The scientific publication Smithsonian published an article stating that the "tulip fever", which is considered to be the first stock market bubble, was invented by the Dutch Calvinists. People were chasing profits, but not as massively as it is described in textbooks and works of art. And this race certainly did not cause the collapse of the economy and industry. We have prepared a Russian-language adaptation of this article.
General Madness
When the first tulips were grown in the Middle East, the whole world went crazy. Some varieties were worth more than gold. There is a legend that a sailor was accused of a criminal offense and imprisoned only because he mixed up a rare tulip tuber with an ordinary bulb and ate it for dinner. One bulb of the rare Semper Augustus, with flowers of red and white petals, cost as much as a mansion in a fashionable area of Amsterdam, with a personal trainer and a garden to boot. Since the cost of a tulip on the market has grown, a wave of speculation has begun - merchants have raised the price of bulbs to heaven. And then, as is usually the case with stock market bubbles, the tulip market “burst”, leaving hundreds of sellers without revenue.Dynamics of the index of futures (green) and option (red) prices for bulbs in 1635-1637 according to Thompson. Image: Wikimedia Commons
For decades, economists have held up the story of tulip mania as an example of the dangers and instability of the free market. Writers and historians have written hundreds of books about the absurdity of events. A film was even made on this topic, it is called Tulip Fever, its plot is based on the book by Deborah Moggch.
There is only a small caveat: this story is not true.
To understand the truth, you need to understand the history
What really happened and how did it happen that the history of tulip speculation in Holland was so distorted? Ann Goldgar, professor of early modern history at King's College London, discovered the truth when she was researching the archives for her book Tulip Mania: Money, Honor and Knowledge in Golden Age Holland."I always joke that the book should be called Tulip Mania: It's More Boring Than You Think," Goldgar says. "People like the legend because they think they can learn from it. I consider this opinion to be erroneous."
Before putting “tulip fever” on a par with the South Sea bubble that happened in England in the 1700s, with the 19th century railway bubble, with the dot-com and bitcoin bubbles, it is worth examining a few arguments of Professor Goldgar and understanding what was happening in the Dutch society at the turn of the 17th century.
It is worth starting with the fact that the country experienced a major demographic shift during the war of independence with Spain. During this period, merchants arrived in major port cities: Amsterdam, Harlem, Delft and began trading, including the famous Dutch East India Company. This brought a huge income to Holland, even despite the martial law in the country. At the head of the new independent nation was an urban oligarchy consisting of wealthy merchants, unlike other European countries of that era, which were controlled by the nobility. As a result, new faces, ideas and money helped revolutionize the Dutch economy in the late 16th century.
As the economy has changed, so have social interactions and cultural values. A growing interest in natural history and a love of the exotic among the merchant class caused prices to rise for goods from the east, including those from the Ottoman Empire. People of all social classes had to develop in new directions, which appeared with the influx of new goods. For example, a fish auctioneer created the manuscript of The Book of Whales, and this work allowed him to meet with the President of Holland. Dutch botanist Clusius created a botanical garden at Leiden University in 1590 and the tulip quickly rose to prominence.
“Wild tulips found in the Tien Shan valleys began to be planted in Istanbul in 1055, and in the 15th century they already became symbols of the Ottomans. For example, Sultan Mehmed II had 12 tulip gardens, which required 920 gardeners to maintain,” Anna Pavord, gardening correspondent for The Independent, writes in Tulips.
The Dutch deduced that tulips could be grown from seeds and offshoots of the mother bulb. It takes 7 to 12 years for a bulb to grow from a seed and a flower to bloom. A ripe bulb can become a tulip in a year. Of particular interest to the botanist Clusius and the "tulip speculators" were "broken bulbs". The petals of the tulips that grew from these bulbs were not monochromatic, but multi-colored. It was impossible to predict what the future flower would look like. Naturalists devised ways to reproduce such bulbs and buds as the demand for this rare species grew steadily. As it turned out later, this effect was due to the fact that the bulbs were sick. They were frail and rarely produced flowers.
“The high market value of tulips, which authors who study “tulip mania” write about, was caused by the prices of especially beautiful “broken bulbs,” writes economist Peter Garber, “because it was impossible to predict how a flower sprouting from such a bulb would look like "Tulip mania" can be described as a gamble among growers who sought to grow buds of increasingly unusual colors.
