Which company’s failed South Sea trading scheme gave the 1720 British financial collapse its name?

The South Sea Company’s failed trading scheme gave the 1720 British financial collapse its name: the South Sea Bubble.

Founded in 1711, the company received a government-backed monopoly over British trade with parts of Spanish South America, although the expected commercial opportunities were far more limited than investors imagined. In 1720, Parliament approved a plan allowing the company to convert government debt, and its shares rose dramatically as promotion and speculation intensified.

The company’s share price reached about £1,000 in August 1720 before collapsing by the end of the year. Investors included aristocrats, merchants, and members of the political establishment. The crisis damaged confidence and exposed corruption, insider dealing, and unrealistic promises.

The South Sea Bubble was part of a wider European speculative episode. France’s Mississippi Bubble also collapsed in 1720, and the two events are often discussed together. The South Sea Company did not simply trade successfully and then fail; its financial structure and promotional expectations were central to the bubble.