The 18th-century speculative episode centered on the South Sea Company that collapsed in Britain in 1720 was the South Sea Bubble.
The South Sea Company received a government-backed role in managing part of Britain’s national debt. Investors were attracted by ambitious expectations about the company’s potential trade profits and by a system that allowed debt to be exchanged for company shares. Its share price rose dramatically during 1720.
The boom encouraged numerous speculative ventures, and Parliament passed the Bubble Act that year to restrict unauthorized joint-stock companies. When confidence weakened, South Sea shares plunged, ruining many investors and damaging public trust in company promotions.
The South Sea Bubble is often discussed with John Law’s Mississippi Bubble in France, which also collapsed in 1720. They were separate schemes in different countries, although both reflected the period’s enthusiasm for paper wealth, state finance, and speculative share trading.