My lovely partner earned a Master of Divinity. I just like to say that sometimes. Anyway, one of the things I learned very early on in the process is that there is always new and fresh biblical research. The process of arguing with and understanding the book itself never stops.
OK. So this isn’t about biblical scholarship but it is about the need to constantly revisit what you believe and why you believe it. When I was studying history as an undergraduate, I learned about the Dutch tulip futures market in the early 17th century. The subject came up recently and I thought it would make a good diary.
Problem is, I didn’t know everything I thought I knew.
But first, a word from our sponsors ...
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Tulips were introduced into Europe from Turkey shortly after 1550, and the delicately formed, vividly coloured flowers became a popular if costly item. The demand for differently coloured varieties of tulips soon exceeded the supply, and prices for individual bulbs of rare types began to rise to unwarranted heights in northern Europe.
By about 1610 a single bulb of a new variety was acceptable as dowry for a bride, and a flourishing brewery in France was exchanged for one bulb of the variety Tulipe Brasserie. The craze reached its height in Holland during 1633–37. Before 1633 Holland’s tulip trade had been restricted to professional growers and experts, but the steadily rising prices tempted many ordinary middle-class and poor families to speculate in the tulip market.
Homes, estates, and industries were mortgaged so that bulbs could be bought for resale at higher prices. Sales and resales were made many times over without the bulbs ever leaving the ground, and rare varieties of bulbs sold for the equivalent of hundreds of dollars each.
The crash came early in 1637, when doubts arose as to whether prices would continue to increase. Almost overnight the price structure for tulips collapsed, sweeping away fortunes and leaving behind financial ruin for many ordinary Dutch families.
Here Comes the Twist ...
Check out Tulip mania: the classic story of a Dutch financial bubble is mostly wrong based on the research of Anne Goldgar for her book Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age.
Prices rose, because tulips were hard to cultivate in a way that brought out the popular striped or speckled petals, and they were still rare. But it wasn’t irrational to pay a high price for something that was generally considered valuable, and for which the next person might pay even more.
Godgar dismantles the popular story of a society driven mad by the ephemeral and I tend to agree with her analysis. She continues in There Never Was a Real Tulip Fever … based on an interview with Goldgar in Smithsonian Magazine.
“Tulip mania wasn’t a frenzy, either. In fact, for much of the period trading was relatively calm, located in taverns and neighbourhoods rather than on the stock exchange. It also became increasingly organised, with companies set up in various towns to grow, buy, and sell, and committees of experts emerged to oversee the trade. Far from bulbs being traded hundreds of times, I never found a chain of buyers longer than five, and most were far shorter.”
Was it silly? Yes. Was it garish? Probably. But, was it systemic societal collapse? No.
Here’s what happened. The Dutch merchant class was doing really well for itself in the years following their “exploration” of the globe. The Dutch East India Company was making money for a lot of people in Holland hand over fist. And what happens when a large group of people gets access to a previously non existent revenue stream suddenly? People lose their g-d minds.
Dutch merchants and tradesmen, at least at the upper echelons, very excitedly adopted a little something I like to call conspicuous consumerism. You know. Being bougie. But, as Godgar argues, this was a very specific and historically nested expression of a nascent bourgeoisie.
But before you even attempt to apply what happened in the Netherlands to more recent bubbles—the South Sea Bubble in 1700s England, the 19th-century railway bubble, the dot-com bubble and bitcoin are just a few comparisons Goldgar has seen—you have to understand Dutch society at the turn of the 17th century.
The Dutch East India Company was the driving economic force of the day in the Netherlands. Political power stemmed from cities and from their merchants.This was radically different from other European societies at this time. And here’s the thing about merchant networks, they are based on trust and reliability.
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.
So, no. Tulip Mania probably wasn’t what you might think it was.
Why have these myths persisted?
Again, I turn to Goldgar. She asserts that the fault lies with a few authors who were widely published. The short version is that Charles Mackay’s Extraordinary Popular Delusions and the Madness of Crowds from 1841 relied on misinterpreted Dutch satire on the part of the author whom Mackay perhaps over relied.
Much of what Mackay says about tulip mania comes straight from the satirical songs of 1637 – and it is repeated endlessly on financial websites, in blogs, on Twitter and in popular finance books such as A Random Walk Down Wall Street. But what we are hearing are the fears of 17th century people about a 17th century situation.
What’s more, the Church might also have had a hand in shaping the myth.
or as historian Simon Schama writes in The Embarrassment of Riches: An Interpretation of Dutch Culture in the Golden Age, “The prodigious quality of their success went to their heads, but it also made them a bit queasy.”
All the outlandish stories of economic ruin, of an innocent sailor thrown in prison for eating a tulip bulb, of chimney sweeps wading into the market in hopes of striking it rich—those come from propaganda pamphlets published by Dutch Calvinists worried that the tulip-propelled consumerism boom would lead to societal decay.
So, What’s the Point?
Why are you always pestering me with this question? Seriously. Get some new material.
Anyway, my whole point with this is that being a well educated person is getting harder and harder.
Education never stops. And that’s a good thing. But you have to earn the right to say you know stuff by being able to evaluate new information that contradicts the conventional wisdom.
Low information voters drive me nuts because I have a hard time establishing a base line truth with them.
Once I can do that I can generally hold a valuable conversation.
But ...
Wtf ?!?
You mean I have to go back and re organize everything I know about 17th century European economics as it relates to colonization, capitalism, and the global slave trade?
Don’t be ridiculous.
This is less of a “New evidence changes course of history” situation than it is a re evaluation of a long held supposition based on a close reading of the documentation.
And, isn’t that what we’re all really fighting for?
or something
Besides, at the end of the day, all that really happened was that one of the proto weaknesses of a stock market organization asserted itself, as it inevitably does.
Someone got a little too cute with the math in order to pay you Tuesday for a hamburger today.
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