When Flowers Cost More Than Houses: The Dutch Tulip Mania of 1637

Imagine paying a million dollars for three flower bulbs. Not rare diamonds. Not a house. Flowers. That actually happened in the Netherlands in 1637. And then the whole thing collapsed in a single week.

This is Chapter 1 of Torsten Dennin’s “From Tulips to Bitcoins,” and it’s the origin story for every market bubble that came after.

The Dutch Golden Age

In the early 1600s, the Netherlands was on fire. The good kind. Religious freedom brought people from all over Europe. Skilled workers, thinkers, merchants. They all came to a small country that was punching way above its weight.

The Republic of Seven United Netherlands became a serious global power. They built colonies everywhere. New Amsterdam (which you now know as New York). Dutch East India (now Indonesia). They were everywhere.

Then in 1602, merchants did something that changed finance forever. They founded the Dutch East India Company, known as VOC. It was basically the world’s first multinational corporation. The first publicly traded company. Think of it as the Apple or Google of the 1600s, except they traded spices instead of iPhones.

Money was flowing. Rich merchants built huge estates with big gardens. And they needed something beautiful to fill those gardens.

Enter the tulip.

A Flower From the East

Tulips were not native to the Netherlands. They traveled a long road from Armenia and Turkey, through Constantinople, then Vienna, then Frankfurt, and finally landed in the Dutch Republic.

And people went crazy for them.

Upper-class women started wearing tulips as hair ornaments. Rich families planted them in their estates. Having tulips meant you had money and taste. It was a status symbol. Like driving a Lamborghini today, except it was a flower.

Here’s the problem though. Tulips grow slowly. One bulb produces only two or three new bulbs per year. Supply could not keep up with demand. When something is beautiful, rare, and hard to get, prices go up. Basic economics.

At first, tulips were sold at auctions in pubs and inns. Then trading clubs formed. These were basically informal stock exchanges, but for flowers.

When Trading Went Crazy

By the 1630s, things got weird. People stopped buying tulips to plant them. They started buying the rights to tulips still in the ground. Nobody even knew what the flowers would look like when they bloomed. You were buying a promise.

This is basically what we now call futures trading. Except it was the 1630s and nobody had a rulebook.

It got so out of hand that 400 painters were commissioned to paint pictures of tulips. Why? Because buyers wanted to see what they might be getting. You couldn’t see the actual flower, so you bought based on a painting. Think of it as the 1637 version of looking at product photos on Amazon before buying.

A single tulip contract would change hands ten times before anyone planted anything. Pure speculation. Pure hype.

The Virus That Made Things Worse

Here’s an interesting twist. A mosaic virus, spread by aphids, infected some tulip bulbs. Instead of killing the flowers, it created these wild two-color patterns on the petals. Streaks and flames of different colors.

Normal tulips were valuable. These virus-infected “broken” tulips were insanely valuable. The rarer the pattern, the higher the price.

The most famous variety was called Semper Augustus. Red and white flames on the petals. For a single Semper Augustus bulb, buyers paid 10,000 guilders. To put that in perspective, a skilled craftsman earned about 500 guilders per year. So one flower bulb cost 20 years of salary.

Between 1634 and 1637, tulip prices went up 50 times. In January 1637 alone, prices doubled again. At the peak, three tulip bulbs could buy you a house in Amsterdam.

Three. Flower. Bulbs.

The Crash

February 5, 1637. The city of Alkmaar. An auction of 99 tulip bulbs brought in 90,000 guilders. That’s roughly one million dollars in today’s money. For 99 flowers.

But here’s what nobody at that auction knew. The crash had already started two days earlier.

In the city of Haarlem, at a pub auction, something happened that changed everything. No buyer showed up. Nobody wanted to buy. The moment one auction failed, panic spread like fire. Suddenly everyone wanted to sell and nobody wanted to buy.

February 7, 1637. Trading stopped completely. Prices fell 95%. Not over months. Not over weeks. Days.

The math was brutal. Open contracts (promises to buy tulips at high prices) exceeded the actual supply by massive amounts. People had bought tulips that didn’t exist at prices that made no sense.

The government stepped in and banned futures trading on tulips. But the damage was done. Everyone had been caught up in the mania. Nobles, merchants, farmers. Regular people had mortgaged their homes to buy flower bulbs.

Sound Familiar?

Reading this chapter, I kept thinking about crypto in 2017. Or meme stocks in 2021. Or NFTs. The pattern is exactly the same. Something new appears. Early buyers make money. More people pile in. Prices go to the moon. Then one day, nobody shows up to buy, and the whole thing crashes.

Dennin starts his book with this story for a reason. It’s the original template. Every bubble since 1637 follows the same script. Only the names change.

Fun Facts

The tulip mania shows up in pop culture too. You can spot references to it in “Wall Street: Money Never Sleeps” (2010) with Michael Douglas. There’s also a movie called “Tulip Fever” (2017) that is set during this exact period.

And here’s the best part. After all that chaos, the Netherlands still won. Today, almost 80% of the world’s tulip crop comes from the Netherlands. They turned a catastrophic bubble into a permanent industry. Not a bad recovery from a 95% crash.

Next chapter takes us to Japan, where rice traders in the 1700s invented something that every stock trader uses today.

Previous: Introduction

Next: Chapter 2: Dojima Rice Market

This is part of my From Tulips to Bitcoins book retelling series. New posts every week.