History of Money & Markets · Early markets
Tulip Mania & the South Sea Bubble
The two classic early bubbles, what really happened, and what Isaac Newton lost.
Step 1 of 4 · Overview15 min read ·
1630s Netherlands
tulip bulb futures traded in taverns
Feb 1637
prices collapse
1720 Britain
South Sea Company stock soars ~10×
Late 1720
crash; Newton loses heavily
Modern historians think Tulip Mania was smaller than legend says, but contracts for rare bulbs did reach extreme prices before collapsing in February 1637. The South Sea Bubble of 1720 was bigger: a company promising South American trade monopolies saw its stock explode and then crash.
Key idea
Newton reportedly said he could "calculate the motions of the heavenly bodies, but not the madness of the people." Being smart doesn't protect you from crowd psychology.Next: Practice