The South Sea Bubble peaked in 1720, before collapsing later that year.
The South Sea Company had been created in 1711 to manage part of the British government’s debt. Its shares became associated with grand expectations about trade with Spanish America, even though the company’s real commercial opportunities were limited by political and military restrictions. In 1720, Parliament approved a plan that linked the company more closely to government debt conversion.
Share prices rose rapidly as investors speculated and promoters encouraged enthusiasm. The boom drew in wealthy and ordinary participants, while competing ventures also appeared. When confidence weakened, the price fell sharply, ruining many investors and creating a political scandal.
The episode is often paired with the Mississippi Bubble in France, which also burst in 1720. The South Sea Bubble was not a modern exchange crash in the same institutional form as a twentieth-century market collapse, but it is a classic example of speculative excess, leverage, promotional claims, and contagious investor optimism.