Tulip mania (Dutch: tulpenmanie) was a period in the Dutch Golden Age during which contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels and then dramatically collapsed in February 1637.[2] It is generally considered the first recorded speculative bubble;[3] although some researchers have noted that the Kipper und Wipper (literally Tipper and See-saw) episode in 1619–1622, a Europe-wide chain of debasement of the metal content of coins to fund warfare featured mania-like similarities to a bubble.[4] In many ways, the tulip mania was more of a hitherto unknown socio-economic phenomenon than a significant economic crisis. And historically, it had no critical influence on the prosperity of the Dutch Republic, the world’s leading economic and financial power in the 17th century. The term “tulip mania” is now often used metaphorically to refer to any large economic bubble when asset prices deviate from intrinsic values.[5]

In Europe, formal futures markets appeared in the Dutch Republic during the 17th century. Among the most notable centered on the tulip market, at the height of tulip mania.[6][7] At the peak of tulip mania, in February 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled craftsworker. Research is difficult because of the limited economic data from the 1630s, much of which come from biased and speculative sources.[8][9] Some modern economists have proposed rational explanations, rather than a speculative mania, for the rise and fall in prices. For example, other flowers, such as the hyacinth, also had high initial prices at the time of their introduction, which immediately fell. The high asset prices may also have been driven by expectations of a parliamentary decree that contracts could be voided for a small cost, thus lowering the risk to buyers.

The 1637 event was popularized in 1841 by the book Extraordinary Popular Delusions and the Madness of Crowds, written by British journalist Charles Mackay. At one point 12 acres (5 ha) of land were offered for a Semper Augustus bulb.[10] Mackay claims that many such investors were ruined by the fall in prices, and Dutch commerce suffered a severe shock. Although Mackay’s book is a classic, his account is contested. Many modern scholars feel that the mania was not as extraordinary as Mackay described and argue that not enough price data are available to prove that a tulip bulb bubble actually occurred.[11][12][13][14]

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