The South Sea Bubble was the speculative bubble that burst after the South Sea Company collapsed in 1720.
The South Sea Company was granted a monopoly over British trade with parts of Spanish South America, although its actual trading opportunities were limited. Its shares rose dramatically as investors anticipated wealth from trade and as the company promoted ambitious financial schemes.
The price surged during 1720, attracting investors from many parts of British society. When confidence broke, the shares plunged, ruining many investors and causing a major political scandal in Britain.
The South Sea Bubble is often grouped with the Mississippi Bubble in France, which also collapsed in 1720. They were separate schemes, although both reflected the era’s enthusiasm for paper finance, speculative investment, and company promotion.