historyWikipedia1634–1637 · Dutch Republic

Tulip mania: the 1637 Dutch bulb bubble that may not have been the disaster legend claims

the gist

Tulip mania was a period in the Dutch Republic during the 1630s when prices for certain tulip bulbs, newly fashionable at the time, rose to extraordinary levels. Prices accelerated from 1634 and collapsed in February 1637. At the peak, some bulbs sold for more than ten times the annual income of a skilled artisan, and the Semper Augustus was the most expensive variety, fetching 10,000 guilders. Charles Mackay's 1841 book described the episode as a madness that ruined investors, but many modern scholars think its impact was much smaller. The Dutch Republic remained one of the richest economies in the world. The term is now used for any bubble in which prices drift far from underlying value.

how it works

Forward contracts let buyers agree to purchase bulbs at a set price for future delivery, so people could speculate without holding the flowers. When prices turned, contracts became hard to honour, and the market froze.

so what

Tulip mania is the best-known early speculative bubble and the reference point for later manias. Revisiting it shows how a popular story can outlive the evidence behind it.

more on this

key facts

Country
Dutch Republic
Started
1634
Ended
5 February 1637

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Image: Wikimedia Commons