The South Sea Company became the symbol of the 1720 speculative collapse known as the South Sea Bubble.
Founded in 1711, the company received a British government monopoly over trade with Spanish South America, although its realistic trading opportunities were limited. Its shares became tied to a plan for converting government debt into company stock. As prices rose in 1720, investors bought shares in expectation of further gains, and promoters encouraged extravagant confidence in the company’s prospects.
The company’s share price rose dramatically before collapsing later in the year. The crash ruined many investors and caused political scandal in Britain. Parliament investigated the company’s directors and associated corruption, while prominent figures including Isaac Newton suffered financial losses. The Mississippi Company in France was part of the same broad European speculative era, but it was a separate enterprise and crisis. The South Sea Bubble is therefore best identified with the South Sea Company, not with every market collapse in 1720.