05.02.

Tulip mania and stock market crash

Tulip mania and stock market crash

Tulip mania is the name for a period in the Netherlands when tulip hysteria ruled. From the second half of the 16th century tulips became the object of longing in the Lowlands. Bulb prices have skyrocketed. People borrowed to stay in the bulb store. The most expensive tulip variety was Semper augustus. In 1623, only one bulb of this variety cost 1000 guilders, and only fifteen years later it cost 30,000 guilders. In comparison, the most expensive house on the Amsterdam Canal cost about 10,000 guilders.

The sharp rise in prices created expectations for their further growth and attracted speculators who thought that trading bulbs would soon make incredible profits. The peak of the price was reached on February 5, 1637. But the tulip mania was a typical bubble that, when it burst, led to the first stock market crash in history. All trade in the Netherlands stopped, and tulip prices fell 95 percent. This destroyed many citizens as they borrowed to invest in tulips.

Facebook Comments

Related posts