Which investment mania collapsed in 1720 when shares of the South Sea Company plunged?

The South Sea Bubble was the investment mania that collapsed in 1720 when South Sea Company shares plunged. The company had received a government-backed arrangement to manage part of Britain’s national debt.

Promotional claims and speculative enthusiasm drove its share price sharply higher. Investors bought shares partly because they expected the company to gain enormous profits from trade with Spanish America, although those expectations were unrealistic.

Parliament investigated the company after the collapse, uncovering corruption and improper influence. Many investors lost fortunes, and public confidence in joint-stock schemes was badly damaged.

The South Sea Bubble occurred alongside John Law’s Mississippi Bubble in France. Because both collapsed in 1720, the events are frequently discussed together, but they involved different companies and governments. The episode helped establish the South Sea Bubble as a classic example of speculative excess.