Download Tulipomania

• A region and former
province located on the
western coast of the
Netherlands
• The term Holland is also
frequently used to refer to
the whole of the country of
the Netherlands.
• Introduced to Europe in mid 16th Century
form Ottoman Empire
• Became very popular in United Provinces
(now the Netherlands)
• Charles de l’Ecluse a Flemish horticulture
professor started growing them at
University of Leiden
• Flowers could tolerate harsh climate of the
region
• Tulip became coveted luxury item
– What is a luxury item?
– Can you think of some modern luxury
items?
• Many varieties were developed:
– One-colored tulips known as Coulerens
– Multi-colored Cosen, Violetten, Rosen, and
Bizarden
• Became most popular
• Vivid colors, lines, and flames
– We now know what caused these
variations
• “Tulip breaking virus”
• Tulips bloom from April to May for about a week
• Secondary blooms appear shortly after
• From June to September they can be uprooted
and moved
• The rest of the year traders developed a market
for these flowers
– Signed contracts to purchase tulips at end of the
season
– Betting on being able to sell them for more later
• What does this sound like?
– Developed many of the modern techniques of finance
• “The population, even to its lowest dregs,
embarked in the tulip trade” by the promise of
wealth
• Amusing anecdotes from this period:
– 1 bulb for two lasts of wheat, four lasts of rye, four fat
oxen, eight fat swine, twelve fat sheep, two containers
of wine, four containers of beer, two tons of butter,
1,000 lbs of cheese, a complete bed, a suit of clothes,
and a silver drinking cup
– In 1635, 40 bulbs for 100,000 florins (keep in mind
that a skilled laborer made about 150 florins a year)
• Sailor mistook an precious bulb for an onion and
ate a breakfast worth a years worth of food!
• Intending on reselling for even more
– What contemporary examples can you think of?
• It couldn’t last if people were no longer able to pay that price
• February 1637 was that day…people would no longer pay
inflated prices
• People stopped wanting to buy them (demand dropped)
• Prices plummeted
• Speculative bubble burst
• People were left holding contracts to purchase bulbs at 10x
their values
• Tulip speculators sought help of government
– Declaring contracts void for 10% fee
– Government ultimately considered this gambling and didn’t help