The South Sea Bubble was the 1720 financial collapse involving the South Sea Company and a major British parliamentary scandal.
The South Sea Company received a government-backed role connected with Britain’s public debt and promoted optimistic claims about trade with Spanish America. Its shares rose rapidly during 1720, attracting investors from across British society. When confidence failed, the price collapsed and many shareholders suffered heavy losses.
The scandal became politically explosive because members of Parliament and other influential figures had financial connections to the company. Investigations found corruption and bribery, while Parliament passed measures intended to restrict speculative joint-stock ventures. The episode damaged public trust in financial promotion and government oversight.
The South Sea Bubble occurred alongside France’s Mississippi Bubble, which was organized around John Law’s financial system. They are often discussed together, but they were separate schemes in different countries. The phrase “bubble” later became a general term for an asset-price boom followed by a sharp collapse.