The South Sea Bubble was the 1720 speculative bubble whose shares surged and then plunged.
The South Sea Company received rights connected to British government debt and promoted expectations of enormous trade with Spanish America. Those commercial prospects were far greater in public imagination than in the company’s actual trading opportunities.
Its share price rose rapidly during 1720 as investors joined a wider wave of speculation. Parliament passed the Bubble Act that year, restricting some companies and adding to uncertainty. By late summer and autumn, confidence collapsed, and the shares lost most of their value.
The episode ruined many investors and damaged public trust in joint-stock companies. Isaac Newton, who had owned and sold South Sea shares, is often associated with the episode, although the exact details of his later transactions are frequently simplified in popular retellings.