The Dutch Tulip and Bulb Craze of 1637

Yes, tulips. As in the colorful flowers decorating the wallpaper of your grandma’s bathroom.

Believe it or not, in the year 1637, tulips were all the rage. Seriously this trend puts all other fads to shame. Beatles-mania, Poke-mania and Furby-mania have nothing on the Tulip Bulb craze! (Listen to our podcast episode about it here!)

Well at least Pokemon didn’t cause an economic collapse…

It all started in 1593, when an ambassador from the Ottoman court of Suleiman the Magnificent brought some flowers from Turkey to the Netherlands. A vibrant strand of tulip bulbs soon became eagerly sought after because of its rarity and color. Not long after the Amsterdam Stock Exchange opened in 1602, trading among commoners began to rise. In response to the growing supply and demand over the rare flower, multiple tulip brokerages opened up for business.

By 1634, Tulip bulbs began to sell at a premium all across Europe and it seemed as though the Dutch Tulip Market had a bright future ahead. “He who considers the profits that some make every year from their tulips, will believe that there is no better Alchemy than this agriculture,” wrote a poet at the time. As the price went up due to a limited quantity, more investors became interested.

The price of tulips doubled, then they tripled and soon some were being sold at a 1,000% mark up! As their scarcity increased, so did the demand. Many figured if the tulips were so valuable, they could be resold to others at a higher rate. The country went nuts. Problem was, the tulips weren’t that valuable, not by a long shot. Things got so crazy at one point that people were willing to sell their life savings and even their own land just to buy some stupid flowers!

On February 5th, 1637 an auction took place in the town of Alkmaar, to help raise money for orphans. A single tulip sold for 5,200 florins. That’s *one* flower. I haven’t been able to figure out exactly how much a Florin was worth back then, but based on inflation, I’m fairly certain that 5,200 of them was too much for a pretty looking plant.

Then overnight, the tulip bubble burst. Much like the mortgage crisis of 2007 (see “The Big Short”), Tulip Mania led to a country-wide financial meltdown. There’s some speculation over what exactly happened, but one of the predominant theories is that supply simply outpaced demand. Farmers hoping to make quick buck started growing nothing but tulips, making them completely and totally worthless.

Another theory is that some random peasant dude suddenly came to the realization that he’d sold his house for a flower… and wanted a refund.

Things got so bad that the Dutch Federal government stepped in and issued a proclamation in an attempt to stop the economic crisis. It didn’t work. The city of Haarlem (not to be confused with the birthplace of hip hop) intervened by setting up “The Commissioners for Flower Affairs”.

Seriously.

The height of the Tulip craze only lasted less than a year, but the effects of ‘Tulip Mania’ were felt throughout the 17th Century. So yeah, moral of the story: keep things in perspective, don’t put all your tulips in one basket, be cautious of trends and above all else, for the love of all that is holy, do not trade your life savings for a flower!

ERIK SLADER

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Sources:

“Tulip Mania: Money, Honor, and Knowledge in the Dutch Golden Age” by Anne Goldgar

http://www.investopedia.com/terms/t/tulipmania.asp

http://www.businessinsider.com/tulipmania-bubble-story-2014-9