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The Dutch Tulip Bubble of 1637

Article #138 • Written by Cynthia Wood

The later part of the 20th century saw its share of odd financial bubbles. There was the real-estate bubble, the stock market bubbles, and the dot com bubble, just to name a few. In each instance of price inflation people paid exorbitant amounts for things that shouldn't have been worth anything like the going price. And each time people stood around afterwards and said “What were we thinking?”

One has to believe that the same thought occurred to the Dutch in the 17th century when they settled down after their bout with tulipomania, wherein the humble tulip bulb began to sell for prices to make New York Realtors blanch.

As much as the tulip is associated with Holland, it is not native there. Rather it was introduced in 1593 by a botanist named Carolus Clusius, who brought it from Constantinople. He planted a small garden, intending to research the plant for medicinal purposes. Had Clusius's neighbors been morally upright, the tulip might still be a rare exotic in the gardening world. Instead they broke into his garden and stole some of his bulbs in order to make some quick money, and in the process started the Dutch bulb trade.

Over the next several decades tulips became a fad among the rich of Holland, and prices began to mount. Soon even ordinary bulbs were selling for extraordinary prices, and the actually rare bulbs were astronomical. A single Viceroy tulip bulb would sell for 2500 florins a value roughly equivalent to $1,250 in current American dollars, while a rarer Semper Augustus bulb could easily go for twice that. One particularly amusing exchange showed the goods traded for one bulb – the lengthy list includes among other things: a bed, a complete suit of clothes, and a thousand pounds of cheese. At the height of the mania, in what seems a complete loss of sanity, the bulbs were deemed too valuable to risk planting by their (formerly) wealthy purchasers, and it became popular to display the plain ungrown bulbs. In at least one instance the plan for safety backfired when a visiting sailor mistook a tulip bulb for an onion, and proceeded to eat it for breakfast.

The height of the bubble was reached in the winter of 1636-37. Tulip traders were making (and losing) fortunes regularly. A good trader could earn up to 60,000 florins in a month-- approximately $61,710 adjusted to current U.S. dollars. With profits like those to be had, nothing local governments could do stopped the frenzy of trading. Then one day in Haarlem a buyer failed to show up and pay for his bulb purchase. The ensuing panic spread across Holland, and within days tulip bulbs were worth only a hundredth of their former prices. The tulip bubble had burst.

Looking back through time it’s easy to laugh at the foolish Dutch, paying such prices for simple tulip bulbs, but an economic bubble was nothing new even then. We’re still doing the same sorts of things today. Human beings have always been prone to want things that are difficult to get, especially if everyone else seems to be doing it. Nutty behavior becomes commonplace when enough people are following along. It’s only afterwards that we stand back and shake our heads and wonder what came over us.

Article written by Cynthia Wood, published on 16 March 2006. Cynthia is a contributing editor for DamnInteresting.com.

Article design and artwork by Alan Bellows. Edited by Alan Bellows.
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35 Comments
PresMatt
Posted 16 March 2006 at 03:28 pm

I.E. Xbox 360 at Christmas when the base system was easily going for $1,000 on eBay.


RichVR
Posted 16 March 2006 at 03:37 pm

The same thing happened with cocaine in the 1980s. Umm... uh... at least that's what I heard... Ah, yeah. I read that... somewhere.


another viewpoint
Posted 16 March 2006 at 04:32 pm

If only we could throw all our money in the ground, water it, fertilize it, nuture it and then watch it blossom. For now, we'll have to stick with tulips and other bulb type horticultural decorations. Tis sad indeed.


mixedupconfusion
Posted 16 March 2006 at 06:44 pm

Two words: Beanie Babies


mudpuppy555
Posted 16 March 2006 at 07:05 pm

When are we going to legalize pot already?????


xircso
Posted 16 March 2006 at 07:35 pm

im not sure about anyone else, but these things always remind me of gasoline. unfourtunately, the bubble doesnt seem ready to pop for quite a while still.

and to mudpuppy, they will legalize cannabis when they criminalize tobacco. so right around the time of the rapture.


Secret Ninja
Posted 16 March 2006 at 08:32 pm

Morons.

And why does it say 2500 florins are worth 1250 dollars, then 60,000 florins are worth 61,000 dollars?


Prince
Posted 16 March 2006 at 09:51 pm

Mud puppy should book himself into the Betty Ford Clinic


Alan Bellows
Posted 16 March 2006 at 11:01 pm

Secret Ninja said: "And why does it say 2500 florins are worth 1250 dollars, then 60,000 florins are worth 61,000 dollars?"

It appears that two sources have conflicting information on how 17th century florins translate into current US dollars, and we forgot to check the math. Sorry about that...


perlgirl
Posted 17 March 2006 at 12:03 am

Secret Ninja said: "Morons.

And why does it say 2500 florins are worth 1250 dollars, then 60,000 florins are worth 61,000 dollars?"

"Morons"? Geez... somebody's crabby.


Marius
Posted 17 March 2006 at 04:23 am

It's nice to see that the Tickle Me Elmo wasn't the beginning, but just another chapter in the annals of human stupidity.


