The South Sea Bubble was the 1720 British speculative bubble that collapsed after investors rushed to sell shares.
The South Sea Company received a government-backed monopoly over trade with parts of Spanish South America in 1711. In practice, its commercial prospects were far smaller than many investors believed. A debt-conversion scheme and intense promotion helped send the company's share price dramatically higher in 1720.
The boom attracted wealthy investors, politicians, and ordinary speculators. When confidence broke later that year, the share price collapsed, ruining many participants and causing a political scandal in Britain. Parliament investigated the company and uncovered corruption and bribery.
The South Sea Bubble is often grouped with France's Mississippi Bubble, which also burst in 1720. Tulip Mania occurred in the Netherlands during the 1630s and involved bulb contracts, not company shares. The episode helped establish the enduring meaning of a speculative “bubble.”