From the late 1500s until 1637, Netherlands experienced a tulip trading craze that is remembered today as the tulip anger, tulip madness or more commonly, tulipomania.
The period saw people buy the tulip flower at ridiculous prices to resell at more ridiculous prices until it became so expensive that many could not afford it.
This left the tulip turning useless overnight, leaving many in debt.
The tulip flower is native to Constantinople (today’s Instabul, Turkey), the capital of the then Ottoman Empire.
Some samples managed to get into the hands of famed Dutch botanist, Carolus Clusius, who planted them in the botanical gardens of the University of Leiden, Netherlands.
Clusius was fascinated with the flowers and would exchange it for unusual fishes and other rare, odd-looking man-made objects.
Other scholars took interest in Clusius’s flowers and started buying theirs.
The tulip soon caught the eyes of the Dutch nobility, who were fascinated with its ability to produce multiple colored offspring with intricate designs.
(We know today that this mutation is caused by the tulip breaking virus but no one knew back then. They just preferred the virus infected, multicolored tulip plant to the regular single-colored flower.)
Members of the Dutch nobility purchased the rare virus infected tulips for ridiculous amounts of money.
They also paid more ridiculous amounts for rare variants like the viceroy and semper augustus species.
Planters took note and started breeding the flowers to sell to the nobility.
Wealthy private citizens also took interest in the flowers, dragging the price further up.
An Economy Springs Up Around the Tulip Flower
More planters went into the tulip business as its price skyrocketed.
Middlemen also sprung up, buying the tulips at exorbitant prices to resell at more exorbitant prices.
Tulips soon assumed a monetary role in Netherlands as a whole economy sprung up round it.
People bought properties and land with tulip bulbs instead of money. Brokers and insurers also started offering their services to tulip planters, buyers and sellers.
Meanwhile, the price of tulip continued to rise astronomically.
At a time, it went from 125 guilders to 1,500 guilders in just one month.
For comparison, the average Netherlands family earned 150 guilders a year.
A very rare variant of the tulip sold for 10,000 guilders, which was enough to buy one of the most expensive houses in Amsterdam, which was among the most expensive neighborhoods in the world.
Another seller turned down 12,000 florins for ten bulbs of a very rare tulip flower.
Dutch businessmen called the tulip trade windhandel, which means “wind trade”.
This was because the tulips rarely changed hands. Instead, owners were given a certificate to prove that they now owned a tulip.
As the price of the tulip increased, low income earners like cobblers, carpenters and bricklayers — who did not have the money to buy tulips — got involved in the business.
Most of them depended on their ability to buy at ridiculous prices and quickly sell at more ridiculous prices to make any profit.
This continued until tulips became so expensive that these middlemen could not afford to buy for resale.
This caused the tulip trade to crash in the winter of 1636 and 1637 when the flower had become so expensive for even the end users to buy. Since there was no buyer, the planters could not sell.
The flower itself was basically useless since it had no real use or value. Everyone just bought it for bragging rights.
This threw many into debt, turning rich people poor overnight.
This made the Netherlands government form the Commissarissen van de Bloemen Saecken (Commissioners for Flower Affairs), which met twice a week to settle debt and ownership issues arising from the tulipomania.
Many of the deals were canceled and only 3.5% of the agreed amount was given to the debtors.