Tulipomania: Mike's view
One day in the early spring of 1637, a Dutch merchant named Francois Koster paid the enormous sum of 6,650 guilders for a few dozen tulip bulbs.
At a time when a whole family might live for a year on perhaps 300 guilders, this was a remarkable purchase. Even more surprisingly, Koster had absolutely no intention of actually growing his tulips. He planned to take the bulbs and sell them on, and fully expected to make a profit from the deal.
There were many, even then, who thought Koster and the thousands of Dutch people like him who fought for the right to buy ordinary flower bulbs at incredible prices were insane, but in truth the tulip traders had every reason to suppose that the prices they had paid were justified. The most valuable bulbs were rare, and the flowers they produced were greatly coveted and extraordinarily beautiful. Tulip prices had already risen swiftly and consistently for more than two years. Why shouldn’t they go higher still?
Of course, the traders were wrong. Koster’s extravagent purchase took place at the height of one of the most bizarre and memorable episodes in history, the great Dutch tulip mania of 1633-1637, but it proved to be one of the last and greatest expressions of the mania at work. Less than a week after the merchant had bbought the bulbs, tulip prices fell, suddenly and without warning. Within a matter of days, flowers had plummeted to only one tenth of their old values, and often considerably less. By the end of February 1637, men who had been – at least on paper – among the richest citizens in all Holland only a few days earlier had lost everything they had, and those who had invested heavily in tulips when the mania was at its height faced bankruptcy and ruin. Francois Koster himself, having made a down payment of 820 guilders for his bulbs, found himself unable to pay the balance of the purchase price, 5,830 guilders, and was pursued remorselessly through the courts by the irate dealer who had sold him the flowers.
Even at the time, there was a feeling that something quite remarkable had happened. Beginning when the mania was at its peak and continuing through the collapse in prices, the Dutch themselves produced a deluge a pamphlets which sought to explain or satirise the flower trade. Those who lived outside the borders of the country (which was then known as the United Provinces of the Netherlands) looked on with even greater incredulity as a people famous throughout Europe for being dour, drab, sternly moralistic and above all extraordinarily canny in matters of finance abandoned themselves, it seemed completely, to an inexplicable passion for tulips.
Indeed, the story of the flower mania so completely contradicts what we are generally taught about the history of the seventeenth century that it begs for explanation. How could people have become so distracted by something so apparently superficial in an era full of war and want? How could a society which held success to be synonymous with virtue, which publicly professed the strictest form of Calvinism, banned the use of fripperies such as church organs and even frowned on people who danced at wedding feasts, tolerate the greed and extravagances of a trade chiefly carried on by drunken men sitting in the back rooms of taverns? What, anyway, made those men deal in flower bulbs and not some other form of merchandise?
In short, why 1637? Why Holland? And, above all, why tulips?
These questions do not have easy answers. Even the people who lived through the bulb craze found it difficult to explain why it occurred, and in most respects we are not that much wiser now. Today, more than 360 years after the mania erupted, there is still no proper history of the subject based on original sources. The scant original work which has been done was completed as long ago as 1934, and is in any case only available in Dutch. Since then, the few authors who have made more than just a passing reference to tulip mania have mostly copied their information from earlier works which are not always very reliable. And yet the tulip fever is such an inherently memorable subject – once encountered, never forgotten – that many assume it must have been been thoroughly explored.
Over the years thousnds of general readers have been introduced to the subject by the work of a nineteenth century Scottish journalist called Charles Mackay, whose book Extraordinary Popular Delusions and the Madness of Crowds – first published in 1841 and still in print today – contains the classic English-language account of the craze. Indeed, the weird hold that the tulip mania exercises on the imagination is well illustrated by the fact that although Mackay’s book is 725 pages long and contains 16 chapters on subjects ranging from the history of the Crusades to ‘The influence of politics and religion on the hair and beard’, it is for his tiny eight-page section on tulips that he is generally remembered. Unfortunately, while Mackay’s opinions have been influential, his chapter is cursory and many of his facts are misleading or plain wrong. Few accounts of the mania have not been coloured by his mistakes, and when the story is told, it is, thanks to Mackay, almost always recounted in tones of bemused incredulity. The country was crazy, the dealers were mad, the stories go. It cannot really be explained.
