The South Sea Company was at the center of the South Sea Bubble, one of Britain’s most famous eighteenth-century market crashes.
Founded in 1711, the company received a government-backed monopoly over British trade with parts of Spanish South America. In practice, its commercial opportunities were much smaller than promotional claims suggested. The company also took on government debt, and its shares became the focus of intense speculation.
The share price rose dramatically in 1720 as investors were attracted by easy credit, public enthusiasm, and promises of enormous overseas wealth. Other speculative ventures appeared, and Parliament passed the Bubble Act to restrict unchartered joint-stock companies. When confidence broke later that year, the South Sea share price collapsed, ruining many investors.
The scandal reached Parliament and involved prominent political figures. The South Sea Bubble is often described as an early stock-market crash, although eighteenth-century trading differed greatly from modern exchange markets. The episode helped establish enduring warnings about leverage, promotional hype, insider influence, and buying assets solely because prices are rising.