffered losses, including members of the British aristocracy.

The collapse formed part of a wider European speculative episode. France’s Mississippi Company bubble also burst in 1720, creating a separate but related crisis. Parliament responded with the Bubble Act, which restricted the formation of joint-stock companies without a royal charter or parliamentary authorization.