The South Sea Bubble was the 1720 British stock-market speculation centered on the South Sea Company.
The South Sea Company received a government-backed monopoly over trade with parts of Spanish South America, although the expected commercial opportunities were far greater than the company’s actual trading results. It also took on government debt, and its shares rose sharply as investors were encouraged by optimistic claims and speculation.
The price reached a peak in 1720 before collapsing later that year. Many investors suffered severe losses, including prominent figures. The scandal damaged confidence in company promotion and prompted parliamentary investigations into corruption and financial misconduct.
The South Sea Bubble occurred alongside the Mississippi Bubble in France, another major speculative episode of 1720. Both events helped establish “bubble” as a lasting term for prices driven far beyond underlying economic value.