The South Sea Bubble burst in London during 1720 and helped cause one of Britain’s earliest major stock-market crashes.
The South Sea Company received a government-backed arrangement to manage part of Britain’s debt and was associated with expected trade opportunities in Spanish America. Investor enthusiasm drove its share price dramatically higher, even though the company’s realistic commercial prospects could not justify the valuation.
Parliament passed the Bubble Act in 1720 amid the speculative frenzy, restricting many joint-stock ventures. As confidence weakened, South Sea shares collapsed later that year, ruining investors and causing political scandal. The crisis also affected other speculative ventures and contributed to financial distress in Britain.
The South Sea Bubble is often discussed alongside France’s Mississippi Bubble, which collapsed in the same broad era under John Law’s financial system. They were separate schemes, although both illustrate how credit, publicity, and unrealistic expectations can inflate asset prices.