What do you get when you plant kisses?
March 22, 2014 2:59 PM Subscribe
For those who don't quite "get it" when someone makes a tulip joke in any given Bitcoin thread. This is a short documentary on the phenomenon of Tulip Mania, a period in Dutch economic history when Tulips became such a hot commodity that empires were born and lives ruined all over the value of tulip bulbs. [slyt]
If there was a disclaimer of "in recorded history" assuage your concern over the statement? There may well have been bubble economies before Tulip Mania, but historical evidence does not exist to back up the claim.
posted by mediocre at 3:53 PM on March 22, 2014 [1 favorite]
posted by mediocre at 3:53 PM on March 22, 2014 [1 favorite]
speculation in physical goods rather than abstract financial instruments
An interesting point is that the peak of the mania was a bubble in tulip futures, rather than the bulbs themselves. From wikipedia:
An interesting point is that the peak of the mania was a bubble in tulip futures, rather than the bulbs themselves. From wikipedia:
The Dutch derogatorily described tulip contract trading as windhandel (literally "wind trade"), because no bulbs were actually changing hands.posted by topynate at 4:22 PM on March 22, 2014 [2 favorites]
Anyone interested in this sort of thing really needs to read the first few chapters of Memoirs of Extraordinary Popular Delusions and the Madness of Crowds by Mackay. They contain lots of entertaining (possibly fictional) anecdotes from the Tulipmania as well as the slightly later South Sea and Mississippi schemes.
I think Tulipmania has a good claim to be the first modern bubble as we understand it, at least in Europe. A proper bubble requires a functioning market that trades on paper (for example tulip futures, or expected returns from an expedition) rather than traders actually swapping real goods for money. That didn't really exist until the Dutch invented it.
posted by AndrewStephens at 4:25 PM on March 22, 2014 [12 favorites]
I think Tulipmania has a good claim to be the first modern bubble as we understand it, at least in Europe. A proper bubble requires a functioning market that trades on paper (for example tulip futures, or expected returns from an expedition) rather than traders actually swapping real goods for money. That didn't really exist until the Dutch invented it.
posted by AndrewStephens at 4:25 PM on March 22, 2014 [12 favorites]
A cool anecdote from Mackay is that a Dutchman returns from a long trip, unaware that tulips are now valuable, and eats what he believes to be an onion, but which was actually a tulip and thus hugely valuable.
It sort of reminded me of pogs.
posted by Ray Walston, Luck Dragon at 4:38 PM on March 22, 2014 [1 favorite]
It sort of reminded me of pogs.
posted by Ray Walston, Luck Dragon at 4:38 PM on March 22, 2014 [1 favorite]
Pogs were delicious too.
posted by procrastination at 4:51 PM on March 22, 2014 [12 favorites]
posted by procrastination at 4:51 PM on March 22, 2014 [12 favorites]
A cool anecdote from Mackay is that a Dutchman returns from a long trip, unaware that tulips are now valuable, and eats what he believes to be an onion, but which was actually a tulip and thus hugely valuable.
That was from Mackay? I remember reading that in some children's history book.
posted by MartinWisse at 5:13 PM on March 22, 2014
That was from Mackay? I remember reading that in some children's history book.
posted by MartinWisse at 5:13 PM on March 22, 2014
Anyone interested in this sort of thing really needs to read the first few chapters of Memoirs of Extraordinary Popular Delusions and the Madness of Crowds by Mackay.
...and Alexandre Dumas' The Black Tulip. Because, among other things, Gryphus.
posted by Ice Cream Socialist at 5:29 PM on March 22, 2014 [1 favorite]
...and Alexandre Dumas' The Black Tulip. Because, among other things, Gryphus.
posted by Ice Cream Socialist at 5:29 PM on March 22, 2014 [1 favorite]
The punch line I remember was that tulips were poisonous, thus in one meal he put the company out of business and died.
posted by sammyo at 5:30 PM on March 22, 2014 [2 favorites]
posted by sammyo at 5:30 PM on March 22, 2014 [2 favorites]
That was from Mackay? I remember reading that in some children's history book.
