In the 17th century, there was a time when the price of tulip bulbs brought from the Ottoman Empire skyrocketed and then suddenly collapsed.
This bubble period is called Tulpenmanie (Tulip mania).
For this reason, even today in the Netherlands, large-scale economic bubbles are sometimes compared to Tulpenmanie.
History of tulips
Tulips were imported to Europe in the 16th century.
Tulip bulbs and seeds were sent to Vienna (Austria) from the Ottoman Empire (near present-day Turkey) in 1554, and tulips became known throughout Europe.
Tulips did not originate in the Netherlands.
The bright and large petals of the tulips were different from any other flowers, and many people were interested in it.
From Vienna, tulip bulbs spread all over Europe, and some people tried to cultivate the beautiful flowers in the Netherlands, and tulip cultivation in the Netherlands began in 1593.
Dutch tulips have a history of over 400 years!
Dutch tulip trade in the Dutch Golden Age
When it became clear that tulips could be grown even in the harsh environment of the Netherlands, the tulip industry flourished throughout the Netherlands.
At the beginning of the 17th century, the Dutch Golden Age was a time when trade was flourishing and merchants were increasing their wealth. For that reason, Dutch tulips were able to grow rapidly into a major business exported to countries around the world.
It is said that merchants in those days made a profit of 400% on a single trade voyage!
As the popularity of striped tulips increased, rumors spread among investors around the world that “Striped tulips would be profitable”.
Despite having never seen the real striped tulips, investors launched a futures contract that caused the value to skyrocket, and the bulb price skyrocketed in an instant.
Only 40 years after tulip cultivation began in earnest in the Netherlands, tulip bulbs have grown rapidly to become the fourth largest Dutch specialty product. Today, tulip bulbs have become a leading Dutch industry.
Gin, Herring and Cheese were the top three Dutch specialties back then.
The popularity of Dutch tulips had skyrocketed. And it had improving the breed to sell more and at a higher price.
Until then, tulips were monochromatic, but striped tulips were developed as a result of improvements.
The striped tulips are vivid and novel, and have quickly become a very popular tulip.
This striped pattern is now known as a disease that only affects tulips (Tulip breaking virus).
Tulip Bubble Economy
In 1636, the value of tulips reached its highest value.
The value of bulbs, which soared sharply from November, increased 20 times in three months.
20 times!? If it was 1 euro per piece, it’s 20 euro for 1!?
At its peak, 40 bulbs sold for over 100,000 guilders (€45,378).
The price at that time was 1 kg of butter = 0.1 guilder (0.04 euro),
Annual income of a skilled craftsman = 150 guilders (68 euros).
You can only buy one bulb with 16 years of annual income!?
The sharp rise in prices that started in November ended in just three months, and the crash began in February.
It was a tulip bulb that was 20 times the price. Even though it is a beautiful flower, there is no value for 16 years of annual income. Also, tulip flowers have a short flowering period, and the bulbs do not always bloom.
Investors who bought the bulbs at the mercy of rumors were unable to find buyers because the prices were too high.
If the purchase price is 20 times higher, the retail price will be more than that…
In the first place, the reason why the price soared in a short period of time was that many people bought the bulbs for the purpose of resale. But there were no buyers for tulips whose prices have too high.
As a result, the price crashed, and the tulip bubble economy collapsed in three months.
When the burst of tulip economic bubble in February 1637, all tulip trade stoped due to the chaos.
Investors panic because the market has fallen too sharply.
Due to the large amount of damage, it became a major incident in which the Dutch government intervened.
As a solution, it was declared that the contract could be canceled with an unusual 10% fee, but even with the 10% fee, the amount paid was extremely high, so the commotion did not subside.
Ultimately, the court intervened and showed the opinion that it was “A kind of gambling”, and ruled that “there is no liability for payment only for individual contracts”.
There is also a theory that the collapse of the tulip bubble economy was caused by an epidemic. It is said that the plague broke out in the city where the bulbs were traded, and that the bubble burst because the buyers of the bulbs stopped appearing to the city.
By the way, 3 months after the collapse of the tulip bubble economy, it seems that the price returned to the previous normal price.
Since there is no accurate information from that time, some believe that the tulip bubble economy occurred among a few wealthy merchants, so the story is not certain.
Now all that remains is the word Tulpenmanie (Tulip mania), which means the tulip bubble economy.
However, it is clear that the Netherlands has put a lot of effort into the trade of tulips and the improvement of varieties, and now Dutch tulips boast the top market share in the world.
Whatever the history of tulips in the Netherlands, everyone is still fascinated by beautiful tulips.