Printed report on the results of the auction in Alkmaar on February 5, 1637. Image: Wikimedia Commons
The Dutch speculators spent all their money on bulbs, and then they grew flowers, of which perhaps only one would make a profit. “As luxury items, tulips fit well into the culture of big capital and the new cosmopolitanism,” writes Goldgar. Tulips required expertise, experience in evaluating beauty and exoticism, and, of course, a lot of money.
Beginning of the legend
This is where the myth comes into play. According to popular legend, "tulip mania" swept through all levels of Dutch society in 1630. “The desire of the Dutch for rare bulbs was so great that the usual industry was abandoned, and the population, down to the lowest strata, began to trade in tulips,” writes the Scottish journalist Charles Mackay in the popular 1841 work “Extremely Popular Delusions and Folly of the Crowd”. According to this work, everyone from the richest merchants to the poorest chimney sweeps bought up tulip bulbs and resold them at a higher price. Most of the companies selling tulips were at the end of 1636, and in February the market began to burst at the seams. More and more people went bankrupt, hoping to buy the coveted bulbs, and more and more merchants, left in debt, became bankrupt. At least that's how it's always been thought.“Actually, few people were involved and the economic impact was not that significant,” writes Goldgar. “I could not find information about even one bankrupt in the archives. If there really was a mass destruction of the economy, as the myth says, finding the data would not be difficult.
These arguments do not mean that everything in the story about "tulip mania" is fiction. The merchants were indeed involved in the frenzied trade in tulips and paid unimaginable sums of money for a few bulbs. And when the buyers failed to pay the traders as much as they promised in advance, the market fell apart and caused a small crisis. But only because it undermined social expectations.
“In this case, the difficulty lies in the fact that almost all market relations were built on trust. The buyers promised to buy the bulbs from the merchants, and then said, “I don't care that I promised to buy this. Now I don't need this product. The courts did not want to interfere in this and therefore there was no one to make people pay for the goods,” says Goldgar.
But "tulip mania" did not affect all sections of society and did not cause the collapse of the industry. “The lack of data on bankruptcies does not allow for a firm conclusion, but the results of the study suggest that speculation in tulip bulbs was not as massive and crazy as it is commonly believed,” writes economist Peter Garber.
Who spread the myth?
If "tulip mania" was not such a disaster, why was it put up in this light? It can be assumed that offended Christian moralists are to blame. With great wealth comes a wave of social unrest. “The incredible level of success has gone to their heads. All the incredible stories of economic ruin, about a sailor thrown into prison and chimney sweeps trying to get rich, came from propaganda pamphlets. They were spread by the Dutch Calvinists, who feared that the tulip boom would lead to social decay. Their belief that this wealth was terrible has survived to this day,” writes the historian Simon Schum, in The Embarrassment of Wealth: Interpreting Dutch Culture in the Golden Age.“Some ideas are ineradicable, such as the one that God does not like cunning people and sends a plague on them. That's what people in 1630 could say, says Ann Goldgar, the idea that cunning is a sin has survived into modern society. Pride precedes a fall."
Goldgar does not condemn directors and writers for misinterpreting the past. She is dissatisfied with the wrong conclusions of historians and economists, which they made in their writings, further spreading the idea of "tulip mania". “I had no way of knowing this story was a lie until I pulled up the old archives. It was an unexpected treasure,” says Goldgar.
When economists are faced with the phenomena of financial panic or financial collapse, they immediately think of such a phenomenon as tulip mania. In fact, the concept of "tulip mania" is a metaphor used in the field of economics. Looking into Palgrave's Dictionary of Economic Terms, there is no mention of the speculative mania of the seventeenth century in Holland. Instead, the economist Guillermo Calvo, in his Dictionary Supplement, defines tulip mania as follows: Tulip mania is a phenomenon in which price behavior cannot be fully explained by economic fundamentals.
The purpose of this work is to identify the features of the emergence of the first financial crisis in Europe and its consequences.
Many researchers agree that events occur in a certain cycle and that they can be repeated from time to time. In this regard, we can say that the study of the historical facts of financial crises gives us the opportunity to avoid the mistakes of past generations.
