The South Sea Bubble was the 1720 English speculative bubble that collapsed after investors rushed to sell South Sea Company shares.
The South Sea Company received a government-supported monopoly over trade with Spanish South America, although its actual trading prospects were limited. Its shares rose dramatically as politicians, aristocrats, and ordinary investors bought into expectations of immense profits.
The company’s share price reached about £1,000 in August 1720 before confidence broke. A wave of selling followed, destroying fortunes and exposing fraudulent or unrealistic promotion. Parliament investigated the affair, and several directors and politicians were disgraced.
The South Sea Bubble is often discussed alongside the Mississippi Bubble in France, which also burst in 1720. It was not a stock-market crash in the modern, index-based sense, but a major early example of a financial bubble and collapse.