The South Sea Bubble crashed in 1720, ending one of Britain’s earliest major stock-market manias.
The South Sea Company received a government-backed monopoly over trade with Spanish South America in 1711. Its shares later became the focus of intense speculation after the company proposed converting large amounts of British government debt into company stock. Investors bought shares in expectation of enormous trading profits, even though the company’s actual commercial opportunities were limited.
Parliament passed the Bubble Act in 1720, restricting the formation of rival joint-stock companies. South Sea shares climbed dramatically that year, attracting investors from across British society. The price then collapsed as confidence failed, ruining many shareholders and causing a political scandal involving company directors and government officials.
The South Sea Bubble is often discussed alongside France’s Mississippi Bubble, which also burst in 1720. The episode helped shape later British concerns about financial speculation, corporate promotion, and the protection of investors.