The 1720 speculative bubble involving the British South Sea Company is called the South Sea Bubble.
The South Sea Company received rights connected with British trade to Spanish South America and also took over part of the British government’s debt. Its shares rose dramatically as investors were encouraged to believe that the company’s commercial prospects were enormous.
The company’s actual trading opportunities were much smaller than the excitement suggested. Shares climbed from about £100 in early 1720 to roughly £1,000 in August, before collapsing by the end of the year. The crash ruined many investors and damaged public confidence in joint-stock companies.
The same period also saw the Mississippi Bubble in France, associated with John Law’s financial system. The two episodes are often discussed together, but they were separate schemes. Parliament passed the Bubble Act in 1720, restricting some unchartered joint-stock companies. The South Sea episode helped establish “bubble” as a lasting term for speculative financial manias.