The South Sea Bubble was the historic British financial bubble that collapsed after South Sea Company shares surged in 1720.
The South Sea Company received a government-backed role in managing part of Britain’s national debt and promoted hopes of enormous profits from trade with Spanish America. Its shares rose dramatically during 1720, attracting aristocrats, professionals, and ordinary investors. The company’s actual trading prospects could not justify the market’s soaring expectations.
When confidence weakened later that year, the share price collapsed. The panic spread to other companies and damaged public trust in joint-stock ventures. Parliament investigated the episode, and several politicians and company directors were accused of corruption or improper conduct. The South Sea Bubble occurred long before modern stock exchanges and electronic trading, but it remains a classic example of speculative excess, easy credit, promotional claims, and herd behavior.