Economists and city traders, too, are superficially familiar with tulipomania. ‘Gathered around the campfire early in their training,’ as one professor writes, ‘fledgling economists hear the legend of the Dutch tulip speculation from their elders, priming them with a sceptical attitude towards speculative markets. That the prices of bulbs could rise so high and collapse so rapidly seems to prove a decisive example of the instability and irrationality that may materialise in asset markets.’ But financiers and economists have built their analyses of the mania on the same dubious foundations as the historians. (It is even said that some of the more literate investment banks on Wall Street still hand their new employees copies of Mackay’s book and tell them to absorb his chapters on the causes of financial catastrophes before they are let lose on a trading floor.) For them, tulipomania is the first great Mania, the precursor to financial crises of truly seismic proportions, such as the South Sea Bubble (a disastrous scandal which saw some of the most notable members of London society lose thousands of pounds in a fraudulent scheme for trading with South America). It has been allotted a neat position as the very first in a long succession of booms and busts which begins with the introduction of paper money, stocks and shares, and ends – for the time being – with great crash of 1989. Whenever stocks or bonds (for instance shares in companies which try to make money from the Internet) appear to be valued at more than they are worth, comparisons are drawn in the financial press with tulipomania. Because economists depend not on interpretation and impressions but on facts and figures – which are hard to come by in the records of the tulip craze – it is probably more difficult for them to see the story in its proper context than it is for the historians. Even today there are still fundamental differences between professors who see the tulip mania as a classic example of a bubble – that is, a sharp rise in the price of something of no real worth – and those who believe that the huge sums the bulbs commanded were justified by the fact they were in high demand and short supply.
So little of real usefulness has been written on the subject of the tulip craze that it is doubly unfortunate that much of what has been said is wrong. Did everybody living in the United Provinces, from the richest merchant to the poorest vagabond, actually find themselves caught up in the mania? Were sums the equivalent of almost a million pounds paid for single bulbs? When the crash in flower prices came, was it really so severe that it threw the whole Dutch economy – which was then the richest and the fastest-growing in the world – into recession? Did an all-powerful Turkish sultan truly lose his throne simply because he, too, became obsessed with tulips to a dangerous degree?
The answer to all these questions is no. But that need not diminish the interest of the tulip mania. It actually did occur, some people did make fortunes, many others truly were ruined; and anything capable of making weavers richer than spice merchants, and poor orphan children so wealthy they could contemplate never having to work a day in their whole lives – as the Dutch flower craze really did, for however brief a time – possesses a genuine fascination quite independent of the myths which have accumulated around it.
Moreover, tulip mania happened to people whose attitudes were recognisably modern in many ways, yet who were in other respects quite different to us and to the people who live in the Netherlands today. It is fascinating to see that the characteristics which are now widely associated with the Dutch – tolerance, stolidness, love of beer, a certain multiculturalism – were already being attributed to Hollanders in the seventeenth century. And it is worth remembering that the trading frenzy coincided with the height of the Dutch Golden Age, a brief period during which the United Provinces enjoyed not just worldwide commercial supremacy (Amsterdam was to the seventeenth century what London was to the nineteenth) but also an astonishing cultural richness. Rembrandt and Vermeer both lived through the tulip mania, and many of the greatest of all Dutch artists painted tulips.
This, then, is the story of the tulip mania set in context. It seeks to explain how the flower came to leave its original homeland in the east and travel thousands of miles to the United Provinces, how it established itself there, and why the bulb craze occurred where it did and when it did. It is an attempt to set the history of the craze straight and to understand the financial realities which underpinned it.
It is also the story of two different tulip manias, for events in the Dutch Republic were mirrored by an equally remarkable craze which took place among the Turks of the Ottoman Empire. There, the tulip was regarded not as an object of speculation but as a holy flower. It was grown in secret gardens at the heart of the most sacred of imperial palaces, and enjoyed the favour of several of the all-powerful sultans who terrorised half of Europe with their armies – men who thought nothing of ordering a hundred executions with one breath and 10,000 bulbs from Syria with the next. The contrast between the tulip’s experiences in Holland, where it was the subject of a financial mania, and Turkey, where the passion for it was of a more cultural and artistic nature, is as fascinating as it is instructive.
In the end, though, this is the tale of a truly remarkable flower. Both the Dutch and the Turkish manias were rooted in one simple reality: the tulips of the time were absolutely beautiful, much more so than the relatively plain varieties available today. The most valuable flowers of this period possessed petals adorned with vivid and intricately-patterned flames of colour which have not been matched before or since, and which made them irresistible.
Almost everyone who has ever grown tulips is aware that somewhere, at some time, the flower commanded huge public interest and unbelievable sums of money, and has asked themselves exactly where, precisely when, and most of all why that was.
This book is about the answers to those questions.
Mike Dash, London, 30 October 1998