Tulip Mania: The stock market bubble that never happened. Tulip Crisis

Scene: Holland.

Time of action: XVII century.

Corpus delicti: exchange trading in tulip "futures".

Scale: National.

Characters: almost the entire population of the country.

Type: B2B, P2P (business to business, people to people)

Tulip fever in Holland in the 17th century can be considered a scam in the sense that the word was put into the century before last, that is, a lucrative enterprise. But when the thirst for profit covers literally the entire population of the country, when one product becomes a means of profit, and the mechanisms for making transactions are not protected in any way, sooner or later everyone ends up losing.

Many economists believe that the cause of financial crises is the separation of the sphere of circulation (money) from the sphere of production (goods) due to globalization, the growth and complication of world financial flows and the emergence of new banking technologies. For the first time, the threat of such a “separation from the people and fall” arose as early as the beginning of the 17th century “in one single country” - Holland, which at that time was one of the most economically developed.

The financial disaster was the result of the rush demand for tulips and the emergence of "futures" trading. Considering that contract insurance mechanisms were developed only centuries later, it is not surprising that almost the entire population of the country suffered from this "paper trade".

Why was the tulip the subject of national speculation, and not, say, emeralds or overseas spices and other colonial goods, to which the country of seafarers had almost exclusive access? Perhaps the fact is that at the beginning of the 17th century, a bouquet of tulips in a Dutchman's living room meant about the same thing as his own yacht or Rolls-Royce today. The tulip was a status symbol. He testified to belonging to the upper strata of society. It is not surprising that when a tulip bulb was affordable for the average Dutchman, a fever swept the country. Everyone wanted to snatch their piece and join the riches of the tulip market.

But there was another reason why it was the tulip that became the subject of grandiose speculation that ruined one of the most economically developed countries in Europe. Like most other ornamental plants, the tulip came to Europe from the Middle East. It was brought from Turkey in the middle of the 16th century. But the tulip had one interesting feature. Beautiful flowers of a single color grew from the bulbs, but after a few years it suddenly changed: stripes of various shades appeared on the petals. It is now known that this is the result of a viral disease of tulips. But then it seemed like a miracle. The Dutch jeweler, in order to get rich, had to first pay a lot of money for a diamond, then work for a long time to cut it, and then sell the stone at a profit. The owner of a single tulip bulb could instantly become the owner of a new, unique variety that could be sold at the tulip market several times more expensive.

The tulip was good because its striped varieties ideally suited the needs of the most expensive segment of the market - such flowers were rare and sold at a very high price, while the bulk of cheap yellow, pink and red tulips satisfied the needs of middle-class buyers.

In 1612, the Florilegium catalog with drawings of 100 varieties of tulips was published in Amsterdam. Many European royal courts became interested in the new symbol of prosperity. Tulips jumped in price. In 1623, a bulb of the rare Semper Augustus variety, which was in great demand, cost 1,000 florins, and at the height of the tulip boom in 1634-1636, up to 4,600 florins were paid for it. For comparison: a pig cost 30 florins, a cow - about 100.

Where can I get money to start my own business? This is the problem faced by 95% of new entrepreneurs! In the article, we have revealed the most relevant ways of obtaining start-up capital for an entrepreneur. We also recommend that you carefully study the results of our experiment in exchange earnings:

The third reason for the tulip boom was the plague of 1633-1635. Due to the high mortality, there was a shortage of workers and, accordingly, wages increased. The simple Dutch had money, and, looking at the tulip madness of the rich, they began to invest in their own tulip business.

Finally, tulips are seasonal plants. Before the tulip boom, they were traded from May (when the flower bulbs were dug up) to October (when they were planted and the tulip bloomed the following spring). But since demand catastrophically exceeded supply, seedling sales began in the dead winter season for tulip dealers. Of course, there was a risk for the buyer, but the seedlings cost less. Taking a risk and buying future tulips in November or December, in the spring it was possible to sell them for an order of magnitude or even several orders of magnitude more expensive. And from here it is only one step to "futures" transactions, and this step was immediately taken. At the end of 1635, tulips became "paper": a large share of their "harvest" in 1636 was sold under "future" contracts.

Tulips were regularly traded on the Amsterdam Stock Exchange. And in the provinces - in Rotterdam, Haarlem, Leiden, Alkmaar and Horn - improvised tulip exchanges - colleges were created in taverns. They were engaged in, in fact, the same as on the main Amsterdam stock exchange - speculation in "paper" tulips. A special ritual of securities trading was even developed. For example, a potential buyer was forbidden to name his price, he could only hint that he would not mind buying this contract. After that, one of the sellers got up from the table and the two of them retired to the back room of the tavern. If they did not agree, then upon returning to the common room, they paid a small amount to everyone else as compensation for disrupting a possible deal. But the auction did not stop, and the new couple retired to a separate room. And the compensation was immediately spent on drinks for all the respectable brokers, so the trades must have been fun. If the deal was concluded, then upon returning from the office, the seller and the buyer put up a magarych for everyone present and, as usual, splashed beer and vodka on everyone.

In 1636, tulips became the subject of a great stock market game. Speculators have appeared who are not afraid to buy up "paper" flowers during the summer in order to sell them even more expensive next spring before the start of the season. A contemporary described the scenario of such transactions as follows: “A nobleman buys tulips from a chimney sweep for 2,000 florins and immediately sells them to a peasant, while neither a nobleman, nor a chimney sweep, nor a peasant has tulip bulbs and does not seek to have them. This is how more tulips are bought and sold than the land of Holland can grow.

To attract poor people, sellers began to take small advances in cash, and the property of the buyer went as collateral. For example, the cost of a Viceroy tulip bulb was "2 loads (2.25 cubic meters) of wheat, 4 loads of rye, 4 fat cows, 8 fat pigs, 12 fat sheep, 2 furs of wine, 4 barrels of beer, 2 barrels of butter, 1000 pounds of cheese, a bed, a wardrobe with clothes and a silver goblet ”- all goodness for 2500 florins. The artist Jan van Goyen paid the burgomaster of The Hague an advance of 1900 florins for ten bulbs, offered a painting by Solomon van Ruysdael as a pledge of the rest of the amount, and also undertook to paint his own.

And here is another legend. Haarlem tulip merchants heard about a Hague shoemaker who allegedly managed to breed a black tulip. A deputation from Haarlem visited the shoemaker and bought all the bulbs from him for 1,500 florins. After that, right before the eyes of an amateur tulip grower, the Harlem people rushed to furiously trample the bulbs and calmed down, only turning them into porridge. They were afraid that an unprecedented black tulip would undermine their well-established business. The shoemaker could not bear the abuse of flowers, fell ill and died.

The first bell rang at the end of 1636, when tulip growers and city magistrates finally noticed that the trade was mainly in "paper" tulips. With a sharp increase in the number of players on the tulip exchange, prices began to jump in both directions faster than real demand went down or up. Only experts could understand the intricacies of the market. They advised at the beginning of 1637 to reduce purchases. On February 2, the purchases actually stopped, everyone was selling. Prices began to fall catastrophically. Both the poor and the rich were ruined.

The main dealers made a desperate attempt to salvage the situation by organizing mock auctions. Buyers began to break contracts for the flowers of the summer season of 1637, and on February 24 the main tulip growers gathered in Amsterdam for an emergency meeting. They developed the following scenario for overcoming the crisis. Contracts concluded before November 1636 were proposed to be considered valid, and buyers could terminate subsequent transactions unilaterally by paying a 10% compensation. However, the Supreme Court of the Netherlands, which considered tulip growers to be the main culprits in the mass ruin of Dutch citizens, vetoed this decision and offered its own version. Sellers, desperate to get money from buyers, were given the right to sell the goods to a third party for any price, and then demand the difference from the one with whom the original agreement was concluded. But no one else wanted to buy.

The government realized that no specific category of citizens could be blamed for the tulip madness. Everyone was to blame. Special commissions worked throughout the country to resolve disputes over tulip deals. As a result, most of the sellers agreed to receive 5 florins out of every 100 that were due to them under the contracts.

The three-year stagnation in other, "non-tulip" areas of the Dutch economy cost the country dearly. Some later even considered that it was during the period of tulip madness that the main competitor - England - managed to intercept many of the original Dutch markets abroad. Like it or not, the shock that Holland experienced in the 17th century is quite comparable to the default of 1998. However, the end of this story is still good: the mechanisms of futures trading work properly all over the world, and Holland is still considered the country of tulips, and the scale of the Dutch flower business can only be envied.

Source book “The world's biggest scams. The Art of Deception and Deception as Art"

Tulip mania- a short-term surge in the rush demand for tulip bulbs in the Netherlands in 1636-1637.

