Which British trading company’s collapse helped end the South Sea Bubble in 1720?

The South Sea Company’s collapse helped end the South Sea Bubble in Britain in 1720.

The company received a government-backed role in managing part of Britain’s national debt and promoted expectations of enormous trading profits with Spanish America. Its shares rose dramatically as investors bought into the story, often with borrowed money and little understanding of the company’s actual prospects.

The price eventually peaked in 1720 before falling rapidly. As confidence disappeared, investors rushed to sell, and the collapse spread through London’s financial market. The episode damaged many fortunes and prompted parliamentary investigations into corruption and insider dealing.

The South Sea Bubble is often discussed alongside France’s Mississippi Bubble, which also burst in 1720. The two were separate schemes, although both demonstrated how promotional stories, easy credit, and speculative buying can inflate prices far beyond underlying business value.