Well, sort of.
People who had been absent from Holland, and whose chance it was to return when this folly was at its maximum, were sometimes led into awkward dilemmas by their ignorance. There is an amusing instance of the kind related in Blainville’s Travels. A wealthy merchant, who prided himself not a little on his rare tulips, received upon one occasion a very valuable consignment of merchandise from the Levant. Intelligence of its arrival was brought him by a sailor, who presented himself for that purpose at the counting-house, 88bales of goods of every description. The merchant,
to reward him for his news, munificently made him a present of a fine red herring for his breakfast. The sailor had, it appears, a great partiality for onions, and seeing a bulb very like an onion lying upon the counter of this liberal trader, and thinking it, no doubt, very much out of its place among silks and velvets, he slily seized an opportunity and slipped it into his pocket, as a relish for his herring. He got clear off with his prize, and proceeded to the quay to eat his breakfast. Hardly was his back turned when the merchant missed his valuable Semper Augustus, worth three thousand florins, or about 280l. sterling. The whole establishment was instantly in an uproar; search was every where made for the precious root, but it was not to be found. Great was the merchant’s distress of mind. The search was renewed, but again without success. At last some one thought of the sailor.
The unhappy merchant sprang into the street at the bare suggestion. His alarmed household followed him. The sailor, simple soul! had not thought of concealment. He was found quietly sitting on a coil of ropes, masticating the last morsel of his “onion”. Little did he dream that he had been eating a breakfast whose cost might have regaled a whole ship’s crew for a twelvemonth; or, as the plundered merchant himself expressed it, “might have sumptuously feasted the Prince of Orange and the whole court of the Stadtholder.” Anthony caused pearls to be dissolved in wine to drink the health of Cleopatra; Sir Richard Whittington was as foolishly magnificent in an entertainment to King Henry V.; and Sir Thomas Gresham drank a diamond dissolved in wine to the health of Queen Elizabeth, when she opened the Royal Exchange; but the breakfast of this roguish Dutchman was as splendid as either. He had an advantage, too, over his wasteful predecessors: their gems did not improve the taste or the wholesomeness of their wine, while his tulip was quite delicious with his red herring. The most unfortunate part of the business for him was, that he remained in prison for some months on a charge of felony preferred against him by the merchant.
posted by Ray Walston, Luck Dragon at 5:54 PM on March 22, 2014 [4 favorites]
Well, sort of.
People who had been absent from Holland, and whose chance it was to return when this folly was at its maximum, were sometimes led into awkward dilemmas by their ignorance. There is an amusing instance of the kind related in Blainville’s Travels. A wealthy merchant, who prided himself not a little on his rare tulips, received upon one occasion a very valuable consignment of merchandise from the Levant. Intelligence of its arrival was brought him by a sailor, who presented himself for that purpose at the counting-house, 88bales of goods of every description. The merchant,
to reward him for his news, munificently made him a present of a fine red herring for his breakfast. The sailor had, it appears, a great partiality for onions, and seeing a bulb very like an onion lying upon the counter of this liberal trader, and thinking it, no doubt, very much out of its place among silks and velvets, he slily seized an opportunity and slipped it into his pocket, as a relish for his herring. He got clear off with his prize, and proceeded to the quay to eat his breakfast. Hardly was his back turned when the merchant missed his valuable Semper Augustus, worth three thousand florins, or about 280l. sterling. The whole establishment was instantly in an uproar; search was every where made for the precious root, but it was not to be found. Great was the merchant’s distress of mind. The search was renewed, but again without success. At last some one thought of the sailor.
