When the tulip bubble suddenly burst in 1637, Mackay claimed that it wreaked havoc on the Dutch economy. Tulip price index from 1636-1637. The values of this index were compiled by Earl A. Thompson in Thompson, Earl (2007), “The Tulipmania: Fact or artifact?”, Public Choice 130, 99–114 (2007).
In February 1637, tulip traders could no longer find new buyers willing to pay increasingly inflated prices for their bulbs. As this realization set in, the demand for tulips collapsed, and prices plummeted —the speculative bubble burst. Some were left holding contracts to purchase tulips at prices now ten times greater than those on the open market, while others found themselves in possession of bulbs now worth a fraction of the price they had paid.
What was the Dutch tulip bulb bubble?
The Dutch tulip bulb market bubble (or tulip mania ) was a period in the Dutch Golden Age during which contract prices for some of the tulip bulbs reached extraordinarily high levels and then dramatically collapsed in February 1637; the rarest tulip bulbs traded for as much as six times the average person’s annual salary at the height of the market.
It occurred in Holland during the early to mid-1600s when speculation drove the value of tulip bulbs to extremes. At the height of the market, the rarest tulip bulbs traded for as much as six times the average person’s annual salary.
You may be thinking “What happened to the tulip bulb?”
Seeking a zesty accompaniment to his fish, the sailor had unwittingly pilfered not an onion, but a rare Semper Augustus tulip bulb. And in early 1637, tulip bulbs were reaching some truly extraordinary prices. Then, very suddenly, it was over.
What happened to the Tulipmania?
At the height of the market, the rarest tulip bulbs traded for as much as six times the average person’s annual salary. Today, the tulipmania serves as a parable for the pitfalls that excessive greed and speculation can lead to. The Dutch Tulip Bulb Market Bubble was one of the most famous asset bubbles and crashes of all time.