According to Karl Marx, Holland at the beginning of the 17th century could be considered an ideal capitalist country. Almost immediately, foreign and colonial trade became the basis of its economic base. The Dutch industry also received a strong impetus at this time. The key to success is considered to be the political system of the Netherlands, which guaranteed the big bourgeoisie, which seized all the finances and trade in the country, unlimited domination.
The "Tulip" epic rightfully bears the title of the very first speculative race in the world, which ended in failure for the entire country, which was leading at that time in economic terms. The excitement and crazy demand for tulips began in the Netherlands in the early 1620s and did not stop until the 37th year. The peak of prices was recorded in a three-year period: from 1634 to 1637.
One of the foreigners intrigued by tulips was Ogier Ghislain de Busbeck, the Austrian ambassador to Turkey (1555-1562). He brought some bulbs from Constantinople to Vienna, where they were planted in the gardens of Ferdinand I, the Habsburg emperor. There the tulips blossomed under the expert supervision of Charles de Lecluse, a French botanist better known by his Latin name Carl Clusius.
The tulip was a status symbol. He testified to belonging to the upper strata of society. Beautiful flowers of one color or another grew from the bulbs, and after a few years it suddenly changed: stripes appeared on the petals, each time of different shades. It was only in 1928 that it was established that the discoloration of the flower is a disease of a viral nature (mosaic), which, in the end, leads to the degeneration of the variety. But at the end of the 17th century, it seemed like a miracle, the petals received an unusual and brighter color. These flowers were a symbol of luxury and their presence in the Dutch garden testified to the high status of the owners in society.
The reason for the frenzied demand for tulip bulbs can be considered the publication in 1612 in the Dutch catalog Florilegium of almost 100 varieties of this flower. Over time, some European royal courts became interested in this new symbol of prosperity. As a result, a sharp increase in the price of it began. Realizing that you can make good money on tulips, almost all segments of the population began to engage in this business. The fever was explained by the expectation that soon more and more people would become interested in this flower, and the prices for it would increase more than once.
Foreign capital begins to rapidly import into Holland, the value of real estate grows, and the demand for luxury goods increases. People who had not previously thought about trade began to take an active interest in it and even mortgaged their houses, lands, and jewelry to buy as many tulip bulbs as possible in the hope of earning as much money as possible later.
Before this "flower" fever began, tulips were traded from May, when they were dug up, until October, when they had to be planted in the ground. The following spring, the flowers were already delighting their owners. During the boom, the winter trade in seedlings became widespread. Most merchants, despite all the risk, tried to buy tulips in winter: in this case, in the spring they could be sold at two or even three times the price! By the end of 1636, the lion's share of the annual crop turned into "paper", sold under "future" contracts. As a result, speculators began to appear on the markets, trying to buy as many "paper" tulips as possible at the beginning of summer, hoping to resell them next spring at an even higher price.
Prices for tulip bulbs have been on the rise. But on February 2, 1637, the market overheated - prices reached such heights that demand fell sharply. The indebted and impoverished Dutch had a lot of tulip bulbs left - but there was no one to sell them. Of course, those who were lucky enough to be the first to sell the bulbs became rich in no time. Those who were not so lucky lost everything. In that year, the price of bulbs fell 100 times. This collapse in prices also hit the entire Dutch tulip industry. The tulip crisis was the cause of the subsequent financial crisis in Holland, it turned out that the entire economy of the country was focused on tulips. Affected citizens began to blame the provoking tulip crisis on the government, which adopted a series of amendments to the laws on the trade in tulips, limiting stock speculation. It is clear that the Dutch government only "closed the hole" that allowed tulip prices to skyrocket. Not everyone understood that the sooner the bubble of tulip mania burst, the easier the consequences would be.
The main dealers were desperately trying to save the day by organizing mock auctions. Buyers began to break contracts for the flowers of the summer season of 1637, and on February 24 the main tulip growers gathered in Amsterdam for an emergency meeting. The developed scenario for overcoming the crisis was as follows: contracts concluded before November 1636 were proposed to be considered valid, and buyers could terminate subsequent transactions unilaterally by paying a 10% compensation. But the Supreme Court of the Netherlands, which considered manufacturers to be the main culprits in the mass ruin of Dutch citizens, vetoed this decision and offered its own version. Sellers, desperate to get money from their buyers, received the right to sell the goods to a third party for any price, and then claim the lost difference from the one with whom the original agreement was concluded. But no one wanted to buy anymore….. The government understood that one certain category of its citizens could not be blamed for this hysteria. Everyone was to blame. Special commissions were sent around the country to sort out disputes over "tulip" deals. As a result, most of the sellers agreed to receive 5 florins out of every 100 that were due to them under the contracts.
