By Antanas Jablonskis & Krišjānis Krakops
When most people think about the Netherlands, they think about, among other things, the tulip. So, it may come as a surprise for many to find out that not only does the tulip not originate from there but was also responsible for the first financial bubble in history. In the years 1634-1637, the tulip market experienced a drastic increase in prices followed by a sudden crash in February 1637. Until recently, the story of “tulip mania” has been presented as a parable about human greed and market irrationality, brought up whenever there is trouble in the economy. But some have suggested that view might not be true and that our perception of this period in history is largely misconstrued, based upon later, exaggerated stories. This article explores the environment in which the bubble took place, what made the tulip ripe for such a bubble, and how these events are perceived today.