In the early 1600s, the first economic bubble, and resulting crash, involved which product in the Netherlands?
And the answer: tulips.
Also known as "tulip mania," the tulip bulb market bubble is one of the most famous market bubbles and crashes of all time. As tulips became very popular and fashionable in the early 1600s, prices for the bulbs reached extraordinarily high levels, and then dramatically collapsed in 1637.
It all began in 1554. A Flemish ambassador to the Sultan of Turkey, Ogier de Busbecq, sent tulip bulbs to Vienna from the Ottoman Empire. Soon after, botanists began to realize that the gorgeous flowers were able to grow and thrive in the harsher conditions of the Netherlands. The flower's unique coloring rendered the bulbs exotic and desirable, quickly becoming a status symbol. Multicolored intricate lines and flame-like streaks on the petals were vivid and spectacular, making the bulbs that produced these plants highly sought-after. Interestingly, it is now known that this effect is due to the bulbs being infected with a type of tulip-specific virus, known as the "tulip breaking virus," so called because it "breaks" the one petal color into two or more.
As the flowers grew in popularity, professional growers paid higher and higher prices for bulbs with the virus, and prices rose steadily. In 1636, tulip mania became so intense and commercialized that oftentimes transactions of great sums would take place without transferring bulbs from hand to hand. Many men made and lost fortunes overnight.
However, this craze was short lived. In 1637, an outbreak of the bubonic plague kept buyers home from a bulb auction, and prices crashed to unsalvageable depths. Today, tulip mania lives on as a term to describe great discrepancies in price and value of goods.