The unhappy merchant sprang into the street at the bare suggestion. His alarmed household followed him. The sailor, simple soul! had not thought of concealment. He was found quietly sitting on a coil of ropes, masticating the last morsel of his “onion”. Little did he dream that he had been eating a breakfast whose cost might have regaled a whole ship’s crew for a twelvemonth; or, as the plundered merchant himself expressed it, “might have sumptuously feasted the Prince of Orange and the whole court of the Stadtholder.” Anthony caused pearls to be dissolved in wine to drink the health of Cleopatra; Sir Richard Whittington was as foolishly magnificent in an entertainment to King Henry V.; and Sir Thomas Gresham drank a diamond dissolved in wine to the health of Queen Elizabeth, when she opened the Royal Exchange; but the breakfast of this roguish Dutchman was as splendid as either. He had an advantage, too, over his wasteful predecessors: their gems did not improve the taste or the wholesomeness of their wine, while his tulip was quite delicious with his red herring. The most unfortunate part of the business for him was, that he remained in prison for some months on a charge of felony preferred against him by the merchant.
posted by Ray Walston, Luck Dragon at 5:54 PM on March 22, 2014 [4 favorites]
"The world's first great speculative bubble", though? My textbook made some similar claim back then but that seems so improbable to me, as it did back then. Is it maybe a more technical claim than I'm understanding? It just seems so unlikely that when we're talking about speculation in physical goods rather than abstract financial instruments this is the first time it happened, given all the wealthy mercantile empires that existed during the millennia before this point.
I think the point is that Tulips were for all intents and purposes virtual property. They were a product that held virtually zero value without the bubble. And as was mentioned above it was in futures that the big money was won and lost, so it was an abstract financial instrument based on an item that no one knew how to price.
posted by Tell Me No Lies at 6:03 PM on March 22, 2014
I think the point is that Tulips were for all intents and purposes virtual property. They were a product that held virtually zero value without the bubble. And as was mentioned above it was in futures that the big money was won and lost, so it was an abstract financial instrument based on an item that no one knew how to price.
posted by Tell Me No Lies at 6:03 PM on March 22, 2014
A proper bubble requires a functioning market that trades on paper (for example tulip futures, or expected returns from an expedition) rather than traders actually swapping real goods for money. That didn't really exist until the Dutch invented it.
This is basically the gist of what I was taught in high school, but that's why things I've heard since then that appear to contradict it stand out to me. Like, in the Republic of Venice going back to the Middle Ages interest-bearing government bonds were traded:
...In the year 1171 the city of Venice was at war with the Empires of the East and West. Its finances were in great disorder, and the Great Council levied a forced loan of one per cent. on the property of all the citizens. Commissioners were appointed to manage the loan, who were called "camera, degli, imprestiti." Such a loan had several names in Italian, such as "campra mutus," but the most common is "monte vecchio." Subsequently two other loans were contracted and called "monte nuova" and "monte novissimo."(That quote is from an 1890 book—I found the same thing discussed in much more recent books and articles but I couldn't find a short quote that encapsulated it as well.)
In exchange for their money the citizens received stock certificates or credits bearing interest, which they might transfer to anyone else...
The same source where I learned of that IIRC indicated that maritime insurance contracts were traded, their value varying by how late past its expected return date the insured ship was.
When I've read about the invention of paper money in China, there were other paper notes besides currency mentioned that represented standard financial contracts exchanged; and there was an academic article about ancient Egypt that discussed fairly complicated abstract financial contracts that was posted on MeFi as an FPP or comment that I can't find, but I can't remember if those contracts were traded.
But anyway, those sort of things are why I'm skeptical about whether the "everything after double entry bookkeeping was invented in the Renaissance Netherlands or Britain" history of financial stuff I learned in school is a complete picture.
posted by XMLicious at 6:49 PM on March 22, 2014 [1 favorite]
see also, the South Sea Bubble, and the Darien scheme, which may have influenced Scottish unification with England.
posted by the man of twists and turns at 7:19 PM on March 22, 2014 [1 favorite]
posted by the man of twists and turns at 7:19 PM on March 22, 2014 [1 favorite]
I guess the punchline here is the predictable as clockwork "Ponzi scheme" / "Tulip bubble" chorus that appears from 20 second goldfish memory pundits every time bitcoin demonstrates it's volatile exchange rate.
posted by zog at 7:28 PM on March 22, 2014 [1 favorite]
posted by zog at 7:28 PM on March 22, 2014 [1 favorite]
But anyway, those sort of things are why I'm skeptical about whether the "everything after double entry bookkeeping was invented in the Renaissance Netherlands or Britain" history of financial stuff I learned in school is a complete picture.
