Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.
On this day in 1637, the infamous tulip bulb bubble reached its peak.
Where Was The Market?
The S&P 500 and the Dow Jones Industrial Average were nowhere to be found, and neither was the United States of America.
What Else Was Going On In The World?
In 1637, Colonial soldiers killed roughly 500 Pequot Native Americans in the first battle of the Pequot War, which became known as the Mystic Massacre. Anne Hutchinson was tried as a heretic in Massachusetts Bay Colony. A kilogram of “merchantable” codfish cost around 6.81 ounces of silver in Massachusetts at the time.
The Dutch tulip bulb bubble of 1637 is often considered the first ever speculative financial market bubble and is still referenced to this day as one of the best historical examples of irrational investor behavior. The bubble formed after The Dutch Republic created a futures market for tulips in the 17th century. By the time the market peaked in February, the price of some single tulip bulbs had reached more than 10 times the annual income of a skilled Dutch craftsman. At one point, one buyer reportedly offered 12 acres of land for a single bulb.
The price of a Witte Croonen bulb reportedly soared 2,506% in just 33 days before plummeting on average 76% each year over the next five years.
The 1841 book “Extraordinary Popular Delusions and the Madness of Crowds” claims Dutch tulip investors were ruined during the bursting of the bubble and the Dutch economy took a major hit, but scholars now say author Charles Mackay likely sensationalized the impact of the bubble.