Prices for tulips of rare variegated varieties reached a thousand guilders per bulb as early as the 1620s, but until the mid-1630s, such bulbs were resold in a narrow circle of flower growers and wealthy connoisseurs. In the summer of 1636, unprofessional speculators entered the lucrative futures trade in tulips. For six months of rush trading, prices for bulbs of rare varieties increased many times over, and in November 1636 a speculative price increase began for simple, affordable varieties. In February 1637, the overheated market collapsed, and many years of litigation began between sellers and buyers of unsecured tulip contracts. A crisis of confidence arose in the circle of participants in tulip mania, and an atmosphere of rejection of gambling stock games was established in society for a long time. Moral contemporaries unanimously condemned tulip mania as an extreme manifestation of unrestrained money-grubbing.

Already in the 1650s, the legend of rampant tulip speculation turned into a myth that has little to do with history. Tulip mania is the first stock market bubble in the history of modern times, a full-scale economic crisis that undermined the economy of the Netherlands for a long time. The tulip industry continued to develop and eventually became an important branch of the national economy. Various explanations of what happened coexist in science; it is impossible to restore the real causes, scope and consequences of tulip mania in a consistent way due to the scarcity and incompleteness of genuine historical evidence. Researchers agree only that in the winter of 1636-1637 something extraordinary happened in Holland, which had no analogues in history before.

The first tulips of Holland

Tulips from the early 17th century

In the middle of the 16th century, the tulip entered Western Europe from Iran and the Ottoman Empire. In the spring of 1559, the first tulip known in Western European history bloomed in Augsburg; in 1562 merchants brought tulip bulbs to Antwerp for the first time. Thanks to the work and authority of Charles Clusius, European monarchs got acquainted with the novelty; the tulip became the favorite flower of the French and German aristocracy for a long time. By the end of the century, it was grown throughout central and northern Europe. The best conditions for this culture have developed in the Rhine basin: in the east of France, in the north-west of Germany and in the Netherlands; The light seaside soils of North Holland are especially well suited for tulips. In this "melting pot", during the centuries-old hybridization of about fourteen natural species and an unknown number of Turkish varieties, a new, man-made type of tulip has developed - Gesner's tulip, or simply a garden tulip.

At the end of the 16th century, the center of the tulip industry was based in the north-east of France; bulbs from French gardens were willingly bought by wealthy clients from England, the Netherlands and the German principalities. It was in France that the first hype in European history took place in the price of tulips, of which only anecdotal evidence has survived: in 1608, a miller exchanged his mill for a single bulb; grooms considered such bulbs an enviable dowry. The Dutch became seriously interested in tulips only at the beginning of the 17th century. Probably the reason for this was the Dutch Revolution, during which the national aristocracy was drained of blood. The golden age of Holland had already begun, the country was getting richer, but there were very few really rich people who were able and willing to pay for an expensive hobby. Communities of Dutch amateur flower growers and bulb speculators have not yet formed; in their place were scattered and distrustful groups of people. The upper circle was formed by a few wealthy connoisseurs, much lower on the social ladder were gardeners and pharmacists; even lower were wandering predators - rhizotoms (from Greek: "cutting roots"), combing the gardens of France in search of rare bulbs.

Haarlem in 1656 (north - left). To the right (south) of the city wall is a concentration of small tulip farms and the beginning of the Wagenweg highway

By the beginning of the 17th century, Dutch gardeners had mastered the agricultural technique of tulips; in the second decade of the 17th century, the cultivation of tulips and the trade in their bulbs turned into a full-fledged profitable trade. The oldest tulip farms are located along the Wagenweg highway near Haarlem, following Haarlem, tulips began to be grown in other cities. In 1610, the Dutch began exporting rare bulbs to the southern Netherlands, the German principalities and France, where in 1610-1615 there was a fashion for decorating women's necklines with live tulips. German aristocrats paid generously, but unstable - due to wars and uprisings that regularly broke out. For the same reason, thousands of refugees of all classes moved to the Netherlands every year, and among them - wealthy connoisseurs of tulips. With them, precious bulbs of the Flanders and French selection came into the country, which served as reliable "traveler's checks" for immigrants. The number and variety of cultivated plants has increased; during the 1620s, the tulip went from a rarity to an expensive, but still affordable, middle-class, popular product. Earlier, amateur flower growers exchanged bulbs, in the 1620s they began to buy them. With the end of the economic depression of the 1620s and the beginning of the "Golden Twenty", a stable domestic market for tulips arose in the country.

Tulips of simple, common varieties were relatively inexpensive: two hundred bulbs sent as a gift to the Turkish Sultan in 1612 were valued at only 57 guilders. The greatest profit was brought by the newest varieties that had not yet had time to multiply, so gardeners took up hybridization and selection of tulips, and merchants promoted new products to wealthy clients.

Discovery of variegated varieties

Variegated tulips from the 1630s. Left - ‘Semper Augustus’

In 1580, Karl Clusius (one of the most important European botanists of the 16th century) first observed the phenomenon of viral variegation of tulips. Every year, one or two out of a hundred bulbs are "reborn": the colors of their petals, before that the usual two-color ones, are mixed in a bizarre pattern. Some of these plants turned out to be unviable, others took on ugly forms.

The strongest gave birth to flowers of unprecedented beauty according to the concepts of that time, variegated tulips weakened by viruses multiplied much more slowly, and therefore remained a rarity that was desired and inaccessible to most for a long time.

Flower growers, trying to unravel the causes of variegation, set up a lot of experiments, but the mechanism for transmitting variegation remained a mystery; it was only clear that its manifestation could be accelerated by planting variegated tulips next to simple ones. But the main way to create new variegated forms was the laying of more and more fields of simple tulips, counting on an accidental "rebirth" and a considerable income. Floriculture turned into a game of chance, which anyone could start with a piece of land and a few ordinary bulbs. By 1633, about 500 forms of tulips were bred in the Netherlands. The nomenclature of variegated cultivars developed rapidly and erratically; with the light hand of the Kennemerland headman, the most exquisite variegated tulips began to be called "admirals", with the addition of the name of the breeder or seller.

The most famous variegated variety, the personification of tulip mania, was the red and white ‘Semper Augustus’ (“August forever”). The first ‘Semper Augustus’ was bred in France; in 1614 the owner sold it for next to nothing to Holland. Ten years later there were about a dozen 'Semper Augustus' bulbs in Holland; they all belonged to some amateur connoisseur. In 1623 he was offered twenty thousand guilders for a dozen bulbs, in 1624 three thousand guilders for one; every time the owner refused. In the only authentically known transaction, an onion with two children was sold for a thousand guilders. The search for ‘Semper Augustus’ in its supposed homeland ended unsuccessfully, none of the varieties of the Dutch selection managed to push the original.

Players

Merchant and tulip fan. Painting-caricature of the middle of the XVII century

One thousand guilders, which was allegedly offered in the 1620s for one bulb, was 10.28 kg of silver or 856 g of gold. The income of a skilled craftsman then did not exceed three hundred guilders a year. A middle-class merchant earned from one to three thousand guilders a year, and only a few of the most successful entrepreneurs had an income of more than ten thousand guilders. In the 21st century, the tulip is an ordinary plant, and at the same time one of the symbols of the Netherlands, but the Dutch of the 16th-17th centuries treated the tulip differently. A whimsical and changeable flower from the far East was a symbol of novelty, unpredictability, it aroused admiration and a desire to possess it. A similar attitude is recorded in both French and English sources, but only in Holland did rare tulips take the place of the highest value in the public mind, along with gold and precious stones. At the same time, the tulip, unlike the stone, could be propagated; he was not only a treasure, but also a profitable investment.

For an enlightened European, a rare tulip was akin to a work of art; he occupied a unique niche. The circle of connoisseurs of tulips and the circle of art patrons overlapped in many ways; the same customers purchased from the same intermediaries paintings by great masters, antique statues and rare bulbs. Of the 21 participants in the first tulip auction, of which detailed records have been preserved (1625), only five dealt with tulips professionally, while 14 buyers were known as collectors of paintings.

By the 1630s, the circle of people who were able to pay for an expensive hobby had noticeably expanded, but it was not massive: in Haarlem, the tulip capital of Europe, 285 famous people by name participated in tulip mania; in Amsterdam only 60, in Enkhuizen 25. All of them were wealthy people, experienced in commercial affairs. There were no nobles, lackeys, or legendary chimney sweeps among them: the people on this list are the owners of prosperous enterprises. There were no representatives of the ruling oligarchy among them. Middle-class flower growers, on the contrary, actively promoted their hobby and willingly bought and sold bulbs. One of them, the surgeon immortalized by Rembrandt, even adopted the surname tulpa(Dutch tulip) and decorated the house with a “tulip” coat of arms of his own design.

Dr. Nicholas Tulp. Fragment of a 1632 painting by Rembrandt

Passion for tulips usually united not just people of the same circle, but people who knew each other well - close and distant relatives, residents of the same street, parishioners of the same church. Society as a whole was divided into tightly knit clans, workshops, religious communities, and the result of this structure was an unusually high level of trust within the networks of tulip lovers. The comradely, trusting atmosphere gave false confidence in their own knowledge and skills, and at the same time subordinated their will to rumors and other people's opinions. The Dutchman could not trust competitors from another city, but the opinion of neighbors and drinking companions was the highest authority for him.

