In the late 1630s, the Dutch economic market experienced a brief phase of “tulip mania,” during which tulip bulbs, a new and novel commodity at the time, briefly fetched extraordinarily high prices. At the peak of tulip mania in Holland, in March 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled craftsman. It is generally considered the first recorded speculative bubble. The term "tulip mania" is now often used metaphorically to refer to any large economic bubble (when asset prices deviate significantly from intrinsic values).

The event was popularised in 1841 by British journalist Charles Mackay. According to Mackay, at one point 12 acres of land were offered for a Semper Augustus bulb. Mackay claims that many such investors were ruined by the fall in prices, and Dutch commerce suffered a severe shock. Some modern scholars, however, feel that the mania was not quite as extraordinary as Mackay described. In defense of this position, it is clear that not enough price data remain from official records at the time, to represent an all out tulip bulb bubble.

In her 2007 scholarly analysis Tulipmania, Anne Goldgar states that the phenomenon was limited to "a fairly small group," and that most accounts from the period are based on a few contemporary pieces of propaganda designed to criticise the nation of Holland or the excesses of the era’s merchant class. While Mackay's account held that a wide array of society was involved in the tulip trade, Goldgar's study of archived contracts found that even at its peak, tulip trade was conducted almost exclusively by wealthy merchants and craftsmen, but not by members of the nobility. Thus, says Goldgar, any economic fallout from the bubble was very limited. Goldgar, who identified many prominent buyers and sellers in the market, found fewer than half a dozen who experienced financial troubles in the time period, and of these cases it is still not clear that tulips were to blame. This is not altogether surprising. Although prices had risen meteorically, by the time the tulip price bubble abruptly burst, money for the most recent transactions had not actually exchanged hands. Thus profits were never realised for sellers; unless sellers had made other purchases on credit in expectation of the profits, the collapse in prices did not cause anyone to lose money.

There is no dispute that prices for tulip bulb contracts rose and then fell significantly in 1636–37, but even a dramatic rise and fall in prices does not necessarily mean that an economic or speculative bubble developed and then burst. For tulip mania to have qualified as an economic bubble, the price of tulip bulbs would need to have become unhinged from the intrinsic value of the bulbs. Modern economists have advanced several possible reasons for why the rise and fall in prices may not have constituted a bubble. For one, the increases of the 1630s corresponded with a lull in the Thirty Years' War, which occurred between 1618 and 1648. As the economy became less fettered by war, investments and purchases were freed up for luxuries such as tulips. Hence, it is possible that market prices were responding rationally to a rise in demand.

However, the fall in prices was faster and more dramatic than the rise, and did not result from a sudden resurgence in the war. If the precipitous fall of tulip prices in 1637 can not be linked to a clear and practical economic reason for a fall in demand, that certainly bolsters claims for a bona fide bubble. While war nearly always has some economic impact, a number of scholars argue that some other disaster, not strictly linked to the lull in the Thirty Years’ War, may have caused a fall in prices.

Peter Garber, a scholar for the National Bureau of Economic Research, points to the most widely accepted culprit for the implosion of the tulip bulb market in the late 1630s: bubonic plague. Garber points out that the likely catalyst for the fall in tulip prices took place in the city of Haarlem in the Netherlands. There, in February of 1637, merchants were spooked by a shocking “ghost auction” for tulip bulbs, in which no one showed up to bid or purchase. Garber and others speculate that word of this lack of attendance quickly spread, causing buyers and sellers worldwide to lose faith in their ability to continue trading the bulbs at high prices. Scholars also observe the the likely cause of the abrupt lack of buyers or sellers in Haarlem was a surge in cases of bubonic plague in that city. This fits in with the widely accepted “big picture.” There is consensus that the plague’s sweeping economic impact set the stage for many features of the modern economy, possibly including bubbles.

Historical records, while spotty during the Thirty Years’ War, show no concrete evidence that tulip mania had significant impact on the broader economic wellbeing of Holland at the time. Just how widespread the trade was, or how many individuals’ fortunes were impacted by tulip bulb trade in 1636-1637 remains a matter of debate. Regardless of whether or not tulip mania qualified as a true “bubble” by contemporary economic standards, it is impossible not to draw parallels between the Dutch tulip trade of the late 1630s and today’s economic bubbles. If one thing can be learned from this short episode in Holland’s economic history, it is that the line between reasoned response to market forces and artificially driven boom-and-bust cycles can be blurry and subjective.