C&B Notes

Was Tulip Fever Just A Cold?

Extraordinary Delusions and the Madness of Crowds is on our bookshelf, and it includes a chapter on the Netherland tulip bubble in the 1600’s.  A new book challenges just how manic the infamous tulip fever was.

When tulips came to the Netherlands, all the world went mad.  A sailor who mistook a rare tulip bulb for an onion and ate it with his herring sandwich was charged with a felony and thrown in prison.  A bulb named Semper Augustus, notable for its flame-like white and red petals, sold for more than the cost of a mansion in a fashionable Amsterdam neighborhood, complete with coach and garden.  As the tulip market grew, speculation exploded, with traders offering exorbitant prices for bulbs that had yet to flower.   And then, as any financial bubble will do, the tulip market imploded, sending traders of all incomes into ruin.

For decades, economists have pointed to 17th-century tulipmania as a warning about the perils of the free market.  Writers and historians have reveled in the absurdity of the event.  The incident even provides the backdrop for the new film Tulip Fever, based on a novel of the same name by Deborah Moggach.

The only problem: none of these stories are true.  “I always joke that the book should be called ‘Tulipmania: More Boring Than You Thought,’” says Goldgar, a professor of early modern history at King’s College London.  “People are so interested in this incident because they think they can draw lessons from it.  I don’t think that’s necessarily the case.”

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The Dutch learned that tulips could be grown from seeds or buds that grew on the mother bulb; a bulb that grows from seed would take 7 to 12 years before flowering, but a bulb itself could flower the very next year.  Of particular interest to Clusius and other tulip traders were “broken bulbs”—tulips whose petals showed a striped, multicolor pattern rather than a single solid color.  The effect was unpredictable, but the growing demand for these rare, “broken bulb” tulips led naturalists to study ways to reproduce them.  (The pattern was later discovered to be the result of a mosaic virus that actually makes the bulbs sickly and less likely to reproduce.)  “The high market price for tulips to which the current version of tulipmania refers were prices for particularly beautiful broken bulbs,” writes economist Peter Garber.  “Since breaking was unpredictable, some have characterized tulipmania among growers as a gamble, with growers vying to produce better and more bizarre variegations and feathering.”

After all the money Dutch speculators spent on the bulbs, they only produced flowers for about a week — but for tulip lovers, that week was a glorious one.  “As luxury objects, tulips fit well into a culture of both abundant capital and new cosmopolitanism,” Goldgar writes.  Tulips required expertise, an appreciation of beauty and the exotic, and, of course, an abundance of money.

Here’s where the myth comes into play. According to popular legend, the tulip craze took hold of all levels of Dutch society in the 1630s.  “The rage among the Dutch to possess them was so great that the ordinary industry of the country was neglected, and the population, even to its lowest dregs, embarked in the tulip trade,” wrote Scottish journalist Charles Mackay in his popular 1841 work Extraordinary Popular Delusions and the Madness of Crowds.  According to this narrative, everyone from the wealthiest merchants to the poorest chimney sweeps jumped into the tulip fray, buying bulbs at high prices and selling them for even more.  Companies formed just to deal with the tulip trade, which reached a fever pitch in late 1636.  But by February 1637, the bottom fell out of the market.  More and more people defaulted on their agreement to buy the tulips at the prices they’d promised, and the traders who had already made their payments were left in debt or bankrupted.  At least that’s what has always been claimed.

In fact, “There weren’t that many people involved and the economic repercussions were pretty minor,” Goldgar says.  “I couldn’t find anybody that went bankrupt. I f there had been really a wholesale destruction of the economy as the myth suggests, that would’ve been a much harder thing to face.”  That’s not to say that everything about the story is wrong; merchants really did engage in a frantic tulip trade, and they paid incredibly high prices for some bulbs.  And when a number of buyers announced they couldn’t pay the high price previously agreed upon, the market did fall apart and cause a small crisis — but only because it undermined social expectations.  “In this case it was very difficult to deal with the fact that almost all of your relationships are based on trust, and people said, ‘I don’t care that I said I’m going to buy this thing, I don’t want it anymore and I’m not going to pay for it.’  There was really no mechanism to make people pay because the courts were unwilling to get involved,” Goldgar says.

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