The South Sea Company was the 1720 British company whose collapse helped create the South Sea Bubble crash.
Founded in 1711, the company received a government-backed monopoly over British trade with Spanish South America in exchange for helping manage national debt. Its commercial prospects were far more limited than many investors believed, but its shares rose dramatically as speculation spread.
The company’s stock reached extraordinary levels in 1720 before collapsing later that year. The crash ruined many investors and exposed corruption, misleading promotion, and the dangers of buying assets solely because prices were rising. Parliament investigated the episode, and several prominent figures faced scandal.
The South Sea Bubble occurred alongside the Mississippi Bubble in France, associated with John Law’s financial system. These were separate schemes, although both reflected the same period’s enthusiasm for paper finance and overseas commercial wealth. The phrase “bubble” has since become a standard term for speculative markets whose prices detach from realistic expectations.