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Tulip mania (Dutch: tulpenmanie) was a period during the Dutch Golden Age when contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels.

It is generally considered to have been the first recorded speculative bubble or asset bubble in history. In many ways, the tulip mania was more of a then-unknown socio-economic phenomenon than a significant economic crisis. The term tulip mania is now often used metaphorically to refer to any large economic bubble when asset prices deviate from intrinsic values. Forward markets appeared in the Dutch Republic during the 17th century. Among the most notable was one centred on the tulip market. At the peak of tulip mania, in February 1637, certain tulip bulbs sold for more than 10 times the annual income of a skilled artisan. The Semper Augustus was the most expensive tulip during the mania, at its height this tulip was even sold for ƒ10,000 (in guilders; equivalent to approx. €130,000 in 2024). Some modern economists have proposed rational explanations, rather than a speculative mania, for the rise and fall in prices. 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. The 1637 event gained attention in 1841 with the publication of the book Extraordinary Popular Delusions and the Madness of Crowds, written by Scottish journalist Charles Mackay, who wrote that at one point 5 hectares (12 acres) of land were offered for a Semper Augustus bulb.

These tulips at Leiden would eventually lead to both the tulip mania and the tulip industry in the Netherlands. The 'Semper Augustus' was actually not a tulip variety, but rather a tulip affected by the tulip mosaic virus.

Tulip mania reached its peak during the winter of 1636–37, when some contracts were changing hands five times.

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.

Data on sales largely disappeared after the February 1637 collapse in prices, but a few other data points on bulb prices after tulip mania show that bulbs continued to lose value for decades thereafter.

Since late 1636, the Dutch parliament had been considering a decree (originally sponsored by Dutch tulip investors who had lost money because of a German setback in the Thirty Years' War) that changed the way tulip contracts functioned: Using data about the specific payoffs present in the forward and options contracts, Thompson argued that tulip bulb contract prices hewed closely to what a rational economic model would dictate: "Tulip contract prices before, during, and after the 'tulipmania' appear to provide a remarkable illustration of efficient market prices."

Goldgar argues that although tulip mania may not have constituted an economic or speculative bubble, it was nonetheless traumatic to the Dutch for other reasons: "Even though the financial crisis affected very few, the shock of tulip mania was considerable. 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. Nearly a century later, during the crash of the Mississippi Company and the South Sea Company in about 1720, tulip mania appeared in satires of these manias. When Beckmann first described tulip mania in the 1780s, he compared it to the failing lotteries of the time. In Goldgar's view, even many modern popular works about financial markets, such as Burton Malkiel's A Random Walk Down Wall Street (1973), and John Kenneth Galbraith's A Short History of Financial Euphoria (1990; written soon after the crash of 1987), used the tulip mania as a lesson in morality.

Quick Facts

• At the peak of tulip mania, in February 1637, certain tulip bulbs sold for more than 10 times the annual income of a skilled artisan.
• The Semper Augustus was the most expensive tulip during the mania, at its height this tulip was even sold for ƒ10,000 (in guilders; equivalent to approx. €130,000 in 2024).
• Goldgar argues that although tulip mania may not have constituted an economic or speculative bubble, it was nonetheless traumatic to the Dutch for other reasons: "Even though the financial crisis affected very few, the shock of tulip mania was considerable.
• The term tulip mania is now often used metaphorically to refer to any large economic bubble when asset prices deviate from intrinsic values.
• In many ways, the tulip mania was more of a then-unknown socio-economic phenomenon than a significant economic crisis.

Source material: Wikipedia - "Tulip mania". Adapted and summarized for DiscoverScroll. Original contributors are credited through the linked Wikipedia article. Read original on Wikipedia. CC BY-SA 4.0. Changes were made from the original.