The Dutch Tulip Crisis of the 1630’s was a socio-economic disaster caused by greed and opportunity. It would seem that those words when taken out of context and examined today seem to describe recent and current speculative bubbles we have experienced in modern day society. Story has it that “in the 1630s a sailor was thrown in a Dutch jail for eating what he thought was an onion. That onion was in fact a tulip bulb. The cost of the sailor’s gluttony was equivalent to the cost of feeding an entire crew for twelve months” (Economist.com). While this story is probably just urban legend, herein lies the problem with the tulip crisis, it happened so long ago that many of the analysis is just pure speculation and “the line between fact and fiction is blurred” (Economist.com). That’s not to say that it still cannot be used as a valuable lesson into not letting us as human beings repeat such a dreaded type of history, but must be taken with a grain of salt as well during such analysis.
“Tulpenwoede (tulip madness) resulted in big increases in tulip prices. At the beginning of 1637, some tulip contracts reached a level about 20 times the level of three months earlier” (Economist.com). Popular belief is that this bubble was brought about by market irrationality, ideas that were advanced by Charles Mackay and what many current day scholars draw their analysis from. However it is important to remember that these are not the only hypothesis(s) that exist about the cause of Tulip Mania, and many economists have come forward with their own accounts of what caused the crisis. The two most popular opinions are of Peter Garber and Earl Thompson. I put blame on the general public for the price increases… I reckon that an outbreak of bubonic plag...
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“Investor Manias through the Centuries.”
“Financial Market Bubbles” http://www.jstor.org/stable/40056811
Jones, Dan. “Bursting Bubbles.” History Today 59.8 (2009): 3-4. Historical Abstracts.
Kindleberger, Charles P. Manias, Panics, and Crashes: A History of Financial Crises. London: Macmillan, 1978.
Garber, Peter M. “Famous First Bubbles.” Journal of Economic Perspectives 4.2 (1990): 35-50. Historical Abstracts.
Thompson, E. A. (2007). “The tulipmania: Fact or artifact?” Public Choice, 130(1-2), 99-114.
Mackay, C. (2004)  Extraordinary popular delusions and the madness of crowds.
Garber, P. M. (1989). ‘Tulipmania’. Journal of Political Economy, 535-560.
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