The South Sea Company stood at the center of Britain's South Sea Bubble, which collapsed in 1720. The company was granted an expected trade monopoly with Spanish South America, although the practical trading opportunities were far smaller than many investors imagined.
The company also became involved in converting government debt into company shares. Its share price rose rapidly as investors were encouraged by promotion, speculation, and the belief that future trade would generate enormous profits. The boom attracted both wealthy investors and members of the public.
When confidence broke, the price plunged and ruined many holders. The South Sea Bubble is often discussed alongside France's Mississippi Bubble because both involved speculative companies and government finance. The South Sea Company did not cause a modern stock-market crash in the technical sense, but its collapse became a classic example of a financial bubble.