Which London-based company was at the center of Britain’s South Sea Bubble crash in 1720?

The South Sea Company was at the center of Britain’s South Sea Bubble crash in 1720.

Founded in 1711, the company received a government-backed monopoly over British trade with parts of Spanish America, although its actual trading prospects were far more limited than many investors believed. It also took on government debt in exchange for shares and political privileges.

Share prices soared in 1720 as speculation spread and Parliament approved the Bubble Act. Investors bought shares on the expectation of enormous profits, but the company’s weak commercial prospects could not justify the valuations. Prices collapsed later that year, ruining many investors.

The South Sea Bubble occurred alongside France’s Mississippi Bubble, linked to John Law’s financial system. The two episodes are often discussed together, but they involved different companies and national financial systems.