Which British company’s 1720 collapse gave its name to the South Sea Bubble?

The South Sea Company’s 1720 collapse gave its name to the South Sea Bubble.

Founded in 1711, the company received a British government monopoly over trade with Spanish South America, although the expected commercial opportunities were far more limited than promotional claims suggested. In 1720, a plan to convert government debt into company shares helped drive intense speculation. Share prices rose dramatically before confidence failed and prices collapsed.

The crash harmed investors across British society and prompted investigations into corruption and improper promotion. Parliament passed measures to restrict joint-stock companies, although these restrictions were later changed. The episode became one of the best-known early examples of a financial bubble.

The South Sea Bubble is distinct from France’s Mississippi Bubble, which also collapsed in 1720. The companies were separate, but their simultaneous crises helped make 1720 a landmark year in financial history.