Those who ask a rhetorical question - “how did the rational and thrifty Dutch suddenly become obsessed with tulip speculation?”- involuntarily ascribe to the people of the 17th century the stereotypes of the behavior of the Victorian era. The Dutch of the 1630s, who fought with Spain for independence and religious freedom for half a century, bore little resemblance to the bourgeoisie of the 19th century. Indeed, the Dutch of all classes had a passion for saving and accumulating wealth: even poor artisans annually set aside several tens of guilders. Wealthy depositors of the Amsterdam Bank for five years, 1633-1638, increased the volume of deposits in gold and silver by 60%. Thrift was combined with the general passion of the Dutch for gambling. The Dutch society was young not only historically, but also physically: its demographic structure was dominated by young people - the children and grandchildren of the founders of the state and numerous immigrants. Thousands of Dutch traveled overseas every year, and wealthy merchants financed colonial campaigns and risky projects to drain the polders. The country was experiencing twenty years of unprecedented economic growth, but the life of each of the Dutch, as in the Middle Ages, was under threat. In 1623-1625, the Netherlands experienced a plague; in 1635 the plague returned along with the German troops. In that year, a third of the population died in Leiden, and in Haarlem, plague deaths peaked in the autumn of 1636. The coincidence of the epidemic and tulip mania in time is not accidental: war and plague, the feeling of imminent death, accustomed the Dutch to risk and lifted the last moral prohibitions that kept them from reckless speculation.

Windhandel - trade in air

"Flora's Chariot". An allegorical painting by Gendrik Pot, circa 1640, is a popular lubok plot ridiculing simpleton speculators. The cart with the goddess of flowers and her idle companions rolls downhill into the depths of the sea. Artisans wander behind her, abandoning their tools in pursuit of easy money.

The first signs of tulip mania appeared in 1633 in West Friesland, away from the tulip farms of Haarlem and the big money of Amsterdam. In the summer of 1633, the price of tulips rose so much that one of the inhabitants of the city of Horne exchanged his stone house for three bulbs; after that, a local farmer exchanged his farm for bulbs. The value of real estate in each transaction was at least five hundred guilders. Earlier, the Dutch bought bulbs for money; in 1633 the bulbs themselves became money. Perhaps the market was warmed up by external demand in April 1632 in the German lands there was a temporary lull, and the German aristocrats began to again buy luxury goods from the Dutch. Perhaps the excitement was warmed up by gardeners-breeders, who released a lot of new products on the market in 1634. Prices for the former favorites of the market have decreased, and with them the threshold for entering the market for new participants has also decreased. The number of bidders grew rapidly, and within two years there was a qualitative change in the tulip business.

The most important innovation of 1634-1635 was the transition from cash transactions to futures trading. In the conditions of the Netherlands, tulips bloom in spring; in early summer, the faded bulb lays the bulbs of a new generation and dies. Young bulbs are dug up in the middle of summer and planted in a new place in late autumn. The buyer can purchase young bulbs from July to October; It is impossible to dig up and replant already rooted bulbs. In order to get around the restrictions imposed by nature, in the fall of 1634, Dutch gardeners began trading in bulbs. in the ground- with the obligation to transfer the dug out bulbs to the buyer next summer. The following season, in the autumn of 1635, the Dutch switched from dealing with bulbs to dealing with contracts for bulbs. Speculators resold each other receipts for the delivery of the same bulbs; in the words of a contemporary, “merchants sold bulbs that did not belong to them to buyers who had neither the money nor the desire to grow tulips”. In conditions of constant price growth, each transaction brought a considerable profit to the seller of the receipt. These profits could be realized next summer, provided that the resold bulb survived and did not regenerate, and that all participants in the chain of transactions fulfilled their obligations. Transactions were secured by notarization, the guarantee of respected citizens (Dutch borgen). The main protection against non-fulfillment of the transaction was, first of all, the business ethics of the "families" and the atmosphere of intolerance to fraud.

The Dutch called such speculation windhandel, "air trade".

In December 1634, a transition was recorded from trading in whole bulbs to trading in aces - conventional units of bulb weight. At first, flower growers used pricing in aces to fix the benefit from the annual growth of the bulb (there is a case when a valuable bulb increased five times over the season). By the autumn of 1635, almost all transactions were tied to the weight of the bulb, and then the conventional unit began an independent life. Transactions “for a thousand aces” of a small child appeared, transactions with shares of an onion denominated in aces, and similar derivative instruments. Sometimes the tulip contracts were essentially insurance deals, sometimes they were cover for ordinary bets (for example, in September 1635, two professional florists made a deal to sell a bulb worth 850 guilders with a deferred payment of six months, provided that during this time the Dutch army will be able to recapture the Shekenshants fortress from the Spaniards).

In the summer of 1636, the old system of trading through flower growers and respectable amateurs was supplemented by "people's" auctions, which attracted new participants to speculation. In Haarlem, Leiden and about a dozen other cities, “colleges” were organized - clubs of local tulip lovers; their spontaneous organization parodied the structure of the Amsterdam Stock Exchange. The first colleges operated under the roof of parish churches; then tulipomaniacs firmly settled in taverns and taverns, in the suburbs of Haarlem and in brothels. The boards met two or three times a week. At the beginning of the tulip mania, each "session" took an hour or two; in the winter of 1636-1637, the boards met almost around the clock. Wealthy amateurs rarely appeared in colleges; the basis of the public was the local poor, who sought to join the supposedly profitable game in the company of experienced speculators. Rare, expensive bulbs were too expensive for them - in colleges they traded mostly ordinary, inexpensive varieties. It was around them that in the winter of 1636-1637 unjustified excitement unfolded. Trades were conducted on the model of "exchange" auctions; according to the results of each transaction, the buyers paid the seller symbolic “money for wine” (no more than three guilders), and the sellers paid the buyers a “premium”, the amount of which was the subject of the auction. All actions in the colleges were accompanied by copious libations, "the madness of the crowd" in fact was the result of the constant intoxication of tulip lovers. No one was interested in either the solvency of buyers or the ability of sellers to deliver the goods: there was an open, unsecured and unregulated "trade in air" here.

hype

Dynamics of the index of futures (green) and option (red) prices for bulbs in 1635-1637 according to Thomson

All researchers of tulip mania note the paucity of surviving archival data on bulb prices before the hype of 1636-1637 and after the collapse of tulip mania. For example, out of about 400 prices summarized in Maurice van der Veen (2012), only 20 are from before November 1636, and 7 from the second half of 1637 and 1638. The incompleteness of the data allows for various interpretations of the events immediately preceding the peak of tulip mania, but this peak itself is documented in great detail and has clear time limits. Tulip mania in the narrow sense began in the first week of November 1636 and ended in a crash in the first week of February 1637. During the previous two years, from 1634 to the end of October 1636, bulb prices had risen evenly: for example, one ace of the 'Gouda' variety in December 1634 cost 1.35 guilders, in the winter of 1635-1636 2.1 guilders, and in May 1636 it rose to 3.75 guilders. According to economist Earl Thomson, the price index almost tripled in two years - from 22 to 61.

In the first days of November 1636, prices fell seven times. According to Thomson, the market reacted with a collapse to the news of the battle of Wittstock: with the return of hostilities and peasant uprisings to Thuringia and the West German principalities, the Dutch lost a lucrative market. German aristocrats urgently sold their not yet rooted bulbs, the supply of rare tulips in Holland suddenly increased. A new, low price level for real bulbs has fixed fundamental changes in the market; the subsequent boom in prices for unsecured tulip contracts was the product of a purely speculative game. Beginning speculators who resold contracts to each other expected to profit from rising prices; flower growers and wealthy amateurs who owned real bulbs and knew their real price expected to earn, if not by selling bulbs, then by compensation from unlucky buyers. According to Thomson, chains of futures contracts have become unrelated options. The release rate for such options was not set by law, and the buyers of tulip options assumed that they were not risking anything. There was nothing to hold back the rise in prices for contracts.

