In 1593, tulips from Turkey were introduced to the Dutch. The novelty of the new flower made it widely sought after & fairly pricey. After a few decades, the tulips contracted a non-fatal virus called mosaic, which didn't kill the tulip population but altered them causing "flames" of color to appear upon the petals. The color patterns came in a wide variety, increasing the rarity of an already unique flower. Tulips, which were already selling at a premium, began to rise in price according to how their virus alterations were valued. Many began to deal in bulbs, essentially speculating on the tulip market, which was believed to have no limits.
Jean-Léon Gérôme (French artist, 1824-1904) The Tulip Folly 1882. The scene depicts the late 1630s, where a Dutch soldier guards one potted tulip, while other troops (or speculating investment bankers?) stomp out fields of competing, less-precious flowering bulbs.
Bulb speculators began to fill up inventories for the growing season, depleting the supply further & increasing scarcity & demand. Soon, prices were rising so fast & high that people were trading their land, life savings, & whatever they could liquidate to get more tulip bulbs. Many Dutch persisted in believing they would sell their hoard to hapless & unenlightened foreigners, thereby reaping enormous profits. Somehow, the already overpriced tulips enjoyed a twenty-fold increase in value - in one month!
A portrait of a precious Dutch daughter with a precious Dutch tulip. 1631 Unknown artist Inscription [at upper left] Sarra Depeyster AEtatis 30 Maenden 23 Mey 1631
The inflated prices were not an accurate reflection of the value of a tulip bulb. As it happens in many speculative bubbles, some prudent people decided to sell & store their profits. A domino effect of progressively lower & lower prices took place, as everyone tried to sell while few were buying. The price began to dive, causing people to panic & sell regardless of losses.
Jacob Marrel (1634) Still life with a tulip
Dealers refused to honor contracts & people began to realize they traded their homes for a piece of greenery; panic & pandemonium were prevalent throughout the land.
Detail of Jan Brueghel the Younger's Satire of tulip mania c. 1640. Owning & flaunting rare specimens was a reflection of wealth & standing within society. Up until the early 1600s, tulips were only a single color. The enticing change came about with the introduction of the "broken" tulip allowing unique color variations, such as those above, which had never been seen before.
The government attempted to step in & halt the crash by offering to honor contracts at 10% of the face value, but then the market plunged even lower, making governmental restitution impossible. Few emerged unscathed from the crash. Even the people who had locked in their profit by getting out early suffered during the depression which followed.
Hendrik Gerritsz Pot painted this allegory of Flora’s Wagon of Fools around 1640. This painting shows a cartload of tulip-obsessed elites leading the common workers into the sea. During the time when tulip bulbs were treated like a form of currency, much like the years of the California gold rush, people abandoned jobs, businesses, wives, and homes to become tulip growers.
The 1637 event was popularized in 1841, by the book Extraordinary Popular Delusions and the Madness of Crowds, written by British journalist Charles Mackay. According to Mackay, at one point 12 acres (5 ha) of land were offered for a Semper Augustus bulb. Mackay claimed that many tulip investors were ruined by the fall in prices & that Dutch commerce suffered a severe shock. Although Mackay's book is a classic reprinted today, his account is contested because of his lack of primary sources.
Floraes Gecks-Kap Afbeeldinge van 't wonderlijcke Iaer van 1637 doen d'eene Geck d'ander uytbroeyde, de Luy Rijck sonder goet, en Wijs sonder verstant waeren.; print; Pieter Nolpe (After); 1637. A satire on Tulipmania, people who had invested in tulip bulbs and failed to realise their mistake; in the centre a tent in the shape of a fool's cap, background right, the figure of Flora departing on a donkey, foreground right, peasants joyfully bending over a basket with a crop of tulips and tulip bulbs, foreground left, peasants carrying tulips and transporting earth, bulbs and tulips in a wheel-barrow, background left, figure of a devil brandishing a rod with fool's cap and paper bonds