The “Tulip Mania” was the first well-documented speculative bubble in European history. The day when the collapse of this cleverly constructed entity began was February 3, 1637 and it is worth taking a look at the back story of this event to understand it.

Originally, the tulip came from the southeastern Mediterranean, from where it arrived at the court of Vienna in the mid-16th century via the Ottoman Empire and Constantinople. It was probably Ogier Ghislain de Busbecq, the Habsburg ambassador to the court of Suleyman I, who presented the first tulips to Emperor Ferdinand I as a gift, and it was from him that one of the first written records of the “tulipan”, as he called it, was made.

 

To us today it may seem strange that this flower evoked such a degree of devotion, but one must once put oneself in the “mind” of that time. After all, the tulip was an exotic plant that was not only decorative and extremely beautiful, but its care and breeding proved to be very demanding, and therefore seemed suitable only for a certain group of people. However, unlike so many things in history, it was not reserved for the rich and noble to claim it for their circle of people solely on the basis of their financial power, but the cultivation required above all time and dedication, and so it was possible even for enthusiasts to create “exclusive” creations.

The center of this mania was the Netherlands, which entered its “Golden Age” at the beginning of the 16th century and where there was enough capital and time to indulge in this game. Not least because of this, there were a number of artists here who sought to immortalize this passion in paintings, such as Ambrosius Bosschaert the Elder, Balthasar van der Ast or Roelant Savery. It was the short flowering period and the rapid decay of the plant that made it a sign of a “Memento Mori” (“Be aware of mortality”) and in this sense it was also used by the artists in their works.

 

Here in the Netherlands there were also the most important breeders and collectors and by 1650 there were already 800 different varieties of tulips known, the most popular of which were not monochrome but mottled, striped or speckled. Since the various varieties of tulips were so popular, it could not fail that they became a favorite object of speculators. Already in the 1620s, very high prices could be obtained for individual varieties, but in the next few years these already high yields were to multiply. In 1623, for example, an onion of the “Semper Augustus” variety was sold for 1,000 florins, in 1633 it was sold for 5,500 florins, and in 1637 three onions were offered for 30,000 florins. A considerable price, considering that the average annual income in the Netherlands was 150 guilders and the most expensive houses on the Amsterdam canal could be purchased for about 10,000 guilders.

But on February 3, 1637, the peak of the tulip mania was to be passed. On that day, a public auction of 99 lots of tulip bulbs still fetched around 90,000 guilders, but two days later a massive drop in prices began, and at one of the regular auctions in Haarlem none of the tulips on offer could be sold at the expected prices. As a result, within a few days the entire tulip market in the Netherlands was to collapse and the market value was to fall permanently by more than 95%.

For a long time, therefore, the bursting of this bubble was considered a great tragedy in the history of early Dutch economic history, but today researchers believe that the effects were more cultural than financial. For there were few direct bankruptcies or economic downturns associated with the bursting of this “bubble,” but there was a decline in confidence in the free market, and for strict Calvinists this “tragedy” was emblematic of how the humanist tradition of moderation could be violated by speculation.