The South Sea Bubble was the 1720 stock-market crash associated with the collapse of the South Sea Company’s shares.
The South Sea Company received government privileges connected with trade and public debt conversion. Its stock price rose dramatically as investors were attracted by promotional claims, speculation, and the belief that the company’s commercial opportunities were enormous.
The price later collapsed, ruining many investors and creating a political scandal in Britain. Parliament investigated the company’s directors and the conduct of officials who had benefited from the boom.
The South Sea Bubble occurred alongside John Law’s Mississippi Bubble in France, so the two episodes are often discussed together. They were separate schemes, however. Tulip Mania in the Dutch Republic is another famous speculative episode, but it involved tulip bulbs rather than shares in the South Sea Company.