The South Sea Bubble was the 1720 speculative bubble that collapsed after South Sea Company shares soared and then crashed.
The South Sea Company was founded in 1711 and received a government-backed monopoly over British trade with Spanish South America. In practice, the company’s commercial opportunities were far more limited than many investors believed. Its shares nevertheless rose dramatically in 1720 as promoters encouraged speculation.
The company’s price reached about £1,000 per share in August 1720 before collapsing later that year. Thousands of investors lost money, including members of the British aristocracy. Parliament investigated the scandal, and several directors were accused of corruption.
The South Sea Bubble unfolded alongside John Law’s Mississippi Bubble in France, another major speculative episode. They are separate events, although both demonstrated how promotional claims, easy credit, and crowd enthusiasm can inflate asset prices beyond realistic expectations.