The South Sea Bubble was the speculative bubble that burst in Britain in 1720 after intense trading in South Sea Company shares. The company had received government support and was promoted as a way to manage part of Britain’s national debt.
Investors became excited by exaggerated expectations about the company’s potential trade with Spanish America. Share prices rose rapidly, attracting both wealthy investors and ordinary members of the public. Numerous new ventures also sought money during the speculative boom.
When confidence weakened, the share price collapsed. Many investors lost fortunes, and the scandal damaged public trust in company promoters and political figures. Parliament investigated the affair, and several directors were accused of corruption.
The South Sea Bubble is often discussed alongside the Mississippi Bubble in France, which also burst in 1720. They were separate schemes, although both reflected the period’s enthusiasm for paper finance, government-backed companies, and rapidly rising share prices.