A three-year stagnation in the "non-tulip" areas of the Dutch economy: shipbuilding, agriculture, fishing - cost the country dearly. The scale of the shock that the Netherlands suffered in the 17th century is commensurate with the default of August 1998. Subsequent wars brought the country to a desperate state, hastening the decline of Dutch trading power.
The passion for tulips survived the effects of tulip mania and the tulip bulb industry flourished again. Indeed, by the 18th century, Dutch tulips had become so famous that the Turkish Sultan Ahmed III imported thousands of tulips from Holland. So after a long journey, the Dutch descendant of Turkish tulips returned to their "roots".
Tulip mania is still insufficiently studied and has not been the subject of careful scientific analysis. For the first time, the phenomenon of tulip mania became widely known in 1841 after the publication of the book The Most Common Delusions and Folly of the Crowd, written by the English journalist Charles Mackay, and the novel The Black Tulip by Alexandre Dumas (1850).
In its development, the economy goes through stages of ups and downs, determined by the general laws of its development. Therefore, the development of the economic system is considered as a cyclical process. The Tulip Crisis, in turn, is an important step in this cyclical process. The paper reveals the features of the emergence of the first financial crisis in Europe, and it can be concluded that everything in life returns, and everything that seems new, in fact, has already happened.
You need to know what history and experience around the world says, and use this knowledge for the benefit of the prosperity of the country's financial life.
Literature:
1. McKay C. The most common misconceptions and madness of the crowd / M .: Alpina Business Books, 1998. – 318s
2. Bernstein P. L. Against the gods: The taming of risk / Per. from English. - M.: CJSC "Olimp-Business", 2000. - 400 s
3. Douglas French "The Truth About Tulip Mania" [article], 2007 Available at: http://mises.org/
Perkov G.A.
Kramarenko A.A.
Donetsk National University
tulip mania(dutch. tulpenmanie) - a turbulent period in the history of Holland, when the demand for tulip bulbs began to exceed supply, and this product reached an incredible price (this is especially true for the years 1634-1637).
Usually, little is written about this crisis of almost 400 years ago, but the story of the Dutch tulips deserves more attention, especially since it is associated with "unreal money". By the way, when reading about the tulip crisis, the question often arises, why did the tulip mania cover only Holland, and not other European countries?
From Turkey to Austria
In 1555-1562, the Austrian envoy Ogier Ghiselin de Busbecq could be found in the Ottoman Empire. It was he who brought several tulip bulbs to Europe. Tulip bulbs that arrived from Constantinople to Vienna were planted in the garden of the Austrian emperor of the Habsburg dynasty, Ferdinand I. Charles de l'Ecluse, the famous French botanist of that time, usually introduced by the name of Carolus Clusius, looked after them. Charles de l'Ecluse succeeded in creating the necessary climate for flowers and the tulips in the Habsburg garden bloomed. Rumors of Ecluse's success reached the leadership of the University of Leiden, who offered him to become the curator of the university botanical garden.
From Austria to Holland
In the autumn of 1593, Charles de l'Ecluse arrived in the Dutch city of Leiden with a secret cargo of tulip bulbs. And already in 1594 the first tulip planted by him in Holland blossomed. In Leiden, Écluse was engaged in crossing different types of tulips, trying to develop tulips that could be grown in a harsher climate than the Turkish climate and get petals of different shades. For more than twenty years, Charles de l'Ecluse worked in the botanical garden of Leiden, but one day the tulips he had grown were stolen. Soon, some unknown disease attacked the flowers (it is believed that it was a virus) - tulip buds took on unprecedented forms, the edges of some petals became as if sheared, new shades appeared. It was this anomaly that served as the beginning of tulip mania in Holland. Just do not think that at that time the whole of Holland was blooming with tulips. These flowers were a symbol of luxury and their presence in the Dutch garden testified to the high status of the owners in society.
