Which company’s stock bubble gave the South Sea Bubble its name during Britain’s 1720 market crash?

The South Sea Company gave the South Sea Bubble its name during Britain’s 1720 market crash.

Founded in 1711, the company received a government-backed monopoly over British trade with Spanish South America. In practice, the expected commercial opportunities were far smaller than many investors imagined, but the company’s shares became associated with ambitious promises and national prosperity.

In 1720, Parliament approved a plan allowing the company to convert government debt into shares. Promotion and speculation drove the price dramatically upward, attracting aristocrats, merchants, and ordinary investors. The price then collapsed as confidence disappeared, ruining many holders.

The same speculative atmosphere affected other ventures, including the Mississippi Company in France. The episode led to investigations and political scandal in Britain. The phrase “bubble” became a lasting term for a market boom built on unrealistic expectations rather than sustainable value.