Think you know a friend who is a bit too obsessed with flowers?

Well, they probably have nothing on the people living in the Netherlands 400 years ago, who got so obsessed with flowers, tulips in particular, that a single bulb was said to be worth six times the average Dutch salary.

So if the bubble had occurred today a single tulip bulb would set you back £187,000.

Our age has seen financial bubbles in everything from housing to dot com websites, cryptocurrencies, and video game company shares.

This blog will discuss the causes and consequences of one of history’s more odd speculative bubbles; that of the tulips.

Who introduced Tulips to the Netherlands?

We will never know for certain who first bought tulips into the Netherlands. However, it is widely thought that Ogier de Busbecq introduced them indirectly, and Carolus Clusius popularised them.

Tulips were first cultivated by the Ottoman Empire 1000 years ago. It was thought that in the 1500s, Ogier de Busbecq, an ambassador from Vienna to the Ottomans, posted them back home.

From Vienna, they were distributed throughout Europe, arriving at Augsburg, Antwerp, and yes, Amsterdam, within a few years of Busbecq's diplomatic misson

Who popularised Tulips in the Netherlands?

But while Busbecq introduced tulips to the Netherlands, indirectly via Vienna, Carolus Clusius, a botanical professor at Leiden University, is credited with popularising them in the Netherlands .

He established the Botanical Garden in the 1590s at Leiden university and found that tulips could adapt better than other plants to the damp, cold conditions of the Netherlands.

From there they grew in popularity; they were also seen as a symbol of the Netherland’s newly found independence from the Spanish Empire.

What were the immediate causes of the bubble?

The immediate cause of the tulip mania in 1636-7 was a marketing campaign by a few economists to increase demand for flowers in the Netherlands.

Another cause was French speculators who recognized that demand for tulips was in part driven by them being fashionable, there was also a market for speculation; that is people quickly buying and then selling them on for a profit. 

They flooded the market with contracts for bulbs, many of which likely could not be fulfilled.

Though Tulips had been fashionable since the time of Clusius in the 1590s, the spike in the 1630s was caused by this marketing campaign, as well as economic conditions at the time.

Dutch industry and shipping needed an excuse to keep producing goods despite high unemployment rates.

The mass-farming of tulips, as well as demand by speculators, created jobs, but created inflation out of nowhere!

Contracts for tulips, not the physical articles themselves, traded for up to ten times the value of an oil painting of a bulb. Or six times the average Dutchman’s salary.

What caused the Crash of tulip prices?

Remarkably little is known about the causes of the price crash or how events developed.

It is merely known that tulips reached their peak price in February 1637 and then abruptly declined; the next available piece of price data being in May 1637. 

It's most likely that one group of investors realised the market was over-valued and refused to buy at a new high price, leading to a general crash in prices, restoring them to the levels they had been earlier in the 1630s. 

What were the consequences of the crash of 1637? 

Contrary to popular belief, the bubble’s collapse did not lead to a national recession.

Some who had signed contracts offering to pay thousands in Dutch Guilders simply refused to pay after the crash. This led to a slight decline in the levels of trust in the Dutch financial community, one of the more sophisticated of 17th century Europe.

That said, ‘Tulipmania’ did have some general long-term effects. To this day the flower is the national symbol of the Netherlands, and the industry is worth over €200 million to the Dutch national economy.

Conclusion

It is always very interesting to find out about people in the past who were as obsessed by flowers as us, as well as the connections flowers can make to politics, economics, and society.

Thankfully these days, you can pick up a wide assortment of beautiful flower bouquets, alongside a wide variety of other flowers, for a lot less than a house or an oil painting.

When they’re back in season, tulips from us form an excellent gift. We have a wide variety of flower bouquets available for next-day Birmingham flower delivery as well as next-day delivery in the rest of the country.