The cautionary tale of tulip mania is often quoted when we talk about crypto and stock bubbles. I spent yesterday afternoon at the Glenarm Castle tulip festival, so I'll illustrate the story of tulip mania with a selection of nice pictures of flowers from yesterday's tulip festival.
The tale of tulip mania is a historical story of hubris, greed and financial scandal set in 17th Holland.
According to the traditional story in February 1637 tulip bulbs reached such dizzying heights that people were exchanging 10 times a skilled craftsperson's annual salary for one tulip bulb. Every man, woman and child became obsessed with these fashionable horticultural novelties. This was the world's first speculative bubble and the collapse that happened in 1637 brought years of economic misery to the Dutch Republic.
The problem with the story of tulip mania is that's it not totally true. The story became popular after the book 'The Madness of Crowds' was published in 1841 by the Scottish author Charles Mackay.
The book became very popular with economic theorists and as a result the story has become a byword for all the financial bubbles that have occurred since Victorian times.
McKay based his books on material that came ultimately from a number of inflammatory anti-speculative religious pamphlets.
In reality the bubbles victims were limited to a small number of merchants and at the time the Dutch Republic was one of the richest countries in the world, so it easily absorbed any economic pain in its stride.
This final image is a Wikipedia Commons image of Glenarm Castle built in 1636 the year before the 'tulip bubble' supposedly burst.
