The South Sea Bubble was the British speculative bubble that collapsed in 1720.
The South Sea Company was founded in 1711 and received a government-backed monopoly over trade with Spanish South America in exchange for taking on part of Britain’s public debt. In practice, the company’s expected trading opportunities were much smaller than many investors imagined. Its shares nevertheless rose dramatically as promotional claims and speculation spread.
The price reached about £1,000 in August 1720 before collapsing later that year. Investors included members of the public and prominent political figures. The crash caused severe financial losses and damaged confidence in companies, promoters, and government-linked finance. Parliament investigated the episode, exposing corruption and improper dealings.
The South Sea Bubble is commonly discussed alongside France’s Mississippi Bubble, which also collapsed in 1720. They were separate schemes, however. Tulip Mania occurred in the Dutch Republic during the seventeenth century and involved bulb contracts rather than the same kind of joint-stock company episode.