Isaac Newton lost a fortune in it. Britain's 1720 stock mania sent share prices up 900% — then crashed to nothing, bankrupting thousands and reshaping financial law forever.
The South Sea Company was founded in 1711 to trade with Spanish South America — but the trade never really materialized. The real product was the stock itself, inflated by insider dealing, bribery of government ministers, and wild rumors of untold wealth from the New World.
Share prices rocketed from £100 in January 1720 to nearly £1,000 by August — a 900% rise in eight months. The frenzy infected all levels of English society, from aristocrats to servants, all convinced they were about to become rich.
Isaac Newton famously invested early, cashed out with a tidy profit — then watched the mania continue and jumped back in near the peak. He lost £20,000 (roughly £3 million today), reportedly saying: 'I can calculate the motion of heavenly bodies, but not the madness of people.'
The company's actual business included a monopoly on supplying enslaved Africans to Spanish colonies (the Asiento contract) and modest whaling operations. Neither generated profits anywhere close to what was promised to investors.
When the bubble burst in autumn 1720, the collapse was catastrophic. Parliamentary investigation exposed a web of bribery — the company had given shares to government officials and even the king's mistresses in exchange for political protection. Several directors fled the country.
The fallout directly produced the Bubble Act of 1720, which restricted the formation of joint-stock companies for over a century. It shaped British financial regulation until the 19th century and made 'bubble' a permanent part of the economic vocabulary.