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The Tulip Bubble.
Jul 27, 2019

The Tulip Mania was an event in 17th century, representing one of the earliest financial bubble dubbed the Tulip Crash. The rare tulip bulb known as "Semper Augustus" was said to have been speculated at an exorbitantly insane price until it collapsed. This story was passed on as a common knowledge, a true example of an exagerated tale where people brags and talks about it loudly. But very few really dugged deep to explain why.

This account is best understood if one knows the concept of futures trading in the context of that same period of 17th Century. Futures contracts were then defined as gambling debts. As such, the issue accelerated when enforcement of these contracts (gambling debts) were not guaranteed by the court. It was a long standing practice during those time for the court not to enforce repayment of gambling debts. The tulip sales under futures contracts were considered bets under Roman law. 

Author/Vicar Calsado/
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