Tulip mania

Verzameling van een meenigte tulipaanen p15

Jan Brueghel the Younger, Satire on Tulip Mania, c. 1640

Semper Augustus Tulip 17th century

Flora's Wagon of Fools (Flora's Mallewagen) tulipomania, Hendrik Gerritsz Pot c1637

Tulip price index1

Jean-Léon Gérôme - The Tulip Folly - Walters 372612

Tulip mania (Dutch: tulpenmanie) was a period during the Dutch Golden Age when contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels and then dramatically collapsed in February 1637. It is often considered the first recorded speculative bubble or economic bubble. The phenomenon is cited as a cautionary tale of the pitfalls of asset speculation.

History

The tulip was introduced to Europe from the Ottoman Empire in the mid-16th century and quickly became a coveted luxury item among the wealthy of the Netherlands. By the early 17th century, the tulip had assumed a significant role in the Dutch economy and culture, leading to the speculative frenzy now known as Tulip mania.

The Bubble

The height of the tulip market was during the winter of 1636-37, when some single tulip bulbs sold for more than 10 times the annual income of a skilled craftsworker. Tulip mania reached its peak in the years 1636-1637, when contracts for tulip bulbs were traded on the stock exchanges of numerous Dutch towns and cities. Despite the fact that the tulip market constituted a small portion of the Dutch economy, the rapid escalation and subsequent collapse in prices captured the public imagination and led to widespread financial panic.

Collapse

The market for tulips collapsed abruptly in February 1637. The prices fell to a fraction of their peak values, leaving many tulip investors bankrupt. The collapse of the tulip market was the first major financial bubble to be recorded in history. The causes of the collapse have been attributed to a complex interplay of social, economic, and speculative factors that include changes in market demand, the speculative nature of the market, and the introduction of new tulip varieties.

Impact

The tulip mania had a lasting impact on the Dutch economy and society. The event has been extensively analyzed in economic literature as an early example of a financial bubble. Economists have drawn parallels between the tulip mania and subsequent financial bubbles, using it as a warning of the dangers of speculative excess.

Cultural References

Tulip mania has been referenced in various works of art, literature, and music over the centuries, often as a symbol of folly and the irrationality of financial speculation. It has also been used in economic studies as a cautionary tale of the risks associated with asset bubbles.

See Also

• Economic bubble
• Dutch Golden Age
• Speculation
• Financial crisis