The South Sea Bubble was the famous financial collapse of the South Sea Company in 1720.

The company had been formed in 1711, and was based at the corner of Bishopsgate and Threadneedle Street in London. Its purpose was to supply 4,800 slaves each year for 30 years to the Spanish plantations in Central and South America. Britain had extracted the right to supply slaves to Spanish America from Spain at the Treaty of Utrecht in 1713 and the Company bought the contract from the British government for £9,500,000, a large proportion of Britain’s national debt.

The sum was so huge because it was hoped that more lucrative trading rights with South America could be won once Britain got a toe-hold in the market, and also because the profits of the slave trade were expected, incorrectly, to be enormous. Speculators continued to pay inflated prices for the stock, leading eventually to the company’s spectacular financial collapse in 1720.

Jonathan Swift, himself a stockholder in the company and one who also lost a considerable amount of money in its collapse, wrote in his savage satirical ballad on the subject:

Thus, the deluded Bankrupt raves;
Puts all upon a desp'rate Bet
Then plunges in the Southern Waves
Dipt over Head and Ears – in Debt.