Tulip Mania and Stock Market

CrashesHans Overturf

Owner of a private financial services practice, Hans

Overturf, manages money for both himself and his

business partner, as well as holding ownership

stakes in a number of businesses. With a

bachelor’s degree in economics, Hans Overturf also

has a strong interest in mass psychology and stock

market crashes, an example of which is “tulip

mania,” thought to be the first recorded economic

bubble.

In the Netherlands in 1635, tulips began to be sold

with a promissory note indicating the details of the

bulb, including weight and when it would be pulled.

Bulb prices rose steadily throughout the 1630s, with

an increase in speculators entering the market, and

by 1636 trade in tulips, even those not previously

worth much, became frenzied. At the height of this

tulip mania, most exchanges were purely

speculative, without the exchange of any goods,

because bulbs were still in the earth.

In February of 1637, when investors weren’t willing

to go higher, what became known in the economics

field as the first episode of financial panic and crash

occurred. Although tulip mania only affected a small

portion of the population at the time, it did affect

many people’s reputation, credit, and honor.