The 1720 collapse involving the South Sea Company and British share speculation was the South Sea Bubble.
The South Sea Company was granted a monopoly over British trade with Spanish South America, although its actual commercial prospects were far less valuable than investors believed. In 1720, the company promoted ambitious plans and its share price rose dramatically as investors anticipated enormous profits.
The boom drew in members of the public and prominent figures, including some politicians. When confidence broke later that year, the share price collapsed, ruining many investors and causing a major political scandal. Parliament investigated the company’s directors and exposed corruption and misleading financial practices.
The South Sea Bubble is frequently grouped with France’s contemporaneous Mississippi Bubble, which involved John Law’s Company of the Indies and collapsed in the same broad period. They were separate episodes, although both illustrate how speculative enthusiasm, easy credit, promotional claims, and crowd psychology can inflate asset prices far beyond underlying business prospects.