The South Sea Company stood at the center of the South Sea Bubble, the spectacular British market crash of 1720.
Founded in 1711, the company received a government-backed monopoly over British trade with Spanish South America, although its actual trading opportunities were limited. Investors were attracted by the company’s ability to convert government debt into shares and by enthusiastic promotional claims about overseas riches.
Its share price rose dramatically during 1720, encouraging speculation across British society. Parliament passed the Bubble Act that year, but confidence collapsed before the excitement could be sustained. The share price fell sharply, ruining many investors and causing political scandal.
The South Sea Bubble is often discussed alongside France’s Mississippi Bubble because both involved companies, public debt, and speculative enthusiasm. A common mix-up is to call the event simply a banking crash; it was primarily a speculative stock-market collapse linked to the South Sea Company.