The South Sea Bubble was the speculative bubble that collapsed in London in 1720 around the South Sea Company.
The company received a monopoly over British trade with Spanish South America, although the practical trading opportunities were far more limited than promoters implied. It also took over part of the British government’s debt. Its shares surged as investors were attracted by ambitious promises, social prestige, and easy credit.
When confidence broke, the share price collapsed, ruining many investors and causing political scandal. Parliament investigated the company’s directors and associated corruption. The crash damaged public trust in joint-stock speculation and led to restrictions on some corporate activities under the Bubble Act of 1720.
The South Sea Bubble is often discussed alongside John Law’s Mississippi Bubble in France, which also collapsed in 1720. They were related episodes of European financial speculation, but they involved different companies, markets, and government arrangements.