The tulip had reached Europe from Ottoman palace gardens at the end of the sixteenth century, and quickly became a status flower among the newly rich merchant class of the Dutch Republic. The bulbs of the most prized varieties — 'broken' tulips whose flame-striped petals were the result of a viral infection — were astonishingly rare; the legendary Semper Augustus is said to have existed in only about a dozen bulbs. The plant was also slow to propagate: a bulb could only be lifted and transferred between June and September. The rest of the year, buyers and sellers contracted on paper for delivery of a bulb still in the ground — that is, they wrote forward contracts. In the autumn of 1636 this paper market, in the tobacco-smoke evenings of inn rooms (the 'colleges'), began to rise vertically.

The classic narrative entered European memory through Charles Mackay's 'Extraordinary Popular Delusions and the Madness of Crowds' (1841): the carpenter selling his garden for one bulb, the sailor jailed for mistaking a bulb for an onion, cities tipped to the brink of ruin. The historian Anne Goldgar's 'Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age' (University of Chicago Press, 2007), based on notarial and court records from Amsterdam and Haarlem, largely dismantled this story. Mackay's anecdotes turn out to descend mostly from seventeenth-century moralising pamphlets and are emblematic exaggerations, not records. Speculation involved a narrow circle — perhaps a few hundred traders, most of whom knew one another. Many contracts were never delivered, and Dutch courts later ruled most claims uncollectible and quietly voided them.

On 3 February 1637 a bulb auction in Haarlem opened to no bids, and within days the news froze tulip markets across the Republic. Prices appear to have fallen about 90–95 per cent from their peak, but most of that was paper. Goldgar shows that the crash left almost no visible footprint on Dutch macro-economic history: no wave of national bankruptcies, no fall in GDP, no banking-system shock. What it shook was the economy of trust, reputation and merchant honour — the moment when men who had pledged their word stopped honouring it. The damage was real, but it was moral rather than financial.

The legend, however, has had its own life. From the Mississippi Bubble (1720) and the South Sea Bubble (1720) through the railway mania of the 1840s, 1929, dot-com 2000, and the 2008 mortgage crisis, 'Tulip Mania' has been the point of comparison every time. The event was small; the metaphor became enormous. Its real historical weight is not the volume of the speculation but the fact that it became a story capitalism tells about itself: that crowds, even before the digital age, could behave just as they behave today, and that once such a feeling is written down, it echoes for centuries.