The South Sea Company was at the center of Britain’s famous 1720 stock-market bubble.
Founded in 1711, the company received a government-backed monopoly over British trade with parts of Spanish South America in exchange for helping manage government debt. Its actual trading prospects were limited, but rumors and promotional claims helped drive extraordinary enthusiasm for its shares.
The share price rose dramatically in 1720 as investors chased easy profits. When confidence weakened, the price collapsed, ruining many investors and causing a political scandal. Parliament investigated the company’s directors and associated corruption, while public anger spread among people who had bought during the boom.
The same year also saw the Mississippi Bubble in France, associated with John Law’s company and financial system. That is why the two episodes are sometimes confused. The phrase “South Sea Bubble” specifically refers to the British company and its spectacular rise and collapse.