Which company’s collapse in 1720 became the defining event of Britain’s South Sea Bubble?

The South Sea Company’s collapse in 1720 became the defining event of Britain’s South Sea Bubble.

Founded in 1711, the company received a government-backed monopoly over British trade with Spanish South America in exchange for taking on part of the national debt. In practice, the promised trade opportunities were far less valuable than many investors imagined. Shares nevertheless soared as the company promoted ambitious expectations and investors rushed to participate.

Parliament passed the Bubble Act in June 1720, restricting the formation of competing joint-stock companies without a royal charter. By late summer, confidence in the South Sea Company began to fail. The share price fell dramatically, ruining many investors and exposing corruption and political influence surrounding the scheme.

The South Sea Bubble occurred alongside France’s Mississippi Bubble, associated with John Law, but the two were separate companies and financial systems. The episode helped shape British attitudes toward speculation, corporate promotion, and parliamentary oversight, although modern financial regulation developed much later.