The South Sea Bubble was the 1720 British bubble that collapsed after South Sea Company shares soared and then plunged.
The South Sea Company received a government-backed monopoly over trade with parts of Spanish South America, although its actual commercial opportunities were far smaller than many investors imagined. In 1720, the company’s shares rose dramatically as it proposed converting government debt into company stock and promoted expectations of enormous profits.
The price reached about £1,000 per share in August before collapsing later that year. Investors rushed to sell, and the failure damaged merchants, aristocrats, and ordinary speculators. Parliament investigated the episode, finding serious corruption and bribery among company directors and officials.
The South Sea Bubble happened alongside France’s Mississippi Bubble, associated with John Law. Both episodes are often grouped as early examples of speculative financial manias, but they involved different companies and countries.