Which speculative bubble burst in Britain during the 1720 stock-market collapse?

The South Sea Bubble was the speculative bubble that burst in Britain during the 1720 stock-market collapse.

The South Sea Company received special trading privileges and took on government debt in exchange for shares. Promotional claims about the wealth available through trade with Spanish America helped drive intense speculation. Its share price rose dramatically before collapsing in late 1720, ruining many investors and damaging public confidence in company promoters and financial markets.

The episode occurred alongside John Law’s Mississippi Bubble in France, and the two are often discussed together as major early financial bubbles. They were not the same company or the same national market. Tulip mania, another frequent comparison, happened in the Dutch Republic nearly a century earlier and involved contracts connected to tulip bulbs.

The British Parliament responded with the Bubble Act of 1720, which restricted the formation of joint-stock companies without a royal charter or parliamentary authorization. The event remains a classic example of speculation, leverage, persuasive promotion, and herd behavior.