This is an interesting point. I would love to read a book about the financial madness of crowds written with a much broader base to draw from.
posted by Tell Me No Lies at 8:00 PM on March 22, 2014
This is an interesting point. I would love to read a book about the financial madness of crowds written with a much broader base to draw from.
posted by Tell Me No Lies at 8:00 PM on March 22, 2014
So the Dutch are to blame for the invention of futures and, thus, bubbles. Curse their silly flowers and wooden clogs!
posted by five fresh fish at 8:08 PM on March 22, 2014
posted by five fresh fish at 8:08 PM on March 22, 2014
I guess the punchline here is the predictable as clockwork "Ponzi scheme" / "Tulip bubble" chorus that appears from 20 second goldfish memory pundits every time bitcoin demonstrates it's volatile exchange rate.
Jokes on them. Don't they realize they can by a pristine condition Princess Of Wales Beanie Baby for just 100 bit coins?
posted by Tell Me No Lies at 8:11 PM on March 22, 2014 [13 favorites]
Jokes on them. Don't they realize they can by a pristine condition Princess Of Wales Beanie Baby for just 100 bit coins?
posted by Tell Me No Lies at 8:11 PM on March 22, 2014 [13 favorites]
Tulipmania is a great story, but it's not really what happened. Mackay basically accepted as fact stuff that came originally from anonymous anti-speculation pamphlets.
www.museumofhoaxes.com/hoax/weblog/comments/tulipmania
posted by freebird at 9:44 PM on March 22, 2014 [3 favorites]
www.museumofhoaxes.com/hoax/weblog/comments/tulipmania
posted by freebird at 9:44 PM on March 22, 2014 [3 favorites]
He had an advantage, too, over his wasteful predecessors: their gems did not improve the taste or the wholesomeness of their wine, while his tulip was quite delicious with his red herring.
Hey, I've got some leftover bulbs and some smoked river trout. I feel a Should I Eat This AskMe coming on.
posted by Dr Dracator at 12:02 AM on March 23, 2014 [1 favorite]
Hey, I've got some leftover bulbs and some smoked river trout. I feel a Should I Eat This AskMe coming on.
posted by Dr Dracator at 12:02 AM on March 23, 2014 [1 favorite]
So the museum of hoaxes makes it look like, yes, it was a good early example of a market bubble, just one that wasn't as devastating as the myth believes, probably because it wasn't based in something like home equity.
posted by Navelgazer at 12:07 AM on March 23, 2014 [2 favorites]
posted by Navelgazer at 12:07 AM on March 23, 2014 [2 favorites]
Anyone interested in tulip mania should have a look at the excellent book by Anne Goldgar, Tulipmania: Money, Honor and Knowledge in the Dutch Golden Age (reviews here and here). Goldgar shows that most of what we thought we knew about the tulip craze is completely wrong. Economically, the tulip trade was little different from the futures market in herring or spices. The fall in tulip prices in 1637 was more of a market correction than a crash. Nobody was ruined by it, and it had no long-term economic effects. Tulips remained a valuable commodity after 1637, and the tulip trade continued as before.
Needless to say, Goldgar's work has had absolutely no impact outside academic circles, and people still go on recycling the same old myths about the 'madness of crowds'. The documentary linked here (from Andrew Marr's History of the World) is particularly dishonest, as it plucks a lot of factual details from Goldgar's book while completely ignoring her interpretation of them.
posted by verstegan at 5:35 AM on March 23, 2014 [10 favorites]
Needless to say, Goldgar's work has had absolutely no impact outside academic circles, and people still go on recycling the same old myths about the 'madness of crowds'. The documentary linked here (from Andrew Marr's History of the World) is particularly dishonest, as it plucks a lot of factual details from Goldgar's book while completely ignoring her interpretation of them.
posted by verstegan at 5:35 AM on March 23, 2014 [10 favorites]
dylanjames: "Bankrupt by beanies "
So, my Dad. I love him, I really do. He had a bit of an OCD issue with certain things.
