Friday, April 23, 2010

When The Tulip Bubbles Burst

In 17th century Holland, tulips were gaining in popularity. Introduced to Holland in 1593, the tulip was the new and exotic flower from Turkey. Everybody wanted some to show they were hip with the hot trend. As markets go, the price followed the demand, and when new hybrid tulip species were grown, the rarest types and colours grew extraordinarily expensive. At the hight of the craze, one tulip bulb could cost as much as ten times a years salary for a skilled craftsman! Needless to say, the tulipmania came to a quick and dramatic end in 1637 when the prices stagnated and fell with a crash.

Today I was surprised to find that the story of the Tulip market crash, the tulipomania or tulip bubble, is known more widely among my non-Dutch colleagues, than among the Dutch. Apparently, the Dutch school system does not favour examples from their own history when it comes to letting their pupils learn from the past. Maybe that is why the Dutch are still making history after history of economic bubbles, like the case of Worldonline or more recently the Fortis bank crash...

Read more: The tulip craze from investopedia
Read more: Bubbleology from

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Blogger Lucas Brouwers said...

I'm ashamed to admit I've never heard the story! It seems only natural that as one of the first nations to experiment with a free economy, the Netherlands had to experience the up- as well as the downsides. Whether we learned much from it, is another question entirely ;).

10:59 PM  

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