The South Sea Bubble was the 18th-century speculative bubble that collapsed in Britain in 1720, causing major losses for South Sea Company investors.
The South Sea Company received a government-backed monopoly over trade with Spanish South America, although its actual trading prospects were limited. It also assumed part of Britain’s national debt, giving investors confidence that its shares had official support.
Share prices rose dramatically during 1720 as investors bought shares in expectation of enormous profits. The excitement spread beyond the company itself, with many speculative ventures forming during the same period. When confidence weakened, selling accelerated and prices collapsed.
The episode is often discussed alongside France’s Mississippi Bubble, which also burst in 1720. The two crises were separate schemes, but both became classic examples of market speculation, leverage, and crowd psychology.