The company at the center of Britain’s South Sea Bubble was the South Sea Company. Founded in 1711, it received a government-backed monopoly over British trade with parts of Spanish South America, although the expected commercial opportunities were far more limited than promotional claims suggested.
The company also took on a large portion of Britain’s government debt. Its shares soared in 1720 as investors expected enormous profits, and the excitement spread through London society. Parliament, prominent figures, and many private investors became involved. When confidence weakened later that year, the share price collapsed, ruining many holders and creating a major political scandal.
The South Sea Bubble formed part of a wider European speculative episode. France’s Mississippi Company bubble collapsed around the same time, but that was a separate scheme associated with John Law. The South Sea episode is often used as a classic example of speculation driven by unrealistic expectations, easy credit, and crowd enthusiasm rather than sustainable earnings.