The 1720 British financial crisis caused by the South Sea Company is known as the South Sea Bubble.
The South Sea Company received a government-backed monopoly over trade with Spanish South America, although its actual trading prospects were limited. In 1720, investors were encouraged to exchange government debt for company shares, sending prices sharply upward. Prominent figures and ordinary investors joined the speculation.
The price reached about £1,000 per share in August 1720 before confidence broke. Selling spread rapidly, and the shares collapsed to roughly £100 by December. The crash ruined many investors and caused a political scandal in Britain.
The South Sea Bubble is often discussed alongside France’s Mississippi Bubble, which also burst in 1720. Both episodes helped establish “bubble” as a lasting term for speculative prices that become detached from underlying economic value.