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Tulip mania

From Academic Kids

The term tulipomania (alternatively tulip mania) is used metaphorically to refer to any large economic bubble. The term originally came from the period in the history of the Netherlands during which demand for tulip bulbs reached such a peak that enormous prices were charged for a single bulb. It took place in the first part of the 17th century.

The tulip, introduced to Europe in the middle of the 16th century, experienced a strong growth in popularity in the Netherlands, boosted by competition between members of the middle classes to outcompete each other in possession of the rarest tulips. Competition escalated until prices reached unsustainable levels.

Tulip cultivation in the Netherlands is thought to have started in 1593, when Charles de L'Ecluse first bred tulips able to tolerate the harsher conditions of the Low Countries from bulbs sent to him from Turkey by Ogier de Busbecq. The flower rapidly became a coveted luxury item and a status symbol. Special breeds were given exotic names or named after Dutch naval admirals. The most spectacular and highly sought after tulips had vivid colors, lines, and flames on the petals as a result of being infected with a tulip-specific virus known as the Mosaic Virus. In 1623, a single bulb of a famous tulip breed could cost as much as a thousand Dutch florins (the average yearly income at the time was 150 florins). Tulips were also exchanged for land, valuable livestock, and houses. Allegedly, a good trader could earn sixty thousand florins a month.

By 1635, a sale of 40 bulbs for 100,000 florins was recorded. By way of comparison, a ton of butter cost around 100 florins and "eight fat swine" 240 florins. A record was the sale of the most famous bulb, the Semper Augustus,[1] (http://www.nortonsimon.org/collections/browse_artist.asp?name=Anonymous+Dutch+Artist&resultnum=11) for 6,000 florins in Haarlem.

By 1636, tulips were traded on the stock exchanges of numerous Dutch towns and cities. This encouraged trading in tulips by all members of society, with many people selling or trading their other possessions in order to speculate in the tulip market. Some speculators made large profits as a result.

Some traders sold tulip bulbs that had only just been planted or those they intended to plant (in effect, tulip futures). This phenomenon was dubbed windhandel, or "wind trade", and took place mostly in the taverns of small towns using an occult slate system to indicate bid prices. State edict in 1610 made that trade illegal by refusing to enforce the contracts, but the legislation failed to curtail the activity.

In February 1637 tulip traders could no longer get inflated prices for their bulbs, and they began to sell. The bubble burst. People began to suspect that the demand for tulips could not last, and as this spread a panic developed. Some were left holding contracts to purchase tulips at prices now ten times greater than those on the open market, while others found themselves in possession of bulbs now worth a fraction of the price they had paid. Thousands of Dutch, including businessmen and dignitaries, were financially ruined.

Attempts were made to resolve the situation to the satisfaction of all parties, but these were unsuccessful. Ultimately, individuals were left in the situation they found themselves in at the end of the crash—no court would enforce payment of a contract, since judges regarded the debts as contracted through gambling, and thus not enforceable in law.

Lesser versions of the tulipomania also occurred in other parts of Europe, although matters never reached the state they had in the Netherlands. In England in 1800, it was common to pay fifteen guineas for a single tulip bulb. This sum would have kept a labourer and his family in food, clothes and lodging for six months.

Further reading

Mike Dash, Tulipomania: The Story of the World's Most Coveted Flower and the Extraordinary Passions It Aroused (1999) ISBN 0575067233

Anna Pavord, The Tulip (2004) ISBN 0747571902

External links

fr:Tulipomanie it:Bolla dei tulipani

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