Which company’s South Sea scheme collapsed in Britain during the financial crisis of 1720?

The South Sea Company’s scheme collapsed in Britain during the financial crisis of 1720.

The South Sea Company had received a monopoly over British trade with parts of Spanish America, but its expected commercial profits were vastly overstated. Promotional campaigns and share speculation drove its price to extraordinary levels during 1720.

When confidence failed, the share price collapsed. The episode became known as the South Sea Bubble and caused ruin for many investors, including prominent figures. Parliament investigated the company’s conduct, revealing corruption and financial deception.

The crisis unfolded alongside the Mississippi Bubble in France, another famous speculative collapse. That connection can cause confusion, but the South Sea Bubble specifically refers to the British company and its shares. The Bank of England helped manage the aftermath, although it was not the company whose speculative stock created the bubble.