The South Sea Company stood at the center of Britain’s South Sea Bubble, one of history’s famous speculative crashes. Founded in 1711, the company received a government-backed monopoly over trade with Spanish South America, although its actual commercial opportunities were much more limited than investors expected.
In 1720, Parliament approved a plan for the company to assume part of Britain’s national debt. Shares rose dramatically as the company promoted expectations of immense profits and investors rushed to participate. The boom attracted speculation well beyond the company itself, with many new ventures seeking money from the public.
Confidence collapsed later in 1720. South Sea Company shares fell heavily, ruining many investors and provoking political scandal. The episode is sometimes grouped with the Mississippi Bubble in France, which burst during the same year, but the two bubbles involved different companies and financial systems.