Which company’s share-price collapse became the central symbol of the 1720 South Sea Bubble?
Answer
South Sea Company
The South Sea Company’s share-price collapse became the central symbol of the 1720 South Sea Bubble.
Founded in 1711, the company received a British government monopoly over trade with parts of Spanish America, although its realistic trading opportunities were far more limited than many investors believed. In 1720, Parliament approved a plan allowing the company to assume part of the national debt, and its shares soared amid promotional claims and speculation.
When confidence weakened, the price fell dramatically. Investors ranging from aristocrats to ordinary savers suffered losses, and the scandal damaged public trust in company promotion and government finance.
The South Sea Bubble was not the only speculative mania of 1720. France’s Mississippi Company also collapsed, and the two events are often discussed together. The episode helped establish “bubble” as a lasting financial metaphor for prices detached from sustainable economic value.