Did you know that one of the first documented financial crises of the modern age happened in the Netherlands? Today, the Netherlands is one of the top 20 largest economies in the world, but back in the 1600’s, many people lost their life savings, all over a little flower bulb.
There are several different historical and socio-economic opinions on how the madness began and continued, most of which are too complicated to go into here. There are some facts about the period, though, that are well-documented.
The speculative frenzy of tulip bulbs started around 1610, when a single bulb was commonly used as dowry for a bride. In France, a brewery was purchased with a special variety of bulb. Twenty-five years later, the bulb craze reached its height with ordinary families mortgaging property and homes so that bulbs could be bought and sold for increasingly higher prices. Bulbs were sold and resold so many times a day that the bulb never left the ground. Rare bulbs were considered to be worth (the equivalent of) hundreds of dollars each.
The period, also known as Tulpenwindhandel (tulip speculation), ended in 1637, after the government stepped in to try to calm down the situation and keep the economy afloat. Practically overnight, the prices of the bulbs bottomed out, along with the bank accounts of many a poor family.
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