Tulip mania was history's first recorded speculative bubble

During the 1630s, the prosperous Dutch Republic developed a feverish trade in tulip bulbs. The most coveted were the “broken” tulips — blooms with dramatic feathered streaks of color against a paler base. Nobody at the time understood why they appeared, and breeders couldn’t reliably reproduce them. We now know the flaming was caused by a mosaic virus carried between plants by aphids. Buyers paying a fortune for the most spectacular varieties were, in effect, paying top guilder for a plant disease that also weakened the bulb.

Much of the trading never touched an actual flower. Most deals were windhandel — “wind trade” — futures contracts on bulbs still buried in the ground, sold and resold on paper through the winter months, settled by promise rather than delivery. A single prized bulb could change hands many times for more than a craftsman earned in years, and contemporaries told of bulbs swapped for entire houses.

Then, in early 1637, confidence evaporated. Almost overnight the price structure collapsed, and bulbs that had commanded fortunes could not be sold at any price.

The popular image of mass ruin, though, deserves a caveat. Historian Anne Goldgar, working from contract records, argues the crash’s scale was exaggerated by moralizing pamphlets selling a parable about greed. Relatively few traders were actually bankrupted; many contracts were quietly renegotiated. The episode endures less as financial catastrophe than as the first recorded illustration of the “greater fool” theory — buying not for value, but in the hope of reselling higher.