In the South Sea Bubble of 1720, the South Sea Company’s shares became the focus of Britain’s speculative mania.
The company was founded in 1711 and received a government-backed role in managing part of Britain’s national debt. Investors were attracted by expectations that its trade privileges and financial arrangements would produce enormous profits, even though the company’s actual commercial prospects were far more limited.
Share prices rose rapidly in 1720 as investors bought into the excitement. The boom drew in wealthy figures and ordinary savers, while a wave of new joint-stock schemes appeared. Parliament eventually passed the Bubble Act, which restricted unauthorized companies, although the collapse had already begun.
When confidence broke, South Sea Company shares plunged, ruining many investors and causing a political scandal. The South Sea Bubble is often mentioned alongside France’s Mississippi Bubble, but they were separate schemes. Both collapses helped shape later suspicion toward speculative financial promotions.