tulipmania investment & finance definition

A large speculative bubble that occurred in Europe in the 17th century when the value of tulips skyrocketed, especially in Holland and Britain. By 1634, the Dutch economy focused almost exclusively on tulips to the exclusion of other business activities. The value of special breeds of tulips soared to as much as thousands of florins. In contrast, 12 fat sheep sold for 120 florins. In 1636, the demand for rare tulip species increased so much that tulip exchanges were established on the Stock Exchange of Amsterdam as well as on the London Exchange. By the end of the year, sense returned and people began to sell their tulip interests for just a small profit. Soon, confidence plummeted and the floor in the market gave way. Tulips once again were just pretty flowers and the entire episode was derided as “tulipmania.”