Odd this day
The arse fell out of the wildly out-of-control Dutch tulip market, everybody went broke, and loads of people hurled themselves into canals. Well…
The date of 3 February first appears in a pamphlet in which someone called Waermondt tells another chap, Gaergoedt, that someone else in a pub in Haarlem tried to sell a tulip bulb for 1,250 florins, but couldn’t, even though he repeatedly dropped the price. There are a couple of problems here: the pamphlet is propaganda, not reportage; the story is hearsay, passed from one person to another, about someone entirely different; oh, and Waermondt means ‘true-mouth’, and Gaergoedt is Dutch for ‘greedy-goods’. It wasn’t just propaganda; it was satire.
The highest price for tulips was reached in February 1637, but the historian Anne Goldgar discovered that most of the rest of what we know about the story isn’t true. There was not, for example, a sailor who came across a bulb worth 3,000 florins which he mistook for an onion and ate “quietly sitting on a coil of ropes”, finding it “quite delicious with his red herring”. There were no “desperate bankrupts” throwing themselves in canals. The entire economy of Holland did not collapse.
The most expensive tulip bulbs did cost around 5,000 guilders, which was about the price of a rather nice house, but that was because it was very difficult to cultivate the speckled or stripes petals which were highly prized. Most people weren’t buying those, though. Goldgar looked through the Dutch archives and found a grand total of 37 people who ever spent more than 300 guilders on bulbs.
The story also goes that — with the market booming — every Tom, Dirk and Hendrik was getting involved. In fact, it was mainly merchants, who could afford to lose some money — and everyone who’d bought and sold bulbs the year before was fine. It was just the people who were waiting for the bulbs to come out of the ground in May or June 1637 who might lose out. Even then, the tulip growers agreed that all contracts entered into before December 1636 would be honoured, and any from after that date could be cancelled on payment of a 10% fee. So, nobody was likely to have to sell their house for a bulb, and it only applied to two months of trading anyway.
Goldgar jokes that her book
should be called ‘Tulipmania: More Boring Than You Thought’
…and believes most of the blame for the fable of the Tulip Bubble can be laid at the feet of Charles Mackay, a 19th century journalist who wrote Extraordinary Popular Delusions and the Madness of Crowds, and passed off as fact a lot of drivel he’d picked up from satirical pamphlets and songs (including the one about the ‘onion’ eater above). Many of the pamphlets were published by austere Dutch Calvinists who wanted to warn people off financial speculation on the grounds that it would bring about the collapse of society.
Ah, well. At least Mackay may have had a point in his book — or at least in its title. There have been, and will no doubt continue to be, financial bubbles. Humans are not always level-headed.
Or, as Tommy Lee Jones* once put it:
*speaking words written by Ed Solomon, to be pedantic about it.
