tulipmania

Tulipmania was a period in the Dutch Golden Age during which contract prices for bulbs of the recently introduced tulip reached extraordinarily high levels and then suddenly collapsed. It is often considered the first recorded speculative bubble.

The tulip was introduced to Europe in the 16th century and quickly became a fashionable commodity in the Netherlands. By the early 17th century, tulip bulbs, especially rare varieties with variegated patterns, were highly prized and traded at significant prices. The market for bulbs became increasingly speculative, with contracts to buy bulbs in the future being traded, often without the bulbs themselves ever changing hands. Prices continued to rise, fueled by a belief that prices would continue to increase indefinitely.

In February 1637, the market for tulip bulbs collapsed abruptly. Prices plummeted, leaving many investors ruined. The exact causes of the collapse are debated by historians, but it is generally attributed to a loss of confidence in the market, possibly triggered by an unsuccessful auction.

The economic impact of Tulipmania on the Netherlands is also a subject of historical discussion. While some individuals suffered significant financial losses, the overall effect on the Dutch economy is considered to have been less severe than sometimes portrayed. The event, however, became a notable historical example of speculative excess and market instability.