Tulipmania

Goldgar, a historian of the Dutch Golden Age, examined the Dutch tulip episode of 1636 and 1637 using archival records including notarial documents, court records, estate inventories and correspondence, and concluded that almost everything commonly said about it is wrong.

The standard account, which descends from Charles Mackay's Extraordinary Popular Delusions and through him from moralising pamphlets published shortly after the events, holds that the whole Dutch population traded tulip bulbs, that prices reached absurd levels, that the collapse ruined thousands and that it produced a general economic depression.

Goldgar found otherwise. The trade involved a few hundred people, concentrated among wealthy merchants and skilled artisans who already knew each other, largely within Mennonite and other connected religious and social networks. The very high prices applied to a small number of rare bulbs, and most transactions were forward contracts for future delivery rather than cash purchases. When the market collapsed in February 1637, most contracts were simply not settled: buyers refused to pay and sellers had little recourse, since courts declined to enforce the contracts. She found very few bankruptcies attributable to tulips and no measurable effect on the Dutch economy.

Her argument about what actually happened is social. The episode damaged trust among people whose commercial relationships depended on personal reputation and on the honouring of informal agreements. The crisis was about credit in the older sense of the word, meaning reputation, and the pamphlet literature that produced the legend was a response to anxiety about commerce and value rather than a record of financial ruin.

The book is archival history and does not engage the finance literature on bubbles. Its correction is now widely accepted among historians while the legend persists in financial writing, which is itself the point.