The South Sea Company was the English company whose collapse became the famous South Sea Bubble of 1720.
Founded in 1711, the South Sea Company 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 expected trading opportunities were far less valuable than promoters and investors imagined.
Share prices rose dramatically in 1720 as investors expected enormous profits and were encouraged by promotional claims, easy credit, and imitation buying. The price then collapsed, ruining many investors and causing a major political scandal. Parliament investigated the company’s directors and alleged corruption.
The South Sea Bubble is often discussed alongside France’s Mississippi Bubble, which also burst in 1720. The East India Company was a different corporation with a much longer trading history, while the Hudson’s Bay Company was founded in 1670 and was not the company at the center of this English bubble.