The South Sea Company became central to the 1720 South Sea Bubble, which ended in a major stock-market collapse.
Founded in 1711, the company received a British government charter connected with trade and the conversion of government debt. In 1720, its shares rose dramatically as investors accepted optimistic claims about the company’s commercial prospects and financial arrangements.
The bubble burst later that year. Share prices collapsed, ruining many investors and causing a political scandal in Britain. Parliament investigated the company’s directors and associated corruption, while public confidence in speculative ventures suffered.
The South Sea Bubble is often discussed alongside France’s Mississippi Bubble, which also collapsed in 1720. They were separate schemes, although both illustrate how credit, promotion, and crowd enthusiasm can inflate asset prices.