In his authoritative work on the subject of human folly Extraordinary Popular Delusions and the Madness of Crowds, Victorian journalist Charles Mackay cited the Dutch mania for tulip bulbs as a perfect illustration of a speculative ‘bubble’. During the 1630s The Netherlands was gripped by a sort of national insanity. In retrospect, it was an outbreak of delusional frenzy that almost defies belief.
The 17th century was the Dutch Golden Age: Holland was a great global trading power, the arts and sciences were flourishing and the aspirational middle classes were prospering, until… a craze for tulip bulbs swept through the nation.
Originally introduced to Europe from Turkey in the late 16th century, the tulip was having its heyday. Growers produced eye-catching new cultivate with exotic names, and rare specimens were sought after as fashionable garden plants. As the seasonal tulip trade became increasingly profitable, speculators devised a system of ‘futures’ contracts so that tulips could be bought and sold even when the bulbs were planted in the ground. The tulip contracts market became known as the ‘wind trade’ because there were no visible goods.
Tulip mania reached its peak towards the end of 1636. Everyone, from all walks of life, wanted to invest and contract prices rose to dizzying heights. A single bulb of the rare Semper Augustus variety, admired for its flamboyant blue-and-crimson-streaked flower, cost the equivalent of the entire annual income of a well-to-do merchant.
Suddenly, in February 1637 at the Haarlem bulb-contract auction, asking prices weren’t met. The news spread like wildfire, panicking investors into offloading their contracts, sending prices plummeting. Many ordinary people were faced with ruin, having invested in tulip contracts that were now only worth a tenth of what they had paid for them, and only government intervention prevented the disastrous ‘wind trade’ from destabilizing the entire Dutch economy.
When was the Tulip Bulb Mania: 1634-1637
Where was the Tulip Bulb Mania: The Netherlands
What was the Tulip Bulb Mania toll: Although the Dutch economy was strong enough to absorb the collapse of the tulip market, confidence was badly shaken, which slowed down economic growth. The poorer members of society bore the brunt: people who had scraped together everything they owned in exchange for a tulip contract were left penniless.
You should know: The amazing multi-colored flowers of the most highly valued 17th-century tulips were in fact caused by a plant disease known as ‘mosaic’ or ‘tulip break’, a virus that breaks up the color of the petals making them appear attractively streaked. A similar but less dramatic effect is achieved in modern tulips by cross-cultivation.