Incredible numbers
Why were tulips so important? The fact is that every rich man of that time had plenty of real estate and horses with carriages, but the tulip was just such a rare and exceptional thing that could always tell about the wealth of the owner. In 1623, one bulb of the most popular varieties of tulips stalled 1000 guilders. Is it a lot or a little? Decide for yourself - the annual income of the average Dutchman of that time was 150 guilders, which means that he had to save almost seven years to buy one tulip. There are known facts when tulips were exchanged for real estate and land. Tulip sellers of that time earned about 6,000 guilders a month. Some transactions are generally striking, for example, in 1635, 40 tulip bulbs were sold for 100,000 guilders. What a gigantic amount of money this can be understood by learning the prices for food of that time: one ton of butter stall 100 guilders, 10 fattened pigs - 300 guilders. The bulbs of the Semper Augustus variety were considered the most expensive - a deal is known for the sale of one bulb of this variety at a price of 6,000 guilders.
Tulip exchanges
The demand for tulips was increasing, and the supply was not sufficient. Many Dutch have immersed themselves in the tulip business. Tulip exchanges have opened in Amsterdam, Rotterdam, Harlem and Leiden. Not only “live” tulip bulbs were traded on the stock exchanges, but also those that had not yet grown. Deals for the future were also concluded there, where people were obliged to buy or sell a specified number of tulip bulbs for a specified amount at a specified time in the future (in modern terms, the use of options). It was the use of options that was one of the reasons for the formation of a "soap bubble" and its decline. Options seem to have given many newcomers the opportunity to enter a market that was previously closed to them. In such transactions, not only the ungrown "children" of already planted bulbs were sold, but also bulbs that had yet to be planted next autumn. These transactions were called "wind trade" (eng. " wind handel"). In a word, real exchange life was in full swing, in which speculation was not in shares, but in tulips. Many Dutch people, driven by tulip mania, sold their only possessions only to buy a couple of tulip bulbs and later sell them for a higher price.
tulip mania bubble
Prices for tulip bulbs have been rising every year. But in 1637, the market overheated - prices reached such heights that demand fell sharply. The indebted and impoverished Dutch had a lot of tulip bulbs left - but there was no one to sell them. In that year, the price of bulbs fell 100 times. This collapse in prices also hit the entire Dutch tulip industry. The tulip crisis was the cause of the subsequent financial crisis in Holland, it turned out that the entire economy of the country was focused on tulips. Affected citizens began to blame the provoking tulip crisis on the government, which adopted a series of amendments to the laws on the trade in tulips, limiting stock speculation. It is clear that the Dutch government only "closed the hole" that allowed tulip prices to skyrocket. Not everyone understood that the sooner the bubble of tulip mania burst, the easier the consequences would be.
A turbulent period in Dutch history when the demand for bulbs began to outstrip supply and the commodity reached an unbelievable price.
One of the foreigners intrigued by tulips was Ohir Gilen de Bouzbek, the Austrian ambassador to Turkey. (1555-1562). He brought some bulbs from Constantinople to Vienna, where they were planted in the gardens of Ferdinand I, the Habsburg emperor. There the tulips blossomed under the expert supervision of Charles de Lecluse, a French botanist better known by his Latin name Carl Clusius.
Soon the fame of Clusius attracted the attention of the University of Leiden in the Netherlands, and he was persuaded to become curator of the university botanical garden. In October 1593, with " a secret stockpile of tulip bulbs”, Clusius came to Leiden. A few months later, in the spring of 1594, the new garden of Clusius was the site of the very first tulip to bloom in the Netherlands.
Rise of the tulip trade
In 1625, one bulb of a rare variety of tulip could already cost 2,000 florins. (florin - a gold coin weighing about 3.5 grams). Their trading was organized on the exchanges of Amsterdam, Rotterdam, Haarlem and Leiden.
By 1635 the price had reached 5,500 florins. By the beginning of 1637, the average price of tulips had risen 25 times.
● According to art historian Oliver Impey, it was cheaper to buy a tulip painting by Jan D. de Heem (the great Dutch still life painter of the 17th century) than a rare tulip bulb.
One bulb was given as a dowry to a bride, three were worth as much as a good house, and just one bulb of the Tulip Brasserie variety was given for a thriving brewery. Bulb sellers made huge profits. All conversations and transactions revolved around a single subject - onions.
The ever-increasing prices encouraged many families from the middle and poor strata of society to play on the exchange for the sale of tulips. Houses, fortunes, and businesses were mortgaged to buy bulbs and resell them at a higher price. Sales and resales were made many times, while the bulbs were not even taken out of the ground. States doubled in moments. The poor became rich, the rich became super-rich. Bulb trading on the stock exchange has become an uncontrolled market.
