The South Sea Bubble was the speculative bubble that burst in Britain in 1720, causing a major early stock-market crash.
The South Sea Company received a government-backed arrangement connected with Britain’s public debt and promoted expectations of enormous trading profits with Spanish America. Its shares rose dramatically as investors bought into the company’s prospects, often with borrowed money.
The boom collapsed later in 1720 when confidence failed and share prices plunged. Many investors suffered ruin, and the scandal damaged public trust in company promotion and government oversight. Parliament investigated the affair, and some directors faced severe consequences.
The South Sea Bubble is often discussed alongside France’s Mississippi Bubble, which also collapsed in 1720. It is not the same event as Tulip Mania in the Dutch Republic, an earlier episode involving contracts connected with tulip bulbs rather than shares in a British company.