Tulip Mania

semper augustus tulip

Tulip mania was a period in the Dutch Golden Age during which contract prices for bulbs of the recently introduced tulip reached extraordinarily high levels and then suddenly collapsed. At the peak of tulip mania in February 1637, some bulbs sold for more than 10 times the annual income of a skilled craftsman. The most sought after variety of tulip was the Semper Augustus; as much as 12 acres of land was reportedly offered in exchange for a single bulb. It is generally considered the first recorded speculative bubble (or economic bubble). The term ‘tulip mania’ is now often used metaphorically to refer to any large economic bubble (when asset prices deviate from intrinsic values).

Research on the tulip mania is difficult because of the limited data from the 1630s. Although these explanations are not generally accepted, 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 prices on the flower’s introduction, which then fell dramatically. The high 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.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.