The 1720 English joint-stock company whose collapse became part of the South Sea Bubble was the South Sea Company. Parliament created it in 1711 to trade with Spanish South America and to manage a large portion of Britain’s government debt.
In 1720, investors were encouraged by a plan that exchanged government debt for company shares. Expectations about profitable overseas trade pushed the share price dramatically higher, even though the company’s actual commercial opportunities were limited. Speculation spread beyond the South Sea Company to many other ventures.
The bubble burst later in 1720, causing severe losses for investors and political scandal. The episode is often grouped with France’s Mississippi Bubble because both involved debt conversion, promotional speculation, and public enthusiasm for new financial schemes. The South Sea Company did conduct some trade, but its market valuation became far more important than its operating business.