The South Sea Bubble was the British financial bubble that collapsed in 1720.
The South Sea Company received a government-backed trading monopoly and later arranged to convert government debt into company shares. Expectations of enormous profits drove its share price dramatically higher, even though the company’s real commercial prospects could not justify the valuation.
When confidence broke, the share price plunged. Investors across social classes suffered losses, and the scandal damaged Britain’s political establishment. Parliament investigated the episode, and several directors and politicians faced severe consequences.
The South Sea Bubble is often discussed alongside France’s Mississippi Bubble, which also collapsed in 1720. They were connected by the era’s speculative enthusiasm but were separate companies and national schemes. The episode became a classic example of how rising prices, persuasive stories, easy credit, and herd behavior can reinforce one another.