Tulip Mania

Tulip Mania (or Tulipomania) is perhaps the most extraordinary event in the long history of cut flowers. It refers to a short period in The Netherlands, from roughly 1620 to 1637, where speculation on tulip bulbs reached fever pitch resulting in ridiculous prices being paid for single bulbs and the inevitable crash. People won or lost huge amounts of money gambling on the colour of the flower produced by tulip bulbs, which in those days was somewhat unpredictable.

Tulips, originally from Turkey, first reached Austria in the mid-1500s, and were cultivated in the area now known as The Netherlands by about 1593, where the soil was particularly suitable. Breeding commenced at the same time in an effort to find varieties better suited to the harsher climate of The Netherlands.

The flower rapidly became a coveted luxury item amongst wealthy and fashionable Europeans. Special breeds were given exotic names or named after Dutch naval admirals. The most spectacular and highly sought-after tulips had vivid colours, lines, and flames on the petals as a result of being infected with a virus.

News of the huge profits speculators were making quickly spread, and by 1634 even tradespeople were becoming involved. One modern view on why this happened is that it was not caused by irrational speculation or straight greed, but rather by a Dutch parliamentary decree (originally sponsored by Dutch investors made skittish by the Thirty Years War then in progress) that made the purchase of tulip-bulb "futures contracts" a nearly risk-free proposition.

Either way, this influx of new money caused prices to spiral rapidly in 1635, with many people buying on credit. By 1636 sales were organised by unofficial 'colleges' or stock exchanges that often held auctions at local inns. Speculation had also started on futures - in other words on the availability and price of bulbs at a specified future time.

It is difficult to convert 17th century tulip prices to modern equivalents, as many were sold for livestock and houses. As a rough estimate, the average annual income in 1620 was about 150 Dutch florins. If we assume this is equivalent to $50,000, then in 1620, at the start of the mania, a single bulb changed hands for about $330,000. Fifteen years later, in 1635, 40 bulbs were sold for 100 times this amount, ie $33 million, or $825,000 per bulb. The record sale was in 1636 for a single bulb of 'Semper Augustus', a striped carmine and white variety, for between 5000 and 6000 florins (depending on the account you read), which equates to between $1.67 and $2 million. The actual price for this small bulb, thought to not even be of flowering size, was 4600 florins plus a coach and 2 dapple-grey horses.

The bubble burst in February 1637 when the high prices could no longer be sustained and there was a mass sell-off. Prices fell through the floor and many people were financially ruined. While official attempts were made to resolve the situation to the satisfaction of all parties, these were unsuccessful. Ultimately, individuals were stuck with the bulbs they held at the end of the crash - no court would enforce payment of a contract, since the debts were judged to be sustained through gambling, and thus not enforceable by law.

Interestingly this was not the only time in history when flowers became the object of frenzied market speculation. Smaller booms followed with tulip bulbs in Istanbul in the early 1700s, and in The Netherlands again with hyacinth bulbs in 1734, and gladioli in 1912.