The South Sea Company became the central target of the South Sea Bubble, one of the earliest major market crashes.
Founded in 1711, the company received a British government monopoly over trade with parts of Spanish America, although its actual trading opportunities were far more limited than promotional claims suggested. It also took on government debt in exchange for company shares and political privileges.
Its share price rose dramatically in 1720 as investors anticipated wealth from overseas commerce and debt-conversion schemes. Speculation spread through London, and many new companies formed to attract money with grand or deliberately vague plans. When confidence broke, South Sea shares collapsed, ruining many investors.
The episode is often confused with the contemporaneous Mississippi Bubble in France, which centered on John Law's Mississippi Company. Both bubbles burst in 1720, but they were separate schemes. The South Sea crisis prompted parliamentary investigations and exposed corruption involving company promoters and public officials.