** 07-Mar-2021 World View: Tulipomania
Cool Breeze wrote: Sun Mar 07, 2021 1:40 pm
> Quickly on the tulip bubble, which is the most embarrassing
> comparison these emotional hater posters put forth: The tulip
> thing was overstated, but even if you don't believe that, the nail
> in the coffin for the stupidity in comparison is that the "tulip
> bubble" - or any other bubble akin, lasted all of 1 year? Maybe
> 1.5. It didn't even bankrupt anyone, but it proved itself a
> bubble, yes.
Your description is completely untrue. The Tulipomania bubble lasted
for decades, and it bankrupted a lot of people.
I wrote about Tulipomania at length in my 2003 book on Generational
Dynamics. I was comparing the tech bubble to the bubble in "high
tech" tulips. Here's what I wrote at that time:
**** Tulipomania
By way of example, let's start with one of the most famous bubbles in
history. However, it occurred in Europe, not in America. It's the
first reasonably well-documented bubble in history, and it was called
"Tulip Mania" or "Tulipomania" -- because it had to do with the
pricing of Dutch tulips in the early 1600s. This bubble grew for
decades, but it only burst completely in 1637, just as France was
entering a major "world war" of that time, the Thirty Years' War.
It's almost hilarious to compare the Internet products of the 1990s
with tulips of the 1630s, but in fact, tulips were the high-tech
product in the Netherlands at that time.
Those were heady days in the Dutch Republic. Amsterdam was the major
gateway between London and Paris, and the city had benefited hugely
from having established Europe's first central bank in 1609, giving
Dutch merchants a big competitive advantage around the world. It was
still the biggest bank in Europe in the 1630s, and the whole of the
Netherlands was prosperous, not having yet been affected by the
Thirty Years War.
Tulips did not originate with the Dutch. The first bulbs had arrived
from Turkey only a few years earlier, in the late 1500s. By means of
breeding experiments, Dutch botanists were able to produce tulips
with spectacular colors. These tulips were sought by wealthy people,
and by 1624, one particularly spectacular bulb sold for the cost of a
small house.
Prices remained elevated for over another decade, and soon investors
from all over Europe began purchasing a kind of "Tulip future," a
certificate purchased in the fall which can be traded for a specific
actual tulip to be grown the following spring. In some ways, these
certificates were similar to "stock options" in the 1990s.
In 1636, speculation in tulip futures went through the roof, and on
February 3, 1637, the tulip market suddenly crashed, causing the
loss of enormous sums of money, even by ordinary people, including
many ordinary people in France and other countries.
A mood of retribution began immediately, and even the tulips
themselves suffered. Evrard Forstius, a professor of botany, became
so reviled by the mere sight of tulips that he attacked them with
sticks whenever he saw them! At this point, the Thirty Years
War enveloped all of Europe.