In mid-November prices soared again. By November 25, they exceeded the October maximum, in December they doubled. By Christmas, the price index was almost 18 times the November low and continued to rise throughout January 1637. It happened that the same bulb was resold ten times during the "trading session", and each transaction brought the seller a considerable paper profit. Only in Holland, according to Mike Dash, at least three thousand people participated in the auction, and in all the United Provinces - at least five thousand; local boards of speculators appeared in Utrecht, Groningen and in the cities of northern France. Rare varieties and their imitations-paragons rose so much that they were beyond the reach of most tulip lovers - then the boards focused on the trade in "garbage" varieties. A pound of inexpensive, common variety Switzer, which cost 60 guilders in the fall, and 125 guilders in December, rose to 1,500 guilders by the beginning of February. A strange and intolerable situation developed on the market: transactions with real bulbs growing in the ground were carried out at the low prices established in early November, and in colleges speculators resold unsecured contracts to each other for twenty times more. In a society frightened by an epidemic of the plague, there was confidence that the bubble was about to burst; the number of optimistic buyers has declined. The Haarlem tulip lovers were the first to sound the alarm: on Tuesday, February 3, another auction for the sale of "garbage" bulbs failed in the Harlem College. Only one of the bidders agreed to buy, at prices 15-35% lower than the prices of previous auctions. Speculators were confused, and the next day, February 4, trading in Haarlem ceased completely. It took several days for the terrible news to spread across the country, so trading continued on February 4 in The Hague, on February 5 in Alkmaar, and on February 6 in Amsterdam.

The culmination of tulip mania was an auction held on February 5 in Alkmaar, just twenty miles from Haarlem. A collection of bulbs was put up for auction, collected by Wouter Winkel, who died in the spring of 1636, a local innkeeper, amateur flower grower and extremely successful speculator. In July 1636, the seven children of the deceased, placed in an orphanage, managed to secretly dig up precious bulbs. In December, these bulbs, carefully weighed and described under the supervision of a board of trustees, were planted in the ground and waited for their new owners; in contrast to purely speculative transactions with option receipts, the Alkmaar auction sold live, cash goods. The highly publicized auction attracted dozens of the most experienced and wealthy connoisseurs; without waiting for the opening of the auction, one of them bought 21,000 guilders worth of tulips from the orphans, including the only bulb of "Admiral Enkhuzen" for 5,200 guilders. At the auction itself, prices reached 4200 guilders per bulb, and in total the orphans gained more than 90 thousand guilders, which in the 2010s is equivalent to about 6 million pounds sterling. The results of the auction, immediately replicated in a printed pamphlet, stunned connoisseurs; the sensation was not the absolute amount, but the increase in prices recorded at the auction. The rarest "Admiral Lifkens", which in the summer cost 6 guilders per ace, went under the hammer at a price of more than 17 guilders, prices for less valuable varieties tripled over the same period. Two days after the Alkmaar auction, the markets of all the cities of Holland collapsed completely and irrevocably; The orphans never saw their money.

Pay

"Allegory of Tulip Mania". Painting by Brueghel the Younger on a popular print, circa 1640

A twenty-fold drop in prices in February 1637 brought buyers of tulip contracts to the brink of ruin. They did not want to pay the sellers, and often could not, but the refusal to fulfill obligations in the then Netherlands with their "families", communities and workshops was impossible. Failure to fulfill an obligation bordered on a crime, bankruptcy forever made the Dutchman an outcast. At first, buyers and sellers tried, in private, to reach an agreement and terminate the onerous contracts with the payment of compensation - but only a few managed to disperse peacefully. The most active, well-organized party in February were professional florists: already on February 7, deputies from the provinces of Holland and Utrecht agreed to hold a congress. Two weeks later, a farmer's convention resolved to seek a statutory minimum of 10% release for transactions entered into after November 30, 1636. The earlier deals, the flower growers insisted, were to remain in place. Most growers signed forward contracts for the sale of bulbs as early as October-November; the fate of numerous intermediaries who resold bulbs to each other, they were not interested.

City magistrates were in no hurry to make a decision. The officials involved in the speculation hoped to resolve the conflict to their own advantage, but the conflict turned out to be too complex and large-scale. In Haarlem, where tensions were particularly acute, the city council ruled in March in favor of contract buyers, in April in favor of sellers, and then reversed all rulings and requested assistance from the Estates General. The uncertainty has exacerbated the panic among tulip lovers, and has played into the hands of their many opponents. Pamphlets, proclamations and caricatures were printed and distributed throughout the country, vilifying the "mad" speculators. The search for those responsible for the disaster began; Calvinist agitators openly pointed to a conspiracy of Jews, Mennonites and bankrupts (in the Netherlands the latter lived in the position of untouchables). The prudent doctor Tulp permanently removed the coat of arms with the image of three tulips from the facade of the house. Things did not come to witch hunts and pogroms: the parliamentarians, acting on the recommendations of the supreme judges, made a decision already on April 27, 1637. All tulip contracts, regardless of the date of signing, have been temporarily suspended; the supreme power washed its hands, entrusting the final decision to the city magistrates. The regents of Amsterdam have decided that the contracts remain in force, and the flower growers and tulip lovers retain the right to litigation; Haarlem, Alkmaar and all other cities in the Netherlands have declared tulip contracts invalid.

"Flora's jester's cap". A popular lubok plot, thanks to which the nickname "caps" stuck behind the tulip lovers

A simple decision that forced creditors and debtors to deal with each other privately deepened the crisis of confidence and forever destroyed the atmosphere of trust in the Dutch communities: creditors harassed debtors, and debtors refused to pay and no longer considered such a refusal to be something extraordinary. The intolerance of the “zero option” was first recognized in Haarlem: in January 1638, the first Flower Arbitration Court in the Netherlands (CBS for short) was launched here. The main task of the four CBS mediators was not to establish the truth, but to reconcile the townspeople by forcing them to negotiate. In May 1638, Haarlem worked out a standard recipe for settling the dispute: if the seller insisted on repaying the debt, the debtor-buyer was released from any obligations after paying the seller 3.5% of the contract price. These conditions were not beneficial to either flower growers or debtors-tulip lovers; it was easier for the disputants to disperse peacefully than to seek a formal CBS verdict. Acting according to this scheme, the Haarlem mediators settled all conflicts in their city by January 1639. Tulip mania is officially over, at least in Haarlem; in The Hague and Amsterdam, creditors persecuted tulip debtors in the 1640s. Economist Alexander Del Mar believed that the end of tulip mania came in 1648, with the conclusion of the Peace of Westphalia. Under the terms of the treaty, the Netherlands stopped the free minting of coins, the flow of silver into the country decreased, and only then did the Dutch have to tighten their belts and give up expensive hobbies.

In popular and economic literature, the opinion was established that most tulip lovers went bankrupt, and "the country's commerce was in a state of deep shock, from which it recovered only many years later". In the 21st century, this opinion is echoed by the influential economist Burton Malkiel: “this crazy story ended with the shock of the rise and fall of tulip prices leading Holland into a prolonged depression that spared no one.” In reality, no economic crisis, "shock", or even mild recession occurred; The "Golden Twenty" continued. The tulip industry involved negligible resources of society, so even the complete death of the Dutch floriculture and the ruin of all tulip lovers would not undermine economic growth. This did not happen, no evidence of ruin due to tulips has been preserved in the archives. In Amsterdam, the number of personal bankruptcies doubled in 1637 compared to 1635, but out of hundreds of bankrupts known by name, only two or three people speculated in tulips. On the contrary, it is known from land records that dozens of prominent tulip lovers bought up real estate in 1637-1638 and clearly had no problems with cash. The most famous "tulip mania bankrupt" is the artist Jan van Goyen, who had the misfortune to buy a tulip contract on February 4, 1637 - but in fact, van Goyen went bankrupt not on tulips, but on land speculation.

Jan van Goyen- portrait by Gerard Terborch

Long-term consequences

The market for rare tulips recovered from the disaster in two years; already in the summer of 1637, real transaction prices approached a thousand guilders per bulb. Probably, then the prices continued their gradual decline. The meager data of the early 1640s indicate that by this time the prices of rare tulips were about six times lower than the prices of 1636-1637 and amounted to one or two hundred guilders per bulb. Following the decline in prices and profits, the number of tulip farms also gradually decreased. By the middle of the 17th century, the entire tulip industry in Holland was concentrated within the city limits of Haarlem; about a dozen surviving farms shared the national market and controlled the export of tulips until the start of the Napoleonic wars. Dutch floriculture in the 18th century served as a model for the French and English; an internship in Holland was considered the key to success in floriculture. The memory of the excitement of 1636-1637 became the best advertisement for the Haarlem flower growers and helped them to keep their leadership in the cultivation and selection of tulips - as it turned out, forever. In the 19th century, the city economy could no longer cope with the growing demand, and the Haarlemites planted the first tulip fields on the drained polders of the Haarlemmermeer, which soon became one of the symbols of Holland. When these lands were fully occupied, Haarlem firms established plantations in Hillegom and Liss, and in the 20th century tulip production covered the whole of North Holland. In the 21st century, the Netherlands produces more than four billion tulip bulbs annually and controls 92% of the world trade in them.