For example, first, I got him turned onto Baseball Cards when I was in 6th grade. When I told him about the 1987 Topps Jose Canseco card, which I think was somewhere between 3-7 dollars at the time, but I'm not sure... He said "No, that piece of cardboard is worth that much?" (Now that I'm older, and looking back, I can hear the lights going off in his head when he was saying this).
He got into cards. Like. REALLY got into them. For my 12th birthday, he bought a giant display stand of Donruss cards from the wholesale place. We ended up making a lot of full sets and many partial sets (I can't recall how many), but we sold them to kids for like 120 or whatever the hell they were worth at the time.
Then my poor mom. You know, she doesn't know much about cards, but she knows I like them, so she did her best to find something for me. She saw one of those grab bags of commons in the toy aisle that say "HUNDREDS OF RANDOM CARDS! MAYBE *YOU* WILL FIND A REAL VALUABLE CARD INSIDE!" I believe she was being very sincere when she gave it to me, and I remember when I got it the minor disappointment, not so much disappointment in what it was, because I knew her heart was in the right place, but having to tell her that there wasn't anything good inside... I pretended like there *could* have been and I just missed the luck of the draw. My dad probably told her (I can't recall if he did then and there) that there wasn't going to be anything good in there, just to save her on wasting money. I felt so bad for her, all that hope, I didn't want to crush it.
So... Yes, buying a big box of cards like that as some form of investment, I guess, that was weird, but everyone was buying and selling, the scene just got bigger and bigger from there for about 5 years or (I think? I dunno - it moved onto like Basketball and Football and limited edition foil yada yada insanity).
But he had this one guy he liked, coming outta the minors to Milwaukee Brewers. He was so damn sure of this guy. He bought a whole CRAPTON of cards of him. (DIVERSIFY DAD!): Joey Meyer. Looks like this was around the same time (1988/1989 - I thought it was a bit later). He handed a family friend a large box of cards (I mean, like, I think this was an entire SET sized box) for the guy's birthday. He basically told our family friend that this was going to be worth a shitton of money someday. Our family friend laughed. I don't think my dad was joking, but then again, who knows - maybe he was.
So ...
Beanie Babies happened. And they happened to our family. My dad decided that, yet again, here was something that was great and going to make a lot of money. He bought all kinds from all over - eBay, local place, ordering wherever he could (I'm pretty sure eBay was part of that scene? I don't recall when BBs were huge, but I think it was late-mid 90s? So he bought, and bought and bought and bought. Oh, he sold, too. I'm sure he made some money as he bought, but of course, like gambling, you win some, you lose more. He never rented a mini-warehouse. We had a really large living room that served for that purpose (admittedly, a mini-warehouse would probably have been overkill for what he did have).
He had a set of these cardboard container boxes, each box was probably 18" wide, 16" tall and 36" long. He had about 5 columns, 4 high. Packed and I mean PACKED full of Beanie Babies, just ready for the go.
Then the stork market crashed...
posted by symbioid at 8:19 AM on March 23, 2014 [1 favorite]
So, my Dad. I love him, I really do. He had a bit of an OCD issue with certain things.
For example, first, I got him turned onto Baseball Cards when I was in 6th grade. When I told him about the 1987 Topps Jose Canseco card, which I think was somewhere between 3-7 dollars at the time, but I'm not sure... He said "No, that piece of cardboard is worth that much?" (Now that I'm older, and looking back, I can hear the lights going off in his head when he was saying this).
He got into cards. Like. REALLY got into them. For my 12th birthday, he bought a giant display stand of Donruss cards from the wholesale place. We ended up making a lot of full sets and many partial sets (I can't recall how many), but we sold them to kids for like 120 or whatever the hell they were worth at the time.
