Tulipmania: How a flower crashed the stock market

Written by Tali Schlanger

‘The tulips are too excitable, it is winter here’ writes Sylvia Plath[1], contrasting the vibrancy and life of the tulips to her own listlessness. This multicoloured flower that blooms in the Springtime is indeed striking, and although one wouldn’t expect it from a plant, has quite the socio-economic history

The tulip is a flower belonging to the same family as the lily. Found in the wild in Central Asia, it is a perennial plant, which means it blooms and dies again each year, remaining dormant in its bulb. There are more than 150 species of tulips today, with thousands of variations in colour, shape and pattern, and bouquet of this flower make popular gifts to loved ones. Tulips have often been immortalised in art and particularly in Dutch renaissance paintings, due to the importance the flower had at that period as a sign of opulence. 

Few would suspect, looking at this rather pretty but innocent looking flower, that it was responsible for one of the earliest stock market crashes in Europe.

The early history of the tulip in Europe is related to the Western fascination with the Orient. Tulips were apparently cultivated in Persia as early as the tenth century CE. By the 15th century, the tulip had become the official symbol of the Ottoman empire and was often worn by members of the court as decoration in their turban. 

While it is not entirely certain when or by whom tulips were first brought to Europe, the year 1554 is often quoted as the official introduction of tulips to the western world; in that year, the ambassador of the Habsburgs, the rulers of the Holy Roman Empire, Ogier de Busbecq, sent a shipment of tulip bulbs from the Ottoman court of Constantinople to the Habsburgs in Austria. Period sources suggest, however, that tulips had already been grown in Europe before then. 

The European higher class’ fascination with tulips can be attributed to many reasons. No doubt the introduction by Ogier de Busbecq of the plant from one imperial court to another served to give the beautiful and unusual flower its reputation. The European courts were also obsessed with the novelty of anything that came from the orient: the tulip was admired for its exoticism, its orientalism.

The Renaissance also marked a huge advance in the field of botany and botanical gardens started to appear to house plant specimens from across the world, including the tulip.  Perhaps the fact that the shape and colour were not like any flower the Europeans had seen contributed to its popularity, as well as the comparative ease with which tulip bulbs could be stored as well as transported, and thus traded. 

It is widely considered that Carolus Clusius, horticulturist and director of the imperial medical garden in Vienna from 1564 to 1573, was responsible for introducing the flower to the Netherlands when he moved to the city of Leiden in 1593 to become prefect of the city’s botanical garden and planted tulips. His studies focused particularly on the phenomenon of “breaking”, which produced strange flowers with petals crisscrossed by stripes with no predictable pattern. 

Although tulips were already hugely popular, even leading to two raids on Carolus Clusius’ gardens in 1596 and 1598, it was in France at the beginning of the 17th century that the Tulipmania, as it became known, first took hold. Collectors would pay extravagant sums for the foreign flowers and soon the bulbs were being exported from France to the rest of Europe. Soon enough, in the 1630s, the tulip trade drifted from France to the Netherlands and there turned into to the famed tulip craze. 

For three years, between 1634 to the abrupt crash in 1637, the trade in tulips among the rich merchants in the Netherlands soared to unimaginable heights. Bulbs were traded for fabulous sums, 5,000 guilders ($300,000) a piece for exceptional specimens with most bulbs reaching as much as 400 guilders ($24,000)[1]. Flower collectors, called bloemisten (from bloem, Dutch for flower) spent their time speculating on the flower bulbs and trading them. 

The Netherlands where then going through a Golden Age, due to the central position of the Dutch in European and especially in the East Indies trade. This led to the Netherlands being one of the richest lands in Europe at the time, from the foundation of the Dutch Republic in 1581 to 1672, and to the merchant class becoming the most significant both in terms of riches and trade and in social position. The Dutch Republic also saw the creation of the first formal stock market, the Amsterdam Stock Exchange, in 1602. 