The "heroes" of tulip mania, rare variegated varieties, died out a long time ago. Of all the variegated varieties listed in 1637, only ‘Zommerschoon’ has survived to this day. The legendary ‘Semper Augustus’ fell out of fashion by 1665 not only in Holland, but even in England. A hundred years after the tulip mania, ten bulbs of ‘Semper Augustus’ were worth one guilder; in the middle of the 18th century, mention of the variety ceased forever. The old favorites were replaced by new variegated varieties that cost up to four hundred guilders per bulb, and then they fell out of fashion, fell in price, and fell victim to the virus. After the Second World War, variegated tulips - breeding grounds for the disease - were expelled from commercial farms; by 2013, not a single "Rembrandt" remained on the Royal Association's variety register. The variegation of varieties cultivated in the 21st century is not due to a virus, but to artificially induced mutations.

flower booms

Flower "manias" flared up from time to time in the 18th and even in the 20th century. In 1703, with the coming to power of Ahmed III, the "age of tulips" began in the Ottoman Empire. The new sultan, himself a connoisseur and lover of tulips, awakened a new wave of tulip mania in Istanbul society. Taking into account the experience of Holland, Ahmed did not allow open speculation: first he limited the number of flower growers who had the right to trade in bulbs in Istanbul, then he limited the price of bulbs and banned the trade in tulips in the provinces. After the deposition of Ahmed in 1730, the hobby quickly faded away, many varieties of breeding from the beginning of the 18th century perished in desolation. Around the same years, "mania" returned to the Netherlands: hyacinth fever began here. The Dutch, so indifferent to terry hyacinths, suddenly became interested in them. In the 1720s, prices for new varieties of hyacinths rose steadily but slowly. In the 1730s, a rush demand began, which flower growers could not satisfy (hyacinth grows and multiplies much more slowly than a tulip). Exactly one hundred years after the tulip mania, in 1736-1737, hyacinth prices peaked at a thousand guilders per bulb and then collapsed. By 1739, prices for rare hyacinths had fallen 10-20 times. No futures and options were used this time, and the total number of hyacinth speculators was small, so the market crash in 1737 passed without consequences, and the 1736-1737 fever itself was quickly forgotten.

Another century later, in 1838, dahlia fever broke out in France; at the peak of the excitement, a “flower bed” (a conventional unit of small-scale wholesale trade) of dahlia tubers cost up to seventy thousand francs. In 1912, a short-lived excitement around the newest varieties of gladioli began in the Netherlands, interrupted by the outbreak of the First World War. The latest flower "mania" occurred in China in the 1980s around lycoris radiata, or spider lily, a common ornamental plant that was widely cultivated in Manchuria both during the empire and under the communists. By 1982, bulbs of rare, newer varieties cost up to one hundred yuan (about US$20); in 1985, prices peaked at 200,000 yuan per bulb, about three hundred years' wages for a skilled Chinese. In the summer of 1985, the black market for bulbs collapsed, prices fell by about a hundred times.

The legend of tulip mania

Title page of The First Conversation between Warmondt and Gargudt. 1734 edition issued at the height of the hyacinth fever

In 1637 a Haarlem publisher published a pamphlet, The Conversation of Warmondt and Gargudt; in the same year, 1637, the first "Conversation" was followed by a second and a third. "Conversations" - the only thing historical evidence detailing the structure of the boards, the "technology" of speculation, and the development of events after the February crash. It is to them that all studies of tulip mania go back, from the chronicle of the 17th century to the works of the 21st century. There are quite a lot of documents of the 17th century about the cultivation of tulips and their trade, but almost all of them either have no direct relation to tulip mania, or do not confirm it in any way. Only about fifty handwritten, hand-illustrated albums and catalogs of tulips have survived, but the prices are indicated in only a few of them, how real or inflated they are - it is not known. The same uncertainty accompanies other documents that fixed prices for rare bulbs - bills of sale, auction reports, court and inheritance cases. According to historians of the 21st century, "Conversations" present the facts reliably and accurately, but certainly biased. This is not a manual on stock trading, but an open sermon against games. The uncritical attitude of later authors to the polemical mood of Roman contributed to the fact that an actually false legend about tulipomania was fixed in literature and folk tradition.

By the middle of the 17th century, the legend of the collapse of 1637 had become a myth and overgrown with fables. In the 1660s, Aitzema reproduced a critical exposition of the Roman in his six-volume chronicle, in the 1670s his own critical description of tulip mania was published by Abraham Mounting, the son of a Dutchman who lost his fortune in tulip speculation. In 1797, Johann Beckmann's narrative was published and then repeatedly reprinted - a compilation of "Conversations" and numerous historical anecdotes of the 17th-18th centuries. It was Beckman who “introduced” the story of a sailor who ate a precious onion, mistaking it for an ordinary onion, he also owns the words: “Finally, the onion burst like a soap bubble.” Beckman's argument that no one in their right mind would ever agree to pay hundreds and thousands of gold pieces for "useless rhizomes" long defined the perception of tulip mania as an irrational mass insanity that ended in a devastating crisis. In 1841, Beckmann's interpretation of events was finally consolidated by Charles Mackay's The Most Common Delusions and Madness of the Crowd.

During the years of the Great Depression, McKay's book became popular in the United States thanks to the work of Bernard Baruch. In the preface to the 1932 reprint, Baruch wrote that it was McKeve's description of tulip mania that helped him save his fortune: he managed to get out of the stock market before the crash of 1929. In the 1930s, the McKee myth became firmly established in the everyday life of politicians and journalists; since then, in the English-speaking world, not a single economic shock, large or small, is complete without a mention of tulip mania. The "detailed descriptions" of tulip mania in popular literature have taken on an exaggerated, implausible air: in 1997, for example, Management Today columnist Rymer Rigby seriously argued that “By 1630, the once bustling, businesslike, world-famous Dutch economy was completely dependent on tulips…every free square inch of land was devoted to their cultivation…”.

In serious economic works of the first half of the 20th century, the Mackeve myth was almost never used. The situation changed in 1957, when Paul Samuelson introduced into the lexicon of economists the concept of "the tulip mania phenomenon" - a market condition in which prices and costs of sellers can rise indefinitely, and can collapse at any unknown moment in time. In the 1960s, tulip mania was fixed for a long time in the language of academic economics as a full-fledged economic term. In the first edition of the Palgrave New Economic Dictionary (1987), one of the authors of the theory of sunspots, Guillermo Calvo, defined tulip mania as “a state [of the market] in which the behavior of the prices of certain goods cannot be fully explained by fundamental economic factors” (in the economy of the 21st century, this formula - one of the definitions of a financial bubble). However, this approach was by no means universal: in the same 1987, Charles Kindleberger in his “Financial History of Western Europe” believed that any speculative crisis was necessarily preceded by an abnormal expansion of the money supply, and in the 17th century, in the absence of a banking system, it was impossible. . The Kindleberger critic, libertarian Douglas French, believes that the money supply of the Netherlands expanded rapidly even without bank credit, due to income in gold and silver from colonial trade and piracy, i.e. tulip mania was a spin-off of the economic policies of the United Provinces, which encouraged the influx of wealth into the country.

Latest Research

The revision of the McKean myth began in 1989 with an article by Peter Garber in the Chicago Journal of Political Economy. After examining the sources available to Beckman and McKay, he came to the conclusion that the canonical description of tulip mania is nothing more than a legend generated by the propaganda of the 17th century. The driving force behind this legend was the desire of the Dutch business elite to cut off the flow of investment in the shadow and speculative sectors of the economy. Emotional claims about exorbitant prices for "useless rhizomes," Garber argued, could not replace the scientific fundamental analysis of the markets of the 17th century, and his predecessors neglected such analysis. Summarizing archival data on the prices of tulips, Garber argued that the surge in prices for rare varieties in the 1630s was not an irrational anomaly. Only the drunken frenzy of non-professional speculators of "garbage goods" in the collegiums was abnormal. In the market for rare tulips, prices reflected the expectations of competent sellers and buyers, and followed the usual model of the life cycle of a new product. Tulip mania, according to Garber, was neither a "mania", nor a "bubble", nor a "crisis"; it did not influence the development of the country and could not do it.

In 2006, Californian economist Earl Thomson (1938-2010) put forward an alternative explanation for tulip mania. He believed that the main reason for the rise in prices was an implicit change in the rules of the game in the market - the transition from conventional forward transactions to risk-free options. Thomson's main conclusion was consistent with Garber's: tulipmania is "a remarkable example of efficient market pricing in which option prices roughly match the expectations of knowledgeable sellers." Thomson's work has also been heavily criticized from various quarters.

In historical science, the revision of the Mackeve legend was consolidated by Ann Goldgar's "Tulip Mania" published in 2007 - a convincing work based on a mass of new archival materials. Goldgar not only outlined the sequence of events, cleared of later distortions, but also tried to clarify the place of floriculture in the life of the Dutch of the 17th century, and the reasons that such a phenomenon left such a long and incorrect memory of itself. The main motive and conclusion of the book - tulip mania was a sharp shock, unexpected for contemporaries, of the ethical foundations of society. Its collapse did not directly damage the country's economy, but forever changed the Dutch business climate. Tulip mania is still mentioned both as a symbol of the economic crisis, and as an example of "delusions and madness of the crowd", including top-ranking financiers. For example, former Dutch finance minister and central bank chairman Nut Wellink, speaking out in a 2013 denunciation of cryptocurrencies, said that “Bitcoin is worse than tulip mania. Then, at least, you got tulips for your money…”.