Gaffer
Posted 17 March 2006 at 05:43 am

iTulip.


indra c
Posted 17 March 2006 at 07:16 am

Internet bubble, turn of this century. NASDAQ (or was it NYSE?) went over 10,000 points. What were we thinking?


ShenWolf
Posted 17 March 2006 at 09:07 am

indra c said: "Internet bubble, turn of this century. NASDAQ (or was it NYSE?) went over 10,000 points. What were we thinking?"

The Dow Jones Industrials broke the psychological barrier of 10,000 points, and later 11,000,of which it is trading back above now (for the time being, IMHO). The NASDAQ was briefly over 5,000 points and still has not regained half of that value. The NYSE is the New York Stock Exchange, simply a place where they trade stocks.

I think Greenspan still nailed it on the head with the "irrational exuberance" comments.


Joshua
Posted 17 March 2006 at 02:10 pm

Secret Ninja said: "And why does it say 2500 florins are worth 1250 dollars, then 60,000 florins are worth 61,000 dollars?"

Maybe because the value of the florin fluctuated like any other currency? The F60K = $61.71K rate was just before the bubble burst in 1637. The F2500 = $1250 figure was not dated but could have been any time between 1593 and 1636. Even one year was plenty of time for the value of the florin to drop that far.


BoPRoX
Posted 17 March 2006 at 03:50 pm

mudpuppy555 said: "When are we going to legalize pot already?????"

There are is a minister in Holland still not wanting to legalize softdrugs until most weed plantations have been found and the owners caught.
I'm sure it will happen someday... I hope...

No I'm not a madman, there are perfectly good reasons to legalize the growing of weed in the Netherlands.


Oax
Posted 17 March 2006 at 09:18 pm

Yeah, beanie babies. I know someone who sold one for $1600. I'll bet the owner just sits and glares at that thing.


tekish
Posted 18 March 2006 at 06:56 am

There was no city called Constantinople then. Constantinople which was the capital of the Byzantium Empire was conquered by the Ottoman Empire in 1453 and is called Istanbul since that date. wanted to get your attention on that while reading...


NeonCat
Posted 18 March 2006 at 09:06 am

From Wikipedia...

"The Ottoman Turks called the city Stamboul or İstanbul, adopting a usage in Greek "eis tin Poli" (to or at the City). But they still used "Konstantiniyye" ("Constantine's City", or Constantinople) as the official name. When the Republic of Turkey was founded in 1923, the capital was moved to Ankara. Constantinople was officially renamed İstanbul by the Republic of Turkey on March 28, 1930."

I bet the Dutch and everybody else in the 17th century told friends they were going to Constantinople, if they were going.


another viewpoint
Posted 18 March 2006 at 03:41 pm

No matter how you cut it....two lips are still better than one!


AKALucifer
Posted 20 March 2006 at 10:00 am

Oax said: "Yeah, beanie babies. I know someone who sold one for $1600. I'll bet the owner just sits and glares at that thing."

That sentence is so funny for a reason I can't put my finger on.

I can beat your two word fad with a one word fad, Gaia. People post day and night on that thing for, what is basically, pixels.


AKALucifer
Posted 20 March 2006 at 10:02 am

NeonCat said: "From Wikipedia…

"The Ottoman Turks called the city Stamboul or İstanbul, adopting a usage in Greek "eis tin Poli" (to or at the City). But they still used "Konstantiniyye" ("Constantine's City", or Constantinople) as the official name. When the Republic of Turkey was founded in 1923, the capital was moved to Ankara. Constantinople was officially renamed İstanbul by the Republic of Turkey on March 28, 1930."

I bet the Dutch and everybody else in the 17th century told friends they were going to Constantinople, if they were going."

There's a song about this you know?

Istanbul was Constantinople
Now it's Istanbul, not Constantinople
Been a long time gone, Constantinople
Now it's Turkish delight on a moonlit night

Every gal in Constantinople
Lives in Istanbul, not Constantinople
So if you've a date in Constantinople
She'll be waiting in Istanbul

Even old New York was once New Amsterdam
Why they changed it I can't say
People just liked it better that way

So take me back to Constantinople
No, you can't go back to Constantinople
Been a long time gone, Constantinople
Why did Constantinople get the works?
That's nobody's business but the Turks

Istanbul (Istanbul)
Istanbul (Istanbul)

Even old New York was once New Amsterdam
Why they changed it I can't say
People just liked it better that way

Istanbul was Constantinople
Now it's Istanbul, not Constantinople
Been a long time gone, Constantinople
Why did Constantinople get the works?
That's nobody's business but the Turks

So take me back to Constantinople
No, you can't go back to Constantinople
Been a long time gone, Constantinople
Why did Constantinople get the works?
That's nobody's business but the Turks


JJ
Posted 14 May 2006 at 08:07 pm

I'm so lost...


Tink
Posted 29 October 2006 at 11:15 pm

another viewpoint said: "No matter how you cut it….two lips are still better than one!"

