Which company’s failed 1720 share scheme helped cause the South Sea Bubble in Britain?

The South Sea Company’s failed 1720 share scheme helped cause the South Sea Bubble in Britain.

The company was founded in 1711 and received a government-backed monopoly over trade with Spanish South America, although its actual trading opportunities were limited. In 1720, it proposed converting a large portion of Britain’s government debt into company shares. Expectations of enormous commercial profits drove the share price dramatically higher.

The scheme attracted investors from many social classes and inspired numerous other speculative companies. When confidence weakened, the South Sea Company’s share price collapsed. The crash ruined investors, exposed corruption and misleading promotion, and damaged public trust in financial markets.

The South Sea Bubble happened alongside France’s Mississippi Bubble, but the two were separate schemes. The South Sea Company was not the Mississippi Company, and the South Sea episode occurred in Britain. Parliament investigated the scandal, and several prominent figures were punished or disgraced.