The South Sea Company was at the center of the South Sea Bubble, whose collapse caused the 1720 stock-market crash in Britain.
Founded in 1711, the company received a monopoly over British trade with parts of Spanish South America in exchange for taking on government debt. Its shares later soared as investors imagined enormous profits, even though the company’s actual trading opportunities were far more limited than promotional claims suggested.
Speculation spread through London, and many investors borrowed money to buy shares. Parliament passed the Bubble Act in 1720 amid the frenzy, but confidence collapsed later that year. The South Sea Company’s share price plunged, ruining many investors and creating a political scandal.
The South Sea Bubble is often discussed alongside France’s Mississippi Bubble, another major speculative episode of 1720. The two bubbles were separate schemes, although both demonstrated how promotional stories, easy credit, and crowd psychology could inflate share prices beyond realistic business prospects.