Which London bubble involving the South Sea Company burst in 1720?

The South Sea Bubble was the London bubble involving the South Sea Company that burst in 1720.

The South Sea Company was founded in 1711 and received a monopoly over British trade with parts of Spanish South America. In practice, the company’s commercial opportunities were far smaller than many investors believed. Its shares became associated with a plan to convert government debt into company stock.

Speculation accelerated in 1720 after Parliament approved a proposal allowing the company to assume more government debt. Shares rose dramatically, attracting investors from many social classes. The price then collapsed later that year, ruining fortunes and damaging public confidence.

The South Sea Bubble happened alongside France’s Mississippi Bubble, which involved John Law’s Company of the Indies. The two episodes are sometimes discussed together because both combined government finance, monopoly promises, and speculative share buying. Britain responded with restrictions under the Bubble Act of 1720.