What was the primary reason for the popularity of tulips during the 17th century?
What was the maximum fee that buyers had to pay for a tulip trade during the tulip mania?
What was the reason for the collapse of the tulip bulb contract prices in February 1637?
Who conducted the trade in tulips during the tulip mania?
What was the primary argument made by Peter Garber regarding the tulip mania?
What was the name of the book that proposed the idea of tulip mania being a socio-economic phenomenon?
What was the strike price settled for tulip bulbs during the tulip mania?
What was the primary reason for the popularity of Mackay's tale of tulip mania?
What was the impact of tulip mania on the Dutch Republic?
Tulip mania in the 17th century was a period in the Dutch Golden Age when contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels, making it the first recorded speculative bubble or asset bubble in history. The tulip mania was more of a then-unknown socio-economic phenomenon than a significant economic crisis, and it had no critical influence on the prosperity of the Dutch Republic. Tulips grew in popularity because they were a coveted luxury item, and a profusion of varieties followed. Tulips were classified in groups, and their multicolour effects of intricate lines and flame-like streaks on the petals were vivid and spectacular, making the bulbs that produced these highly sought-after. Tulips grew from bulbs and could be propagated through both seeds and buds. During the rest of the year, florists, or tulip traders, signed forward contracts before a notary to buy tulips at the end of the season. Traders met in "colleges" at taverns, and buyers were required to pay a 2.5% "wine money" fee, up to a maximum of three guilders per trade. The tulip mania reached its peak during the winter of 1636–37, when contracts were changing hands five times. No deliveries were ever made to fulfill any of these contracts because, in February 1637, tulip bulb contract prices collapsed abruptly, and the trade of tulips ground to a halt. The modern discussion of tulip mania began with the book Extraordinary Popular Delusions and the Madness of Crowds, published in 1841 by the Scottish journalist Charles Mackay. He proposed that crowds of people often behave irrationally, and tulip mania was, along with the South Sea Bubble and the Mississippi Company scheme, one of his primary examples. Mackay's account was largely sourced from a 1797 work by Johann Beckmann titled A History of Inventions, Discoveries, and Origins. Beckmann in turn used several available sources, but all of them drew heavily from the satirical Dialogues that were written to mock the speculators.Tulip Mania: The Rise and Fall of the World's First Economic Bubble
- Peter Garber argues that the trade in common bulbs "was no more than a meaningless winter drinking game, played by a plague-ridden population that made use of the vibrant tulip market."
- Even at its peak, the trade in tulips was conducted almost exclusively by merchants and skilled craftsmen who were wealthy, but not members of the nobility.
- Any economic fallout from the bubble was very limited.
- The price of bulbs would need to have been mutually agreed and surpassed the intrinsic value of the bulbs for the tulip market to qualify as an economic bubble.
- The increases of the 1630s corresponded with a lull in the Thirty Years' War.
- Garber compared the available price data on tulips to hyacinth prices at the beginning of the 19th century when the hyacinth replaced the tulip as the fashionable flower and found a similar pattern.
- The final 3.5% strike price was not actually settled until February 24.
- The real victims of the contractual conversion were the investors who had bought forward contracts prior to November 30, 1636, on the incorrect assumption that their contracts would benefit from the February 1637 decree.
- The popularity of Mackay's tale has continued to this day.
- Tulip mania was nonetheless traumatic to the Dutch for other reasons.
- Many of the sources telling of the woes of tulip mania, such as the anti-speculative pamphlets that were later reported by Beckmann and Mackay, have been cited as evidence of the extent of the economic damage.
- Tulip mania became a popular reference during the dot-com bubble of 1995–2001, and the subprime mortgage crisis of 2007–2010.
Think you know everything about the world's first economic bubble? Test your knowledge with our Tulip Mania quiz! From the rise and fall of tulip prices to the impact of the bubble on the Dutch economy, this quiz will put your understanding of this fascinating socio-economic phenomenon to the test. With questions on the history of tulips, the traders involved, and the aftermath of the bubble, you'll learn something new while having fun. So, put on your thinking cap and take the Tulip
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