For transactions, futures contracts were often used. (buyers paid money for the supply of bulbs in the future), which received the figurative name "wind trade".
● According to Bernstein, options were also used for transactions (the buyer was given the right to buy or sell the bulbs at a predetermined price in the future). It was the use of options that was one of the reasons for the formation of a "soap bubble" and its decline. Options seem to have given many newcomers the opportunity to enter a trade that was previously closed to them.
● According to Charles McKay, at one point 12 acres of land were offered for the Semper Augustus tulip.
The collapse in prices for tulips
In February 1637, the number of sellers exceeded the number of buyers and there was an unexpected drop in prices - no more than 300 florins were given for the most expensive bulbs. started; in just one night, thousands of Dutch were ruined. By the end of the year, prices fell by an average of 100 times. It was the collapse of an entire branch of commerce. McKay argued that after the end of the tulip mania, the Dutch economy was in crisis, which is disputed by some modern scholars. Tulip mania also affected other European countries, but not to the same extent as Holland. For example, in 1800, a tulip bulb in England cost 15 guineas - a fairly substantial amount for those times.
The passion for tulips survived the effects of tulip mania and the tulip bulb industry flourished again. Indeed, by the end of the 18th century, Dutch tulips had become so famous that the Turkish Sultan Ahmed III imported thousands of tulips from Holland. So after a long journey, the Dutch descendant of Turkish tulips returned to their "roots".
Tulip mania is still insufficiently studied and has not been the subject of careful scientific analysis. For the first time, the phenomenon of tulip mania became widely known in 1841 after the publication of the book "The Most Common Misconceptions and Madness of the Crowd" written by the English journalist Charles Mackay, and the 1850 novel The Black Tulip by Alexandre Dumas.
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The "Tulip Crisis" that broke out in Holland in the 17th century is one of the first well-described and documented economic crises in human history. In the winter of 1637, "tulip fever" was atrocious in Holland. The demand for tulip bulbs and their cost was enormous. It was the first example of a planned crisis in history, and the experiment was clearly a success...
Tulips - a miracle of botanical gardens
In 1554, the envoy of the Austrian emperor in Constantinople, Ogir Gizelin de Busbeck, noticed beautiful flowers in the garden of the Turkish sultan, which struck him with their grace. In the same year, the envoy purchases a batch of bulbs with his own money and brings them to Vienna, where they are planted in the garden of Ferdinand I.
The garden is run by the botanist Charles de Lecluse, known as Carl Clusius. He managed to create the necessary climate in the garden of the Habsburgs, the flowers bloomed and they managed to propagate.
News of this success reached the leadership of the university in the Dutch city of Leiden, where Clusius was appointed director of the university's Botanical Garden. There, Clusius crosses different varieties of flowers in order to obtain varieties that suit the colder Dutch climate.
Already in 1594, the first frost-resistant flower bloomed. Thus began what would later be called "tulip fever".
Flower symbol
Beautiful and rare, the tulip is fast becoming the new symbol of wealth, prosperity and belonging to a chosen society. Owning it is coveted and prestigious.
Tulips from the early 17th century.
His bulbs become a precious and highly desired gift. They are outrageously expensive. Sometimes, in order to buy them, you have to part with ... a stone house.
"Florilegium" and the reason for the demand
In 1612 the catalog Florilegium publishes 100 varieties of the new flower. Why so many varieties? It's all about ... the virus (but this will become known only in the twentieth century).
In the meantime, the bulbs are growing, and, blooming, they give an infinite number of variations - either stripes of different shades, then white spots, then some other speckles, then curly edges of the petals.
Royal European courts are beginning to be interested in the new flower. Prices are rising, fueled by rumors that soon more and more people will become interested in the flower, and prices for it will increase more than once.
Ideal capitalist country
After a protracted war of independence with Spain, in the territory of the seven northern Dutch provinces, after the conclusion of a truce, a bourgeois republic is founded, which in a fairly short time begins to take a leading position in shipbuilding and colonial trade - the leading economic areas of the 19th century.
Amsterdam becomes a thriving industrial center. The main reason for this growth lay in the political system of the Netherlands, which guaranteed the bourgeoisie almost unlimited dominance in all areas of the economy.
