Tulipomania

The rariety of the flower would increase the price

The price of a tulip bulb increase twenty-fold in one month, rising from 125 florins per pound on December 31st 1636 to 1,500 florins on February 3rd, 1637.

The Dutch began to liquidate all of their profitable assets in order to afford these tulip bulbs

People began to sell their farm land, houses, cash in life savings just to obtain enough money to afford the tulips

Once the bubble begin to crash and people began to sell off all of their flowers no matter the cost, people were left with large amounts of debt and fewer assets

Tulip bulb dealers would be paid money from the purchaser to buy the tulips, through written contracts

Once the bubble began to crash, dealers would pay a small fine in order to cancel contracts and minimize the debt for themselves, leaving the buyer in a large sum of debt

Everyone reached a point where they were looking to sell their flowers, and there were fewer buyers

This resulted in a price drop

After the price drop, dealers began to break contracts

This resulted in a mass sell off that left a large amount of people in debt after selling their flowers for a large profit loss

Government contracts were changed from future contracts to opinion contracts

If the investor did not like the current market price of the tulip, the dealer was not obligated to buy the product

The dealer could pay a small fine and cancel the contract

This caused a massive loss for some people who had paid large sums of money for the tulip and will never make their money back

There was no legal regulations on the price of the tulips

Gambling was illegal at the time so these contracts that were created by government officials in an attempt to make a quick dollar were not legally enforced.

The unrestrictiveness of the contracts being cancelled contributed to a large sell off that dropped the price of the tulip significantly

The government began to offer roughly 10% of the face value of the contracts to the people getting cancelled contracts in order to help decrease the amount of profit loss of their citizens

The Commissarissen van De Bloemen Saecken (Commissioners for flower affairs) would meet twice weekly to come up with ideas on how to reduce this bubbles effect.

They came up with the solution that a 3.5% charge to debtors on pre-existing contracts would be put into place to deter the dealer from cancelling the contract.

The new tulip was brought over from Turkey to the Netherlands

This caused a rarity that resulted in a desire for the flower

The desire for the tulips became a mass craze

Due to the non-viral disease mosaic, a "fire" pattern was created on the flower

This caused more unique and rare designs of tulips

The more unique and rare the tulip was, the more people were willing to pay for the flower

Due to the Bubonic plague being present in the Netherlands at the time, people were making irrational decisions

Some people were trying to make the most of what they thought were their remaining months and live lavishly

This, coupled with the desire for the flower, caused people to liquidate all of their assets (like farmland, Houses, and savings) to have enough money to buy these lavish flowers

People began to sell their flowers, and fewer and fewer people were interested in buying.

This mixed with the cancelling of contracts created a panic sell off that dropped the price of the flower drimatically

People would sell off no matter the profit loss they would receive