Chart of the cost of Bitcoin to USD from the site:

When economists are faced with the phenomena of financial panic or financial collapse, they immediately think of such a phenomenon as tulip mania. In fact, the concept of "tulip mania" is a metaphor used in the field of economics. Looking into Palgrave's Dictionary of Economic Terms, there is no mention of the speculative mania of the seventeenth century in Holland. Instead, the economist Guillermo Calvo, in his Dictionary Supplement, defines tulip mania as follows: Tulip mania is a phenomenon in which price behavior cannot be fully explained by economic fundamentals.

The purpose of this work is to identify the features of the emergence of the first financial crisis in Europe and its consequences.

Many researchers agree that events occur in a certain cycle and that they can be repeated from time to time. In this regard, we can say that the study of the historical facts of financial crises gives us the opportunity to avoid the mistakes of past generations.

According to Karl Marx, Holland at the beginning of the 17th century could be considered an ideal capitalist country. Almost immediately, foreign and colonial trade became the basis of its economic base. The Dutch industry also received a strong impetus at this time. The key to success is considered to be the political system of the Netherlands, which guaranteed the big bourgeoisie, which seized all the finances and trade in the country, unlimited domination.

The "Tulip" epic rightfully bears the title of the very first speculative race in the world, which ended in failure for the entire country, which was leading at that time in economic terms. The excitement and crazy demand for tulips began in the Netherlands in the early 1620s and did not stop until the 37th year. The peak of prices was recorded in a three-year period: from 1634 to 1637.

One of the foreigners intrigued by tulips was Ogier Ghislain de Busbeck, the Austrian ambassador to Turkey (1555-1562). He brought some bulbs from Constantinople to Vienna, where they were planted in the gardens of Ferdinand I, the Habsburg emperor. There the tulips blossomed under the expert supervision of Charles de Lecluse, a French botanist better known by his Latin name Carl Clusius.

The tulip was a status symbol. He testified to belonging to the upper strata of society. Beautiful flowers of one color or another grew from the bulbs, and after a few years it suddenly changed: stripes appeared on the petals, each time of different shades. It was only in 1928 that it was established that the discoloration of the flower is a disease of a viral nature (mosaic), which, in the end, leads to the degeneration of the variety. But at the end of the 17th century, it seemed like a miracle, the petals received an unusual and brighter color. These flowers were a symbol of luxury and their presence in the Dutch garden testified to the high status of the owners in society.

The reason for the frenzied demand for tulip bulbs can be considered the publication in 1612 in the Dutch catalog Florilegium of almost 100 varieties of this flower. Over time, some European royal courts became interested in this new symbol of prosperity. As a result, a sharp increase in the price of it began. Realizing that you can make good money on tulips, almost all segments of the population began to engage in this business. The fever was explained by the expectation that soon more and more people would become interested in this flower, and the prices for it would increase more than once.

Foreign capital begins to rapidly import into Holland, the value of real estate grows, and the demand for luxury goods increases. People who had not previously thought about trade began to take an active interest in it and even mortgaged their houses, lands, and jewelry to buy as many tulip bulbs as possible in the hope of earning as much money as possible later.

Before this "flower" fever began, tulips were traded from May, when they were dug up, until October, when they had to be planted in the ground. The following spring, the flowers were already delighting their owners. During the boom, the winter trade in seedlings became widespread. Most merchants, despite all the risk, tried to buy tulips in winter: in this case, in the spring they could be sold at two or even three times the price! By the end of 1636, the lion's share of the annual crop turned into "paper", sold under "future" contracts. As a result, speculators began to appear on the markets, trying to buy as many "paper" tulips as possible at the beginning of summer, hoping to resell them next spring at an even higher price.

Prices for tulip bulbs have been on the rise. But on February 2, 1637, the market overheated - prices reached such heights that demand fell sharply. The indebted and impoverished Dutch had a lot of tulip bulbs left - but there was no one to sell them. Of course, those who were lucky enough to be the first to sell the bulbs became rich in no time. Those who were not so lucky lost everything. In that year, the price of bulbs fell 100 times. This collapse in prices also hit the entire Dutch tulip industry. The tulip crisis was the cause of the subsequent financial crisis in Holland, it turned out that the entire economy of the country was focused on tulips. Affected citizens began to blame the provoking tulip crisis on the government, which adopted a series of amendments to the laws on the trade in tulips, limiting stock speculation. It is clear that the Dutch government only "closed the hole" that allowed tulip prices to skyrocket. Not everyone understood that the sooner the bubble of tulip mania burst, the easier the consequences would be.

The main dealers were desperately trying to save the day by organizing mock auctions. Buyers began to break contracts for the flowers of the summer season of 1637, and on February 24 the main tulip growers gathered in Amsterdam for an emergency meeting. The developed scenario for overcoming the crisis was as follows: contracts concluded before November 1636 were proposed to be considered valid, and buyers could terminate subsequent transactions unilaterally by paying a 10% compensation. But the Supreme Court of the Netherlands, which considered manufacturers to be the main culprits in the mass ruin of Dutch citizens, vetoed this decision and offered its own version. Sellers, desperate to get money from their buyers, received the right to sell the goods to a third party at any price, and then claim the lost difference from the one with whom the original agreement was concluded. But no one wanted to buy anymore….. The government understood that one certain category of its citizens could not be blamed for this hysteria. Everyone was to blame. Special commissions were sent around the country to sort out disputes over "tulip" deals. As a result, most of the sellers agreed to receive 5 florins out of every 100 that were due to them under the contracts.

A three-year stagnation in the "non-tulip" areas of the Dutch economy: shipbuilding, agriculture, fishing - cost the country dearly. The scale of the shock that the Netherlands suffered in the 17th century is commensurate with the default of August 1998. Subsequent wars brought the country to a desperate state, hastening the decline of Dutch trading power.

The passion for tulips survived the effects of tulip mania and the tulip bulb industry flourished again. Indeed, by the 18th century, Dutch tulips had become so famous that the Turkish Sultan Ahmed III imported thousands of tulips from Holland. So after a long journey, the Dutch descendant of Turkish tulips returned to their "roots".

Tulip mania is still insufficiently studied and has not been the subject of careful scientific analysis. For the first time, the phenomenon of tulip mania became widely known in 1841 after the publication of the book The Most Common Delusions and Folly of the Crowd, written by the English journalist Charles Mackay, and the novel The Black Tulip by Alexandre Dumas (1850).

In its development, the economy goes through stages of ups and downs, determined by the general laws of its development. Therefore, the development of the economic system is considered as a cyclical process. The Tulip Crisis, in turn, is an important step in this cyclical process. The paper reveals the features of the emergence of the first financial crisis in Europe, and it can be concluded that everything in life returns, and everything that seems new, in fact, has already happened.

You need to know what history and experience around the world says, and use this knowledge for the benefit of the prosperity of the country's financial life.

Literature:

1. McKay C. The most common misconceptions and madness of the crowd / M .: Alpina Business Books, 1998. – 318s

2. Bernstein P. L. Against the gods: The taming of risk / Per. from English. - M.: CJSC "Olimp-Business", 2000. - 400 s

3. Douglas French "The Truth About Tulip Mania" [article], 2007 Available at: http://mises.org/

Perkov G.A.

Kramarenko A.A.

Donetsk National University

The second half of the 20th century was marked by large financial bubbles. People made money out of thin air, the financial bubble swelled ... and then burst. The same thing happened with Dutch tulips, only in the 17th century.

Now Holland is called the country of tulips, but they did not always grow here. Botanist Carl Clusius brought tulips to the Netherlands. He bought them for his collection in Constantinople and planted them in a small garden, hoping to explore their medicinal properties.

But the outstanding properties of the new colors were different - decorative. Soon Dutch tulips turned into an attribute of wealth. The price of ordinary bulbs was expensive, and rare bulbs were astronomically expensive. A bulb of the Viceroy cultivar sold for 2,500 gold florins (about $1,250 in modern currency), while a bulb of the rarer Semper Augustus cultivar sold for 5,000.

Let's learn more about tulip fever...

The real homeland of tulips is not Holland, as is commonly believed, but Central Asia. To this day, in the valleys of the Tien Shan, in the fields of China, Kyrgyzstan, Mongolia and Altai, you can see wild tulips. And Kazakhstan is one of the key areas for the distribution of these flowers in the world. Out of more than 100 species of tulips, 38 grow there in their original form. The most beautiful sight that I have seen in my life is the May steppe on the border of Kazakhstan and Kyrgyzstan, all covered with scarlet flowers.

