The 1720 British stock-market bubble centered on the South Sea Company is called the South Sea Bubble.
The South Sea Company was founded in 1711 and received a government-backed monopoly over trade with Spanish South America, although its practical trading opportunities were far more limited than many investors imagined. In 1720, the company proposed taking over part of Britain’s government debt, helping drive enthusiasm for its shares.
Its stock price soared as investors expected wealth from trade and financial dealings. Prominent figures, including government officials and members of the aristocracy, became associated with the scheme. The excitement encouraged speculation and the creation of other companies, some genuine and some fraudulent.
The bubble burst later in 1720. Share prices collapsed, ruining many investors and causing a political scandal. Parliament investigated corruption, and several directors were punished. The South Sea Bubble is often discussed alongside France’s Mississippi Bubble, which also collapsed in 1720, but they were separate schemes. Neither event was a modern industrial crash in the twentieth-century sense.