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Entry 167 of 240Economic

Tulip Mania

1637 CE/Low Countries/Dutch Republic
Today The Dutch Republic (Amsterdam)Span Dutch Golden Age · 17th c. CE

In the wealthy Dutch Republic, contracts for rare tulip bulbs spiraled to insane prices on pure speculation — a single bulb could reportedly cost more than a canal-side house — before the market collapsed almost overnight. Whether or not every lurid detail is true, it became the West's first great cautionary tale of a bubble.

◆ Worth knowingAt the peak of the mania, one prized tulip bulb reportedly traded for the cost of a grand Amsterdam house — and its coveted color-streaks, we now know, were caused by a plant virus.
◆ The mechanismMania & panic

A speculative belief detaches asset prices from fundamentals; the belief breaks and prices collapse.

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