Of course, the ancient steppe dwellers did not plant flower beds and flower beds - this was very difficult with a nomadic lifestyle. But they admired the spring steppes, completely covered with scarlet flowers, and composed songs and legends. It was said that the first tulip grew on the blood of the last dragon. The old people claimed that a delicate flower grows from the body of a warrior who died in battle. How many scarlet tulips are in the steppe, so many fighters laid down their lives on this field.

For the first time, wild tulips brought from the steppe regions began to be cultivated in Ancient Persia. The cruel and ferocious King Cambyses was very fond of roses, but he also grew other flowers in his garden, including tulips. Although the main work was done by slave gardeners, the king himself did not disdain to take care of the plants.

Cambyses, famous for his ferocity, was kind to the flowers, and gardeners who made the slightest mistake were punished with a painful execution.

Now it is difficult to establish which species were the ancestors of the first garden plants, but, according to many scientists, these were the wild-growing tulips of Gesner and Schrenk, growing in the foothills of the Zailiysky Alatau.

The Turks were very fond of tulips, and their rulers planted real carpets of fresh flowers in their gardens. There was even a special minister for tulips at court.

At the time of night feasts in the open air, tortoises with lighted candles attached to the shell were released into the vast flower beds. The will-o'-the-wisps among the beautiful flowers were magnificent.

The Turks called tulips "lale" and often called their daughters this name too. Lale is still the most popular female name in Turkey.

In the middle of the 16th century, the envoy of the Austrian emperor in Turkey, Ollie de Busbecome, sent a large batch of bulbs and tulip seeds to Vienna. The director of the Vienna Garden of Medicinal Plants was the professor of botany Charles de Lecluse, who, according to the customs of that time, signed the Latin name Carolus Clusius. He immediately and forever fell in love with exotic flowers and disinterestedly sent tulip seeds and bulbs to all his friends and acquaintances.

But soon his patron, Emperor Maximilian II, an esthete and lover of flowers, died unexpectedly, and the zealous Catholic Rudolph II, who was not interested in botany and did not tolerate Protestants at his court, ascended the throne.

Clusius went to Holland to the University of Leiden, where he had long been lured to the post of director of the botanical garden. Under his leadership, the garden became the best in Europe. Many exotic plants and flowers grew there, and, of course, Clusius's favorites were tulips.

The Dutch, looking at the curiosity, offered Klezius big money for the bulbs of these unprecedented flowers - but he did not want to "share experience" with new compatriots. The Dutch, after unsuccessful attempts to resolve the matter peacefully, in the end, on a dark night, simply stole the bulbs. Several years have passed, and tulips are slowly beginning to spread throughout the provinces.

The tulip, rather than any other flower, was the subject of a huge speculation that bankrupted one of the most economically developed countries in Europe, and for another reason. Like most other ornamental plants, the tulip came to Europe from the Middle East, it was brought from Turkey in the middle of the 16th century. But the tulip had one interesting feature. Beautiful flowers of one color or another grew from its bulbs, and after a few years it suddenly changed: stripes appeared on the petals, each time of different shades. It is now known that this is the result of a viral disease of tulips. But then it looked like a miracle. If a diamond merchant had to buy a new diamond for a lot of money and cut it in a new way, then the owner of a single tulip bulb could become the owner of a new, unique variety that cost several orders of magnitude more on the tulip market.

The tulip was good because its striped varieties ideally suited the needs of the upper end of the market - such flowers were rare and sold at a very high price, while the bulk of the usual yellow, pink and red tulips sated at moderate prices a much larger market for the middle class. .

In 1612, the Florilegium catalog with drawings of 100 varieties of tulips was published in Amsterdam. Many European royal courts became interested in the new symbol of prosperity. Tulips jumped in price. In 1623, a bulb of the rare Semper Augustus variety, which is in great demand, cost a thousand florins, and at the height of the tulip boom in 1634-1636, up to 4,600 florins were paid for it. For comparison, a pig cost 30 florins and a cow 100 florins.

The second reason for the tulip boom was the plague of 1633-1635. Plague then called any serious epidemic, which could be, and most often was, an epidemic of cholera. But be that as it may, due to the high mortality in the Netherlands, there were not enough workers and, accordingly, wages increased. Ordinary Dutch people had extra money, and, looking at the tulip madness of the rich, they began to invest in their own tulip business.

However, tulips are seasonal plants. Before the tulip boom, their trade was limited to the period from May, when the flower bulbs were dug up, until October, when they were planted and the tulip bloomed the following spring. But the wild demand for flowers existed all year round! This state of affairs did not suit the "tulip brokers" who lost profits during the dead season. And then transactions for tulips began to be concluded in the form of contracts for the next year's harvest. Of course, there was a risk for the buyer, but the price was correspondingly lower. That is, if you take a chance and buy future tulips in November or December, then in the spring they could be sold an order of magnitude or even several orders of magnitude more expensive. And from here there is only one step for real futures transactions, and this step was immediately taken. At the end of 1635, tulips became "paper": a large proportion of their "harvest" in 1936 took the form of futures contracts. What happened next is probably already clear. Speculation began in contracts, as in any other securities.

Tulips were regularly traded on the Amsterdam Stock Exchange. In Rotterdam, Haarlem, Leiden, Alkmaar and Horn, impromptu tulip exchanges called colleges gathered in taverns. They were engaged in, in fact, the same as on the main Amsterdam stock exchange, that is, speculation in "paper" tulips.

In 1636, tulips became the subject of a great stock market game. There were speculators who risked buying up "paper" flowers during the summer in order to sell them even more expensive the next spring before the start of the season. A special ritual was even developed for trading securities on boards. For example, a potential buyer was forbidden to name his price, he could only hint that he would not mind buying this contract.

After that, one of the vendors got up from the table, and the two of them retired to the back room of the tavern. If they did not agree, then upon returning to the common room, they paid a small amount to everyone else as compensation for disrupting a possible deal. But the auction did not stop, and already a new couple was removed to a separate room. And the "compensation" of failed partners was immediately spent on drinks for all respectable brokers, so the auction, one must think, was fun. If the deal was concluded, then upon returning from the office, the seller and the buyer put up a magarych for everyone present and, as usual, splashed beer and vodka on everyone. A contemporary described the scenario of such transactions as follows: “A nobleman buys tulips from a chimney sweep for 2,000 florins and immediately sells them to a peasant, while neither a nobleman, nor a chimney sweep, nor a peasant has tulip bulbs and does not seek to have them. And so they buy, sell, promise more tulips than the land of Holland can grow them.

A list of goods that one Dutchman offered to another in exchange for a tulip bulb has survived to this day. It included: a bed, a full set of clothes and a thousand pounds of cheese. At the end of the tulip fever, prices soared so high that no one dared to plant the bulbs anymore - they were stored like gold nuggets.

By the winter of 1636, tulip mania had reached its peak. Bulbs increased in price tenfold - they were given as dowries to brides, exchanged for houses and paintings. There is a known case when a whole brewery was paid for a bulb of a rare variety of tulip. People went crazy - they mortgaged their houses, and with the proceeds they bought bulbs, hoping to sell them even more expensive. Some bulbs did not have time to dig out of the ground - and they already changed a dozen or two owners.

Prices have skyrocketed. Tulip bulbs Admiral de Maan, which cost 15 florins apiece, were sold two years later for 175 florins. The price of the Centen variety jumped from 40 florins to 350 florins, for one Admiral Liefkin bulb they paid 4400 florins. The documented record was a deal of 100,000 florins for 40 tulip bulbs. To attract poor people, sellers began to take small advances in cash, with the buyer's property as collateral for the rest of the amount. For example, the cost of a Viceroy tulip bulb was "2 loads (2.25 cubic meters) of wheat, 4 loads of rye, 4 fat cows, 8 fat pigs, 12 fat sheep, 2 furs of wine, 4 barrels of beer, 2 barrels of butter, 1000 pounds of cheese, a bed, a wardrobe with clothes and a silver goblet ”- all good for 2500 florins. The artist Jan van Goyen paid the burgomaster of The Hague an advance of 1900 florins for ten bulbs, offered a painting by Solomon van Ruysdael as a pledge of the rest of the amount, and also undertook to paint his own.

Another apocryphal story is about how the Haarlem tulip merchants heard about the Hague shoemaker who managed to breed a black tulip. A deputation from Haarlem visited a shoemaker and bought all the black tulip bulbs from him for 1,500 florins. After that, right before the eyes of the amateur tulip grower, the Haarlemites rushed to furiously trample the bulbs and calmed down, only turning them into mush. They were afraid that an unprecedented black tulip would undermine their well-established business. But the shoemaker could not bear the barbarity, took to his bed and died.

