In the 17th century, tulip bulbs imported from the Ottoman Empire saw their prices skyrocket before suddenly collapsing.
This speculative bubble is known as Tulpenmanie (Tulip Mania).
Even today, in the Netherlands, large-scale economic bubbles are often compared to Tulpenmanie.
History of Tulips
Tulips were first introduced to Europe in the 16th century.
In 1554, tulip bulbs and seeds were sent from the Ottoman Empire (modern-day Turkey) to Vienna, Austria, marking the beginning of their spread across Europe.
Actually, tulips didn’t originate in the Netherlands!
Actually, tulips didn’t originate in the Netherlands!
The bright, uniquely shaped petals of tulips fascinated many people, sparking widespread interest.
From Vienna, tulip bulbs spread throughout Europe. Some enthusiasts attempted to cultivate them in the Netherlands, and in 1593, Dutch tulip cultivation officially began.
Dutch tulips have a history of over 400 years!
Dutch Tulip Trade in the Dutch Golden Age
Once people realized that tulips could thrive even in the harsh climate of the Netherlands, the tulip industry took off across the country.
In the early 17th century, during the Dutch Golden Age, trade was booming, and merchants were accumulating vast wealth. This created the perfect environment for Dutch tulips to rapidly grow into a major export business, shipping bulbs all over the world.
They say merchants back then could make a 400% profit on a single trade voyage!
As demand for striped tulips increased, rumors spread among investors worldwide that “Striped tulips are the next big thing!”
Even investors who had never seen a real striped tulip started buying futures contracts, sending the value skyrocketing overnight.
Just 40 years after large-scale tulip cultivation began in the Netherlands, tulip bulbs had already become the country’s fourth-largest specialty product. Today, the tulip industry remains one of the Netherlands’ most iconic symbols.
Back then, the top three Dutch specialties were gin, herring, and cheese!
The Rise of Striped Tulips
As Dutch tulips grew more popular, breeders focused on developing new varieties to sell at higher prices.
Originally, tulips were solid-colored, but selective breeding led to the appearance of stunning striped tulips. These uniquely patterned tulips were bold, eye-catching, and quickly became the most sought-after variety.
Fun fact: The beautiful striped pattern was actually caused by a virus! (Tulip breaking virus)
Tulip Bubble Economy
In 1636, the value of tulips skyrocketed to an all-time high.
The price of tulip bulbs, which had already been rising sharply since November, increased 20 times in just three months!
20 times!? If it was €1 per bulb, now it’s €20 per bulb!?
At the peak of the tulip mania, 40 bulbs were sold for over 100,000 guilders (€45,378).
For comparison:
1 kg of butter = 0.1 guilder (€0.04)
A skilled craftsman’s annual income = 150 guilders (€68)
That means just one tulip bulb cost 16 years’ worth of wages!?
However, the rapid price surge that began in November came to an abrupt end in February, marking the beginning of the crash.
Despite being a beautiful flower, a single tulip bulb was not worth 16 years of income. Additionally, tulips have a short blooming period, and there was no guarantee that the bulbs would even flower.
As panic set in, investors who had bought tulip bulbs based purely on speculation found themselves unable to resell them—nobody wanted to buy at such an inflated price.
If the purchase price was 20 times higher, the retail price would have to be even more… Who would buy that!?
The reason the tulip bubble had inflated so rapidly was that most people were buying bulbs for resale, not to grow them. But once prices became unaffordable, there were no new buyers, leading to a market collapse.
Within just three months, the tulip market crashed, wiping out fortunes overnight.
When the tulip bubble burst in February 1637, the market fell into complete chaos, and all tulip trading came to a halt.
The Aftermath of the Tulip Bubble Crash
As the market plummeted, investors panicked, leading to widespread financial ruin.
The scale of the damage was so severe that the Dutch government intervened, attempting to stabilize the situation.
To address the crisis, officials proposed a solution: allowing contracts to be canceled with an unprecedented 10% penalty fee. However, even with this reduced obligation, the fees remained exorbitantly high, and the chaos did not subside.
Eventually, the courts stepped in, declaring that the tulip trade resembled gambling rather than a legitimate business. Their ruling stated that individual contracts did not carry legal payment obligations, essentially voiding most outstanding debts.
Was the Bubble Burst Caused by an Epidemic?
Some theories suggest that the tulip market crash wasn’t solely due to speculation and panic selling—but also linked to an outbreak of the plague.
It’s believed that the plague spread in cities where tulip trading was most active, preventing buyers from showing up to purchase bulbs—leading to a sudden and dramatic decline in demand.
The Market’s Surprisingly Fast Recovery
Despite the economic catastrophe, within just three months of the tulip bubble’s collapse, prices returned to their normal levels—as if the mania had never happened.
Tulpenmanie: Myth or Reality?
Since accurate records from that time are scarce, some historians argue that the tulip bubble economy may have been limited to a small group of wealthy merchants, making the true scale of the event uncertain.
However, what remains from this era is the term Tulpenmanie (Tulip Mania)—a phrase that has become synonymous with speculative bubbles.
The Lasting Legacy of Dutch Tulips
Regardless of the true extent of Tulpenmanie, one thing is certain: the Netherlands invested heavily in the tulip trade and cultivation. Thanks to centuries of dedication to improving tulip varieties, Dutch tulips now dominate the global market.
No matter what history says, one fact remains—people around the world are still captivated by the beauty of tulips.
