Which financial crisis began when the South Sea Company’s share price collapsed in 1720?

The financial crisis triggered by the collapse of the South Sea Company’s share price in 1720 was the South Sea Bubble.

The South Sea Company received a British government charter connected with trade and public debt. Its shares rose dramatically as investors bought into optimistic claims about commercial opportunities. Speculation spread through London, and many investors purchased shares at prices far beyond the company’s realistic earning prospects.

The bubble burst in the autumn of 1720. Share prices collapsed, ruining investors and causing political scandal in Britain. Parliament investigated the company’s directors and associated officials, while public confidence in financial promotion suffered for years.

The South Sea Bubble is often discussed alongside John Law’s Mississippi Bubble in France, but they were separate schemes and separate collapses. Both formed part of a broader wave of early-eighteenth-century speculative finance, making the distinction important in historical trivia.