The South Sea Bubble was the 1720 English speculative bubble whose collapse damaged investors in the South Sea Company.
The South Sea Company had been created in 1711 and received a government-backed monopoly over trade with Spanish South America, although its actual commercial prospects were far more limited than many investors believed. In 1720, the company proposed converting government debt into its shares, encouraging a huge rise in the price.
Promotional excitement, easy credit, and imitation buying pushed shares to extraordinary levels before confidence failed. The price collapsed later in 1720, ruining many investors and causing a political scandal in Britain. The South Sea Bubble is often mentioned alongside John Law's Mississippi Bubble in France, which also burst in 1720, but they were separate companies and schemes. Tulip Mania occurred in the Dutch Republic much earlier, in the seventeenth century.