In 1554, the Ottoman Empire sent a goodwill gift to Vienna to tell the Holy Roma Empire that they totally wanted to best friends. Included in the goodwill gift was a strange flower called the tulip. Europeans were mesmerized by the tulip’s bright colors and cup like pedals. The had never seen anything like it before. However, nobody could imagine that it would eventually bring the greatest economic power of the time to its knees.
In 1581, the Dutch won their independence from Spain, and not being lazy, soon after set to work transforming themselves into an economic powerhouse. Within fifty years of becoming free, the Dutch controlled the majority of the world's major sea lanes, dominating the lucrative trade routes linking the exotic riches of Asia and Africa to Europe. The United Provinces, later called the Netherlands, became the cultural and technological center of the western world. Its well-educated population enjoyed the highest standard of living in the world, and Dutch artists and craftsman were considered to be the best in Europe.
Tulips were first introduced into the United Provinces in 1593 as a luxury item for the rich to show off to other rich assholes. Eventually normal tulips became rather passé, so Dutch botanists began creating newer and more fancy varieties, the most popular being those involving the mixing of different colors in a streaked pattern. For the members of Dutch high society, you just weren’t really a somebody unless you had some streaky colored tulips. Of course, all of this cost quite a bit of money, because tulips were a real bitch to grow. On average it takes 7 to 12 years for a tulip seed to develop a bulb, which can then be used to regrow the plant year after year. Tulips only bloom for about a week in May, and then go dormant from June through September. It’s only during this dormancy phase that the bulbs can be uprooted and moved about, which means there’s only a limited time to buy and sell them.
The Dutch were the creators of many of the tools of modern commerce, so of course they came up with all sorts of funky ways to trade tulip bulbs. By 1610, an entire market had been set up. To widen the trading window from the naturally forced period of June through September, the Dutch created the first futures contracts, where tulip traders promised to pay immediately for bulbs that they would then be given at a later date. As the United Provinces became richer and richer, the prices professional tulip growers got paid grew higher and higher, with fortunes being exchanged for some of the most sought after varieties. By 1634, the rising prices attracted in speculative money from across Europe. People were hoping to make a butt load of cash by buying tulip futures and then selling the bulbs at an even higher price later. This of course drove the price up even higher, which in turn attracted in more speculative money. Things pretty quickly got out of hand. By 1636, tulip future contracts were changing hands as many as ten times a day. People were mortgaging all of their possessions to buy tulip futures. Prices skyrocketed higher and higher, with some of the best varieties trading for more than the average workman made in a year.
It all came crashing down in 1637. Tulip buyers failed to show up to a major tulip auction in the town of Haarlem, probably because most people in Haarlem were dying of the Bubonic Plague. The failure of the auction sparked a panic which led to the bubble’s collapse. People holding tulip futures contracts suddenly found them worthless. The Dutch economy was so badly hurt that the government was forced to create a bailout of sorts to stave off total collapse. Even so, the bubble bursting continued to have negative effects for years. All of this just for a fucking pretty flower.
Image: https://commons.wikimedia.org/wiki/File:Judith_leyster_tulipFXD.jpg