Medieval financial "bubble" or the story of Dutch tulips

Every year, the world admires blooming tulips in the famous parks of the Netherlands, and Keukenhof is visited by dozens of thousands of tourists who come to admire the varieties of this delicate flower. But few people know that 400 years ago, tulips (or greed) caused a lot of people to go bankrupt!

This is how everything started: in the middle of the XVI century, the Austrian Ambassador Augier Ghislain de Busbecq brought several bulbs of an unknown flower from Constantinople to Vienna, and the French botanist Charles de l'Écluse planted them in the royal garden of Emperor Ferdinand I, carefully protecting them. A few years later, the Frenchman moved to work in the botanical garden of Leiden University and brought these wonderful bulbs with him. In the spring of 1594, the first tulip bloomed in the Netherlands.

At the beginning of the XVII century, not only educated botanists under the leadership of Charles de l'Écluse, but also ordinary gardeners grew tulips in the country. The selection of new varieties became popular: at that time, the market highly valued variegated tulips that changed their color due to the virus. The flowers of unusual hues were much more expensive than the others. The most famous were the red and white tulips of the "August forever" variety bred in France.

In 1623, the only owner in the Netherlands was offered 20,000 guilders for 10 bulbs of this variety, in 1624 — 3000 guilders for one bulb, but he did not agree to sell them. It is a well-known fact that one adult bulb of a red-and-white tulip was sold together with two daughter bulbs for 1000 guilders. At that time, this money could buy 856 grams of gold and 10 kg of silver, and a skilled craftsman earned about 300 guilders a year.

Signs of tulipomania, according to the chronicler Theodorus Velius, began to appear in 1633 in West Friesland: in the summer of that year, prices for tulips soared causing a real stir. The records show that a resident of Horn exchanged his house made of stone for 3 bulbs, and a local farmer gave his farm in exchange for the bulbs. The price of each transaction was at least 500 guilders, which means that tulip bulbs turned into a real currency.
Breeders who in 1634 released a lot of new varieties to the market added fuel to the fire: prices for previously popular bulbs fell, lowering the threshold of entering the market for new "merchants", so the number of tulipanomaniacs increased sharply.

In 1634-1635, the Dutch introduced futures contracts, starting in autumn to sell bulbs that had already been planted in the ground, under an obligation to dig them up the following summer. At the same time, the contracts for multiple resale of bulbs were signed on the market: "merchants sold bulbs that did not belong to them to buyers who had neither the money nor the desire to grow tulips." In December 1634, the bulbs were sold by weight instead of by piece.
The opening of the "crowd" bargaining in the summer of 1636 increased the number of tulip bulb speculators: in the Dutch cities "collegia" opened - similar to the Amsterdam exchange, where mainly poor people traded in inexpensive varieties of tulips.
It was really trading in thin air: no one checked the solvency of buyers or the availability of bulbs from sellers, and prices rose and fell sharply as a result of speculative games.

The peak of tulipomania occurred between November 1636 and February 1637: first, the price of bulbs fell 7 times on the background of the news about the loss of the target market in Wittstock, then by Christmas, the prices soared 18 times as compared to November. The same bulb was resold dozens of times a day, each time with a profit for the seller. As a result, unsecured contracts for bulbs began to be sold at a price that was 20 times higher than the value of real bulbs in the ground.
There were rumors that the inflated "tulip bubble" would soon burst. And so it happened. In February 1637, the prices for tulips fell 20 times. The buyers began to reject the previously signed contracts left and right. Most of the contracts were declared invalid, and those who mortgaged their property in pursuit of a quick profit lost everything.

History doesn't seem to teach us anything ☺. What situation in the world of modern finance did this tulip fever remind you of?