The South Sea Bubble was the 1720 British bubble whose collapse became an early example of a stock-market crash.
The South Sea Company received a government arrangement to manage part of Britain’s national debt and promoted expectations of enormous trading profits with Spanish America. Its shares rose dramatically during 1720 as investors rushed to participate. The company’s business prospects did not justify the valuations, and the price collapsed later that year.
The crash harmed many investors, including members of the political and social elite. Parliament investigated the scandal, and the government imposed restrictions through the Bubble Act. The episode damaged public confidence in joint-stock ventures and became a lasting warning about speculation driven by promotional claims rather than proven earnings.
The South Sea Bubble is often discussed alongside France’s Mississippi Bubble, which also collapsed in 1720. They were separate schemes, although both were linked to government finance and speculative enthusiasm. Tulip Mania occurred earlier, in the Dutch Republic, and involved bulbs rather than a publicly traded company of this type.