South Sea Bubble, a speculative scheme in Great Britain in the early 1700's that nearly resulted in a financial disaster. The South Sea Company was chartered by the government of Queen Anne in 1711 as a monopoly for trade in South America and the South Sea (the South Pacific Ocean). In return, the company loaned the government money. The company was reasonably successful. In 1720, it arranged for persons holding bonds against the government to exchange them for stock in the company; thus, the company assumed most of the national debt.
The relationship between the government and the company created confidence and high expectations. The company's stock was widely sought and its price soared. Within a few weeks, however, people realized that it was greatly overpriced, and prices fell. Thousands were financially ruined.
Investigation revealed bribery involving high officials and fraud in the company's bookkeeping. Robert Walpole offered a plan to avert disaster, and in 1721 he was appointed chancellor of the exchequer. The episode discouraged government participation in business ventures.