Tulip futures emerge in taverns
Dutch tulip traders began selling contracts on bulbs still underground, to be delivered after winter dormancy. The practice moved into taverns, organized informally as 'colleges' of traders. There was no central exchange, no clearinghouse, no written law. The derivative market was where most of the speculation lived, not the underlying bulbs themselves.
The Dutch tulip futures market predated the Amsterdam Bourse's formal futures trading by over 50 years. When prices collapsed in February 1637, contracts were simply walked away from, and Dutch courts mostly declined to enforce the obligations. The first major financial market failure was specifically a derivatives-market failure, not a spot-market one. That pattern has recurred.
01 · Tulip Mania
Dutch tulip bulbs — specifically, the ones infected with a mosaic virus that produced striped 'broken' blooms — became the speculative asset of the 1630s. At the peak, a single Semper Augustus bulb traded for more than a luxurious Amsterdam canal house. Then, one February morning in 1637, a Haarlem auction failed. Prices collapsed 99% inside three months.
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