The South Sea Bubble caused the South Sea Company share price to collapse during Britain’s major early stock-market crash in 1720.
The South Sea Company received a government-backed monopoly over trade with Spanish South America, although its realistic trading prospects were far smaller than many investors believed. The company also took on British government debt, giving its shares a prominent role in public finance.
Its share price rose dramatically in 1720 as Parliament approved a restructuring scheme and speculation spread. Shares reached about £1,000 in August, but confidence collapsed later that year. By December, the price had fallen to roughly £128, ruining many investors and creating a political scandal.
The South Sea Bubble is often discussed alongside John Law’s Mississippi Bubble in France, which also burst in 1720. They were separate schemes. Another common confusion is with tulip mania, a much earlier Dutch speculation episode involving bulbs rather than a joint-stock company at the center of Britain’s 1720 crisis.