The South Sea Bubble was the British speculative bubble that collapsed in 1720 around the South Sea Company.
The company received a government-backed monopoly over trade with parts of Spanish South America, although its actual commercial prospects were far less impressive than public enthusiasm suggested. It also took on government debt and promoted its shares aggressively.
Investors bought stock as prices rose, often expecting further gains rather than evaluating the company’s underlying trade. Parliament later passed the Bubble Act, and confidence broke down in the autumn of 1720. The share price collapsed, ruining many investors and exposing corruption and insider dealing.
The South Sea Bubble is often discussed alongside France’s Mississippi Bubble, which also burst in 1720. They were separate schemes, although both reflected the period’s enthusiasm for joint-stock companies and speculative paper wealth. Isaac Newton famously lost money in the South Sea collapse.