The 1720 British financial bubble involving the South Sea Company was called the South Sea Bubble.
The South Sea Company received a government-backed monopoly over trade with Spanish South America, but its actual commercial prospects were far weaker than promotional claims suggested. Investors nevertheless drove its share price dramatically higher in 1720, encouraged by easy credit, speculation, and the belief that the company’s privileges would generate enormous profits.
When confidence broke, the share price collapsed. Many investors were ruined, and the scandal damaged public trust in company promoters, financiers, and government officials. Parliament investigated the affair, and several insiders were accused of corruption or improper conduct.
The South Sea Bubble occurred alongside John Law’s Mississippi Bubble in France, another major speculative episode of 1720. These events are often grouped together because they showed how excitement, leverage, and unrealistic expectations can inflate asset prices well beyond underlying business results. The South Sea Company did not simply vanish immediately, but its reputation and financial position were badly damaged.