I first heard of the Dutch obsession with Tulips because of my attraction to Alicia Vikander (although I’ve never watched her movies just youtube videos) #cheapskate and shallow 😂*. To be more specific, I saw and trailer for a film starring Alicia Vikandar called Tulip Fever.
The movie was set in Amsterdam in the 1600s, the backdrop was a three year period of excitment over an exotic flowet from the near east- Tulips.
Tulip bulbs may not be much to look at, but tulips are absolutely beautiful. It’s no surprise then that when the bulbous flower was first introduced to the Netherlands people took to it. Everyone wanted to own a piece of this special flower.
But why did they want the Tulips?
The Dutch had their period of great success in the 17th century with the Dutch Golden Age. Spices and money flowed in from the trading success of the Dutch East India Company. The whole city of Amsterdam got rich in the process people had money to spend, and wealth to show off.
There was one tiny problem though, the Netherlands was Calvinist and Calvinism abhorred ostentatious pride and displays of wealth, something quite obvious while walking through the old city. The only display of wealth that was tolerated was that which ‘glorified God’. That being the case, the glorification tool of choice – the garden.
It was into this that the tulip became a special item. Tulips, coming from central Asia and the near east were exotic and new. As with porcelin in Sweden, chocolate in Switzerland and tea in Britain, these new things from far away lands were not cheap. Possessing them was a sign of wealth, something that is called a conspicuous display of wealth. For centuries, wealth was something to be displayed, something that only recently has seen a slight shift away towards inconspicuous displays by investing in education, health and retirement.
Economics happens even without economists, the demands for tulips grew and grew but the import of the flower was not enough to sustain the demand. This lack of supply and a surfeit of demand led to rising prices.
Just how crazy did things get? At its peak, a single tulip bulb would cost the price of an expensive house. Tulips bloom only for a limited time and are very sensitive to being moved, this difficulty in getting a tulip bulb made it more precious.
And so the price of tulips started to rise. One person would sell the promise of selling a bulb to someone else the tulips were in bloom at a profit. That individual would in turn sell it to someone else for a profit. This is called the sale of ‘futured’. The cycle continues and more and more people hope onto the bandwagon hopping to make a killing from the purchase.
The belief was that the demand of tulips would keep growing and the value of tulips would continue to rise and they would be able to sell their futured at an even higher price
People buy on the approval of others. The more people bought into the tulips the more others wanted in (a phenomenon termed the investors Fear of Missing Out). A finite supply of tulup stocks with more people buying into it simply means that the price rises.
And so the cycle continues and if it grows good but the more it continues the larger the risk. A bubble is reached the price of a product is far beyond the true value people sre willing to pay for the product.
When people buy in is usually correlated with how much they know about something. The earlier you buy in the more you know about it. The people who bought in later, wanted to make a quick buck but built their castles on proverbal sand. The bubble had to burst, because people eould ecebtually conclude that the prices made no sense. They concluded so when a tulip auction in the city of Haarlem yielded zero sales.
The bubble had burst.
Mass hysteria is easy to create in such a case people rushed to get rid of their now worthless sheets of paper.
That was exactly what happened in 1637 when the worlds first bubble burst. Tulip sales dropped when garden owners stopped buying tulips are extortionate priced, investors freaked out and everyone panic sold their tulip futured rendering the stocks worthless overnight.
While the Tulip Mania is a textbook case of a market crash, there is an alternative account of the story. According to this series of videos, the conventional conception of Tulip mania was largely based on propaganda, and that there is more to the story above then that of a speculative bubble.
Bubbles happen all the time, the most recent global one being caused the global recession in 2008. Some commenters worry that a new global bubble has been created through cryprocurrency and blockchain technology.
Regardless of the truth behind tulip mania, the Dutch today clearly love their tulips. Tourism videos are never short of that aerial shot flying over the Dutch lowlands with a colorful nursery of tulips, coloured in all shades of the rainbow, blooming in their glory, ready for harvesting Heck, they even have a museum dedicated to it.
Then there is the is the world’s only floating flower market – the Bloememmarkt and honestly I’ve never been to a city that sells Tulip bulbs in a flower market, with worldwide shipping guaranteed too.
It’s hard to imagine something so beautiful comes from a plain looking bulb… I can see why the Dutch would be Tulip-lovers.
*Its way to expensive to watch a movie in Stockholm, but more on that in another post.
ON THE MAP (Bloemenmarkt)
ON THE MAP (Amsterdam Tulip Museum)