The 1720 British speculative episode widely regarded as one of the first major stock-market bubbles and crashes was the South Sea Bubble.
The South Sea Company received a government monopoly over trade with Spanish South America, although its realistic trading opportunities were limited. Investors became captivated by promotional claims, rising share prices, and the prospect of converting government debt into company shares.
Shares rose dramatically during 1720 before collapsing later that year. The crash ruined many investors and exposed corruption involving politicians, company directors, and promoters. Parliament investigated the scandal, and several officials were punished or disgraced.
The South Sea Bubble is often discussed alongside France’s Mississippi Bubble, which also collapsed in 1720. The two events helped establish the modern meaning of a speculative bubble: prices rise far beyond underlying economic value before confidence breaks.