The 1720 British market bubble whose collapse became one of history’s earliest famous crashes was the South Sea Bubble.
The South Sea Company received valuable trading privileges and became the focus of intense speculation in Britain. Its shares rose dramatically as investors imagined enormous profits from commerce with Spanish America, although the company’s actual trading prospects were far more limited than many believed.
The company’s directors promoted confidence while investors bought shares at increasingly unrealistic prices. When enthusiasm faded, the share price collapsed, ruining many speculators and causing a major political scandal.
The South Sea Bubble is often discussed alongside the Mississippi Bubble in France, which also burst in 1720. They were separate schemes, however. The episode helped shape later debates about corporate disclosure, financial speculation, and the dangers of buying assets simply because prices are rising.