a serious financial problem in the UK in 1720, which led to many people losing all their money. The South Sea company made large profits by trading with South America, and this encouraged many people to invest their money in it (=lend the company money, in the hope of making more money). But the company was very dishonestly run, and in the end it failed and the money people had invested became worthless.
Definition from the Longman Dictionary of Contemporary English Advanced Learner's Dictionary.
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