Yep, most guys will probably agree that tulips on an organ are much nicer than roses on a piano. ;)


Beautiful Confusion
Posted 20 August 2007 at 03:11 pm

mixedupconfusion said: "Two words: Beanie Babies"

I was thinking this exact thing while I read this article!! People were selling those meaningless toys for sooo much money when they first came out. I never really understood it, sure they were cute but not that cute.


Beautiful Confusion
Posted 20 August 2007 at 03:22 pm

BoPRoX said: "There are is a minister in Holland still not wanting to legalize softdrugs until most weed plantations have been found and the owners caught.
I'm sure it will happen someday… I hope…

No I'm not a madman, there are perfectly good reasons to legalize the growing of weed in the Netherlands."

There are perfectly good reasons for legallizing it in the U.S. too. You can use Hemp for so much stuff. We could completely stop cutting down trees and just using cannabis for paper, ropes, the list goes on. The plants grow far faster than any tree and as far as I know there aren't any animals living in the plants so it's not like we're taking away a habitat for any living creatures (besides maybe bugs). I could be wrong but I think that the lumber companies just don't want to legalize it for fear of losing money and going out of business.
Not to mention selling it to smoke. I used to smoke my fair share back in the day and as far as I'm concerned weed is far less dangerous to smoke than alcohol is to drink. Sure it delays your reaction time and you suck at remembering things but it's not like you become overly violent and then the next day you don't remember what happened and why your significant other left you. A big down side would be the munchies and being as obesity is already such a big problem in the US we don't really need a drug that increases our want for food.


ValiantDefender
Posted 11 December 2008 at 11:49 am

This post is "post bubble" in the USA. Outrageous realestate prices. People bought house for 3 and 4 times their actual value. WHen the bubble burst so many of these people went bankrupt. The upside is that gas is now an astounding $1.50 a gallon. 3 months ago is was over $4 a gallon.


atonyt
Posted 05 May 2009 at 04:53 am

I can't believe nobody has mentioned "Pet Rocks". What a stupid craze that was. I was not alive at the time it occurred, but I did read about it. People buying rocks for pets when they could have just picked them up from the side of the road. I would not admit to buying them no matter how many times you asked.


thekenemy
Posted 04 April 2011 at 06:34 am

Onion for breakfast...


John
Posted 03 April 2013 at 03:55 pm

Jct: Looks like the Bitcoin Tulip bubble is about to pop.


oman
Posted 02 December 2013 at 01:24 pm

John said: "Jct: Looks like the Bitcoin Tulip bubble is about to pop."

HASN'T POPPED YET!!!


James O Reilly
Posted 08 January 2014 at 05:16 am

COME GET YOUR BITCOINS, COME GET YOUR BITCOINS......

Make the originators BILLIONAIRES. Money for nothing :-)

PS: Humans are stupid.


applegarth
Posted 30 January 2014 at 04:17 pm

...and thence came the "South Sea Bubble"..google it, a fantastic lesson in when NOT to invest.

..dyor (investors).
Another company called Knutsford in the 1980's was a shell company that never made any money, yet investors were so 'excited' of the potential they invested from 3p all the way up to £3 a share in less than SEVEN days. The 'Mirror' reported that one anonymous investor made £500,000 and said that he does not intend to pay CGT, and was transferring his money off-shore and leaving the country. The 'bubble' quickly burst as investors rushed to exit and within another week the shares were less than 1p.


orangutandrum
Posted 06 March 2014 at 11:46 am

Secret Ninja said: "Morons.

And why does it say 2500 florins are worth 1250 dollars, then 60,000 florins are worth 61,000 dollars?"

The writer did realize that he wrote it wrong and later crossed over with a line.


phaetalistic
Posted 24 April 2014 at 02:53 pm

An interesting fun fact I didnt see mentioned in the article. The crazy colors in the tulips during this time were actually created by a virus known as TBV, the "tulip breaking virus".

It makes the tulips incredibly weak, with very fragile stems and extremely vulnerable to parasites and adverse conditions. It also had the side effect of "breaking up" the color patterns, causing pretty colors and patterns which so enamored the people of the time, and also making the tulips rare, thus increasing their value.

But of course, microbiology and viruses were unknown back then. And if you read the writings of the time, many of the people found the extreme fragility beautiful and as something wanted in a flower (often times poeticly comparing them to the desired qualities in a woman...ugh)

The issue was the tulips were sick, barely able to propagate, and extremely prone to dying regardless of the care given to them. The people knew something was up because not all tulips from the same batch would show the color breaking effect. They didnt know what caused it, however they did try many different techniques to create the patterns. The most successful was splicing a TBV infected bulb with a healthy bulb, which of course spread the virus.

Many of the type of tulips involved in the bubble, including one of the most famous known as "The Admiral" went extinct due to the virus and exist only in drawings.

Nowdays, careful breeding of healthy tulips has created natural patterns similar (but not as dramatic) to those caused by TBV, and TBV is a known entity and professional tulip growers and gardeners know the signs and do not allow it to spread, nor is it a wanted trait in any garden.


END OF COMMENTS
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