Then my poor mom. You know, she doesn't know much about cards, but she knows I like them, so she did her best to find something for me. She saw one of those grab bags of commons in the toy aisle that say "HUNDREDS OF RANDOM CARDS! MAYBE *YOU* WILL FIND A REAL VALUABLE CARD INSIDE!" I believe she was being very sincere when she gave it to me, and I remember when I got it the minor disappointment, not so much disappointment in what it was, because I knew her heart was in the right place, but having to tell her that there wasn't anything good inside... I pretended like there *could* have been and I just missed the luck of the draw. My dad probably told her (I can't recall if he did then and there) that there wasn't going to be anything good in there, just to save her on wasting money. I felt so bad for her, all that hope, I didn't want to crush it.
So... Yes, buying a big box of cards like that as some form of investment, I guess, that was weird, but everyone was buying and selling, the scene just got bigger and bigger from there for about 5 years or (I think? I dunno - it moved onto like Basketball and Football and limited edition foil yada yada insanity).
But he had this one guy he liked, coming outta the minors to Milwaukee Brewers. He was so damn sure of this guy. He bought a whole CRAPTON of cards of him. (DIVERSIFY DAD!): Joey Meyer. Looks like this was around the same time (1988/1989 - I thought it was a bit later). He handed a family friend a large box of cards (I mean, like, I think this was an entire SET sized box) for the guy's birthday. He basically told our family friend that this was going to be worth a shitton of money someday. Our family friend laughed. I don't think my dad was joking, but then again, who knows - maybe he was.
So ...
Beanie Babies happened. And they happened to our family. My dad decided that, yet again, here was something that was great and going to make a lot of money. He bought all kinds from all over - eBay, local place, ordering wherever he could (I'm pretty sure eBay was part of that scene? I don't recall when BBs were huge, but I think it was late-mid 90s? So he bought, and bought and bought and bought. Oh, he sold, too. I'm sure he made some money as he bought, but of course, like gambling, you win some, you lose more. He never rented a mini-warehouse. We had a really large living room that served for that purpose (admittedly, a mini-warehouse would probably have been overkill for what he did have).
He had a set of these cardboard container boxes, each box was probably 18" wide, 16" tall and 36" long. He had about 5 columns, 4 high. Packed and I mean PACKED full of Beanie Babies, just ready for the go.
Then the stork market crashed...
posted by symbioid at 8:19 AM on March 23, 2014 [1 favorite]
The academics who say that tulip-mania is a hoax, and that the story was started by pamphlets with an anti-speculative bias, seem to be economists with a free-market, pro-speculative bias.
posted by maggiemaggie at 12:07 PM on March 23, 2014
posted by maggiemaggie at 12:07 PM on March 23, 2014
Anyone interested in tulipomania should search out Tulpendiebe, the 1927 silent about a sailor who mistakenly eats an expensive tulip bulb and is thrown into jail. He falls in love with the duke's daughter and finally brings the tulip market crashing down. Windmills go up in flames. The film was lost for decades until it reappeared in New York under mysterious circumstances a few years ago.
Well all right, Tulpendiebe doesn't exist except for the trailer. It's the fictional debut movie of the eponymous main character in my novel Kino. Which anyone interested in tulipomania or silent film should totally check out!
posted by muckster at 12:08 PM on March 23, 2014 [2 favorites]
Well all right, Tulpendiebe doesn't exist except for the trailer. It's the fictional debut movie of the eponymous main character in my novel Kino. Which anyone interested in tulipomania or silent film should totally check out!
posted by muckster at 12:08 PM on March 23, 2014 [2 favorites]
I wish that there had been one more Blackadder series that tackled an economic bubble.
posted by ZeusHumms at 7:42 PM on March 23, 2014
posted by ZeusHumms at 7:42 PM on March 23, 2014
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"The world's first great speculative bubble", though? My textbook made some similar claim back then but that seems so improbable to me, as it did back then. Is it maybe a more technical claim than I'm understanding? It just seems so unlikely that when we're talking about speculation in physical goods rather than abstract financial instruments this is the first time it happened, given all the wealthy mercantile empires that existed during the millennia before this point.
posted by XMLicious at 3:49 PM on March 22, 2014 [1 favorite]