The 1720 British speculative bubble centered on the South Sea Company was called the South Sea Bubble.
The South Sea Company received a monopoly over British trade with Spanish South America as part of a government debt-conversion scheme. Investors became excited by exaggerated expectations about the company’s commercial prospects, and its share price rose dramatically during 1720. The company also promoted the exchange of government debt for shares, linking speculation to public finance.
When confidence broke, the share price collapsed and many investors suffered severe losses. The episode spread beyond the South Sea Company because numerous other ventures sought to raise money during the same speculative atmosphere. Parliament later investigated the scandal, uncovering corruption and improper relationships between company promoters and public officials.
The South Sea Bubble was not a modern stock-market crash in the same institutional setting as 1929 or 1987, but it remains one of history’s best-known securities bubbles. It is often mentioned alongside France’s Mississippi Bubble, which burst in the same year but involved a different company and financial system.