The Dutch nouveaux riches threw themselves into the tulip trade with enthusiasm. Of course, trading in tulips also implied their cultivation, from bulbs, which took at least a year to grow and produce new bulbs which could then be sold. The varieties of tulips which grew with swirls and stripes of different colours, “broken” bulbs, were the favoured ones and the most profitable. Scientific studies and horticultural attempts were made to breed such striped specimens, but it soon become clear that the results were difficult to reproduce.

 It was only in the 19th century, that this unusual colouring was understood as caused by a virus transmitted to the bulb by a specific type of fly. In the early 17th century, however, the unexplained unpredictability added to the mystery and made the plant even more desirable, turning any purchase into a gamble for the rarest bloom.

Because of the time needed for the bulb to be ready to sell, i.e., for the flower to have bloomed, died, and ‘reverted’ back to a bulb which could be traded, tulip merchants began to use ‘futures contracts’. The buyer would sign a contract before the tulips bloomed, buying a bulb which did not yet exist. Bulbs could only be physically sold when they were dormant, in the months of June to September. Short selling (the act of borrowing a stock, selling it, and hoping for a decrease in its value so as to make a profit when one buys the stock back to return it to the lender) had been banned in the Netherlands since 1610, and the edict against this practice had to be reinforced many times and most notably in 1636, at the height of the tulip mania.

 The flowers’ popularity grew and with it their price, reaching reportedly a cost equivalent to ten times an artisan’s yearly salary! Speculation began in 1634, and by 1636 the Dutch had created a ‘futures market’ where contracts for the purchase of bulbs at the end of the season were bought and sold. All this ended abruptly in February 1637: after a winter of frenzied tulip trading where bulb contracts reportedly swapped hands up to ten times a day, the price of bulbs suddenly dropped, ending the trade.

Tulipmania, though it inflamed the traders and captures the imaginations even today, centuries later, lasted only three years—a fittingly short passion for a flower that only blooms for a week every year.

Jan Brueghel the Younger, Satire on Tulip Mania, 1640. Depicts monkeys as merchants in the tulip trade, ridiculing theabsurdity of the obsession over the flower.

This extraordinary socio-economic phenomenon of people willing to pay a value completely divorced from the intrinsic practical worth of what is being purchased, was referred to as a windhandel, a wind trade, because it was based in speculation and oftentimes traders and contractors would never even see the bulbs that they would stake their fortunes on. The tulip obsession was considered a strange event even at the time when it was booming. 

While the events of Tulipmania, of the almost unchecked speculation that led to men making or sinking fortunes over bulbs, are impressive and indeed hard to believe, it must be noted that the crash of the tulip trading market did not lead to an economic crisis for the Netherlands.


The flower trading fever that gripped the Dutch merchant class was not, as has often been imagined since, a central trade of the Dutch market but rather in its side lines. In fact, the Dutch Golden Age continued for many years after with little overall effect from the tulip trade that had so inflamed traders. Indeed, many of the more outrageous reports about the value of the bulbs have been proven false and apparently stemmed from sources wishing to warn against the dangers of financial speculation. 

The significance of the tulip mania lies in what it reveals about society and about a finance market based on gambling, on the trade of wind. Why the obsession for this flower, why stake so much on the mere chance of getting the right bulb, which would produce the most uniquely patterned flower? The crash of the tulip market is significant in that it follows a pattern reminiscent of today’s global market, with investments and trade with no tangible value behind, in a stock market that regularly peaks and crashes just as the tulip trade did in 1637.

While tulips no longer serve as the indicator of wealth and class they once were, and no one would dream today of trading a house for a bulb, they have remained popular across the world. Tulips are used in the Persian New year celebration, marking the advent of springtime, and tulip festivals are held all over the world.

The Netherlands is still responsible for most of the world’s tulip propagation, and exports around 2 million tulip bulbs a year. The tulip festivals held in the Netherlands during April are particularly noteworthy and well worth the trip and give some small inkling into the obsession 17th century Dutchmen felt over this special flower. 


[1]Anne Goldgar, Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age, 2008.

[1]In her poem “Tulips”, in Ariel, 1968.

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