Viceroy and Semper augustus - half a kingdom for a flower
So how much did the bulbs cost? In 1623, a Viceroy bulb cost 1,000 guilders. Is it a lot or a little? The average annual income of the then Dutchman was 150 guilders, and in order to buy just one bulb, he had to save 7 or even 8 years.
A ton of oil cost one hundred guilders, and three hundred pigs cost 300. But the record was broken by the Semper augustus variety. A record of a deal is known, which says that for one bulb of this variety they give 6 thousand guilders! By the way, the most profitable bride was considered to be the one who had the “Semper augustus” bulb in her dowry.
Variegated tulips from the 1630s (leaftulip catalogfrom the collectionof the Netherlands Historical and Economic Collection). Right - “Semper Augustus”
Some of the deals are still amazing. In 1635 there were 40 tulip bulbs. sold for a fantastic amount at that time - 100,000 guilders. It was also not uncommon for one bulb to be sold for several acres of fertile land, for a stone house, or for a few centners of wheat.
In addition, when selling, only part could be paid in guilders, everything else could be given in cows, wheat, butter, cheese or good wine.
Tulip Fever Created Legends
One of them is about how a port tramp, seeing a ship entering the harbor, rushed to the office of its owner. The merchant, delighted with the news of the return of the long-awaited ship, chose the fattest herring from the barrel and rewarded the beggar with it.
And he, seeing an onion on the desk that looked like peeled onions, decided that herring was good, but herring with onions was even better, put the onion in his pocket and departed in an unknown direction.
A few minutes later, the merchant missed the tulip bulb Semper Augustus ("Eternal August"), for which he paid 3,000 florins. When the tramp was found, he was already finishing his herring with "onions". The poor guy went to jail for embezzlement of private property on an especially large scale.
"Allegory of Tulip Mania". PaintingBrueghel the youngeron a popular plot, about 1640.
Another apocryphal story is about how the Haarlem tulip merchants heard about the Hague shoemaker who managed to breed a black tulip.
A deputation from Haarlem visited a shoemaker and bought all the black tulip bulbs from him for 1,500 florins. After that, right before the eyes of the amateur tulip grower, the Haarlemites rushed to furiously trample the bulbs and calmed down, only turning them into mush.
They were afraid that an unprecedented black tulip would undermine their well-established business. But the shoemaker could not bear the barbarity, took to his bed and died.
Winter tulips, stock exchanges and "air trading"
Tulips are seasonal. Before the "flower fever" began, they were traded from May to October. During the boom period, however, the winter seedling trade became popular.
Most merchants tried to buy winter plants, because in spring they could be sold at two, three, or even four times the price.
Merchant and tulip fan. Painting-caricature of the middle of the XVII century.
Demand grew, more and more Dutch people immersed themselves in the new business. The trade in gold began to bring less income than the trade in flower bulbs.
Flower markets open in Amsterdam, Leiden, Harlem. Not only live, but not yet grown "future" bulbs were traded there. Thus, deals were made for the future - people agreed to buy a specified number of bulbs at a specified time in the future.
Such transactions were called “wind trade” (from the English wind handel). So people began to sell their time, which is a sin for Christian culture.
collapse
By 1634, half of all transactions in the market were "paper", that is, for the future. Prices rose, the bubble of demand inflated more and more, but in February 1637 there was an “overheating” of the market. There were a huge number of bulbs, but there was no one else to sell them to. The price of bulbs instantly fell a hundred times, and then a thousand.
The collapse of the market hit the entire Dutch industry, since both it and the entire economy of that time were focused on tulips. A full-blown financial crisis has begun.
"Flora's Chariot". An allegorical painting by Gendrik Pot, circa 1640, is a popular popular plot ridiculing simpleton speculators. The cart with the goddess of flowers and her idle companions rolls downhill into the depths of the sea. Behind her wander artisans who have abandoned the tools of their labor in pursuit of easy money.
The process was catalyzed by the futures mechanism - the same "wind trading", which provoked at first a sharp and growing growth, and then the same rapid fall.
National hysteria, an inflated demand bubble and unjustified investment value led to the collapse. However, it was the memory of the “tulip hysteria” that helped the Dutch to refrain from risky ventures in subsequent years and catch up over the next 200 years ...