Which company’s stock-market collapse helped define the South Sea Bubble of 1720?

The South Sea Company’s stock-market collapse helped define the South Sea Bubble of 1720.

The company received a monopoly over British trade with parts of Spanish America, although the practical trading opportunities were far smaller than many investors imagined. It also took on portions of the British national debt, encouraging the impression that its shares offered enormous financial potential.

Its share price surged during 1720 as investors speculated and the company promoted ambitious expectations. Parliament passed the Bubble Act that year, restricting unchartered joint-stock companies. Confidence broke later in 1720, and the South Sea Company’s shares collapsed, ruining many investors.

The crisis was international. France’s Mississippi Company bubble also burst around the same period, showing how speculative enthusiasm could cross borders. Isaac Newton was among those who lost money, though the famous exact-loss quotation associated with him is difficult to verify in its popular form.