Which investment company became the emblem of Britain’s 1720 South Sea Bubble?

The South Sea Company became the emblem of Britain’s 1720 South Sea Bubble.

Founded in 1711, the company received a British government monopoly over trade with parts of Spanish South America, although its practical trading opportunities were limited. Its shares rose dramatically in 1720 as investors were encouraged by promotional claims and by a plan to convert government debt into company shares.

The boom attracted people from across social classes and encouraged the creation of other speculative ventures. When confidence weakened, the share price collapsed. Many investors lost fortunes, and the scandal damaged public trust in company promotion and political oversight.

The South Sea Bubble was not the only major speculative episode of the period. France’s Mississippi Bubble, associated with John Law, collapsed at about the same time. The phrase “bubble” now describes a market in which prices rise far beyond reasonable expectations before a sharp reversal.