The first bell rang at the end of 1636, when tulip growers and city magistrates finally saw that the trade was mainly in "paper" tulips. With a sharp increase in the number of players on the tulip exchange, prices began to jump in both directions faster than real demand went down or up. Only experts could understand the intricacies of the market. They advised at the beginning of 1637 to reduce purchases. On February 2, the purchases actually stopped, everyone was selling. Prices fell catastrophically. Both the poor and the rich were ruined.

The main dealers made a desperate attempt to salvage the situation by staging mock auctions for the public. Buyers began to cancel contracts for the flowers of the summer season of 1637, and on February 24 representatives of the main centers for growing tulips gathered in Amsterdam for an emergency meeting. They proposed the following scenario for overcoming the crisis. Contracts concluded before November 1636 are considered valid, and those transactions that were after, the buyer has the right to terminate unilaterally by paying a 10% compensation. However, the Supreme Court of the Netherlands, which considered tulip growers to be the main culprits in the mass ruin of Dutch citizens, vetoed this decision and offered its own version. Sellers, desperate to get money from their buyers, received the right to sell the goods to a third party at any price, and then claim the lost difference from the one with whom the original agreement was concluded. But no one else wanted to buy.

The terrible news spread throughout the city, and after some time throughout the country. A wave of suicides swept across the country.

The government realized that one cannot blame any particular category of its citizens for the tulip madness. Everyone was to blame. Special commissions were sent around the country to resolve disputes over tulip deals. As a result, most of the sellers agreed to receive 5 florins out of every 100 that were due to them under the contracts.

The three-year stagnation in other, "non-tulip" areas of the Dutch economy cost the country dearly. Some later even considered that it was during the period of tulip madness that England's main competitor managed to intercept many of the original Dutch markets abroad. "Tulip fever" lasted from 1625 to 1637, and as quickly as it began, it subsided just as quickly: the market was oversaturated with flowers. Buyers no longer wanted to shell out thousands for Princess Smile, Black Devil, Shirley, Fancy Friels, Angelica, or Garden Party. Prices for bulbs fell, families went bankrupt, people, as if waking up, began to return to their former daily activities, although there were almost no cases left: many found themselves without workshops, without tools. The only thing on the farm was that a bag of strong small onions ...

You can understand the Dutch and their obsession with flowers. After all, those tulips were insanely beautiful, much more beautiful than the current ones. And, paradoxically, the main reason for the magnificence of the flowers was that they were sick - affected by the flower mosaic virus. Because of it, white or yellow stripes appeared on the petals of flowers mixed with touches of different shades of pink or red.

The variegated color of the petals is very decorative, and such tulips were valued more than plain ones. But a virus is a virus. Affected plants develop poorly, produce fewer offspring and bloom later. And although they do not die, they are less viable - they can grow only in greenhouse conditions. Breeders realized that a surge of fresh "blood" was needed - wild, primitively powerful, natural. But where to get such "savages" - in Turkey and Persia, tulips also became cultivated and lost their primitive strength.

And in the middle of the 19th century, articles and monographs of the Russian traveler Alexander Shrenk appeared, who explored vast areas of Central Kazakhstan and Semirechye. They described that in the distant Kyrgyz-Kaisak steppes and at the foot of the mountains a huge number of wild tulips grow. No one breeds them, no one cares for them, they grow on their own and every spring they literally cover the entire steppe with a scarlet carpet.

In those days, the Swiss Eduard Regel was in charge of the St. Petersburg Botanical Garden. His son Albert was sent as a county doctor to Ghulja. Returning to St. Petersburg, he told his botanist dad about the unknown flora of Kazakhstan and Semirechye. Senior Regel began to beat out money from the treasury for a scientific expedition. As today, the then officials paid the least attention to science, and even more so to botany.

However, Regel still managed to win the favor of influential people, and Albert's expedition set off.
The results exceeded all expectations. Albert collected collections of flora, consisting of dried plants, bulbs, seeds, and sent them by courier to St. Petersburg, where his father meticulously described and identified plants, among which there were a lot of species hitherto unknown to science, including nine species of wild tulips. One of the species was named after the younger Regel - tulip Albert, the other - in honor of the pioneer Alexander Schrenk, and most of the species had to be given the names of benefactors-officials - Kolpakovsky, Greig, Kaufman.

Thanks to the Regel family, the species of Kazakh tulips came to Holland, England, France, Germany and America, where they attracted the attention of breeders, becoming the progenitors of most modern varieties. 75% of all garden Dutch tulips are descendants of Greig and Kaufmann tulips.

Tulips are saviors

During World War II, when a famine broke out due to the blockade, the Dutch had to eat tulip bulbs. They are tough, tasteless, low-calorie, but nevertheless saved many civilians from starvation.

In general, tulips should be planted and grown: in gardens, front gardens, flower beds, greenhouses. And yet these beautiful and delicate flowers should be given to women - wives, beloved friends, mothers, sisters, all women without exception. Because both are beautiful.

P.S. By the way, the bright and varied colors of tulips are the result of a special virus that infects the bulb and decorates the flower in different shades. The tulip is naturally red in life. any other color is a viral disease. people have learned to use it. etc. .

sources

http://www.irinaepifan.narod.ru/tulip.html

http://www.historyhouse.com/in_history/tulip/

http://tainy.info/history/tyulpanovaya-lixoradka/

Let me remind you something else interesting about plants: for example, and here. And here is the amazing The original article is on the website InfoGlaz.rf Link to the article from which this copy is made -

Ponzi schemes, from which many Russians suffered at the end of the last - beginning of this century, are far from a new phenomenon. One of the first such pyramids arose in the distant 16th century and led to the ruin of an entire country - Holland.

In 1593, Carolus Clusius, director of the medicinal herb garden of Emperor Maximilian II, planted several tulip bulbs in the soil of the botanical garden of the University of Leiden. The following year, flowers appeared that determined the whole future fate of Holland.

Like most other ornamental plants, the tulip came to Europe from the Middle East. But the tulip had one interesting feature. Beautiful flowers of one color or another grew from its bulbs, and after a few years it suddenly changed: stripes appeared on the petals, each time of different shades. It is now known that this is the result of a viral disease of tulips. But then it looked like a miracle. If a diamond merchant had to buy a new diamond for a lot of money and cut it in a new way, then the owner of a single tulip bulb could become the owner of a new, unique variety that cost several orders of magnitude more on the tulip market.

In 1612, the Florilegium catalog with drawings of 100 varieties of tulips was published in Amsterdam. For example, the bulb of the tulip shown in the picture cost, depending on the size, from 3,000 to 4,200 florins.
Many European royal courts became interested in the new symbol of prosperity. Tulips jumped in price. In 1623, a bulb of the rare Semper Augustus variety, which is in great demand, cost a thousand florins, and at the height of the tulip boom in 1634-1636, up to 4,600 florins were paid for it. For comparison, a pig cost 30 florins and a cow 100 florins.
The second reason for the tulip boom was the cholera epidemic of 1633-1635. Due to the high death rate in the Netherlands, there were not enough workers, so wages increased. Ordinary Dutch people had extra money, and, looking at the tulip madness of the rich, they began to invest in their own tulip business.

Clusius literally infected the Dutch with his passion for tulips. Insanity began in the country, complete madness, later called "tulip mania" by historians. For more than 20 years, the Dutch have managed to grow dozens of varieties of tulips.
In 1625, a bulb of a rare variety of tulip could already cost 2,000 gold florins. Their trading was organized on the exchanges of Amsterdam, Rotterdam, Haarlem and Leiden. The volume of the tulip exchange reached an astronomical sum of 40 million florins.
By 1635, the price had risen to 5500 gold per bulb, and by the beginning of 1637 the price of tulips had increased 25 times. One bulb was given as a dowry to a bride, three were worth as much as a good house, and just one Tulip Brasserie bulb was given away for a thriving brewery. Bulb sellers made a lot of money. All conversations and transactions revolved around a single subject - onions.

For example, a bulb of a red tulip with white veins cost 10,000 florins, and Rembrandt was paid 1,800 for his painting The Night Watch, which made him very happy.
The documented record was a deal of 100,000 florins for 40 tulip bulbs. To attract poor people, sellers began to take small advances in cash, with the buyer's property as collateral for the rest of the amount. For example, the cost of a Viceroy tulip bulb was "2 loads (2.25 cubic meters) of wheat, 4 loads of rye, 4 fat cows, 8 fat pigs, 12 fat sheep, 2 furs of wine, 4 barrels of beer, 2 barrels of butter, 1000 pounds of cheese, a bed, a wardrobe and a silver goblet" - 2,500 florins worth of everything. The artist Jan van Goyen paid the burgomaster of The Hague an advance of 1900 florins for ten bulbs, offered a painting by Solomon van Ruysdael as a pledge of the rest of the amount, and also undertook to paint his own.

Tulip fever has given rise to legends. One of them is about how a port tramp, seeing a ship entering the harbor, rushed to the office of its owner. The merchant, delighted with the news of the return of the long-awaited ship, chose the fattest herring from the barrel and rewarded the beggar with it. And he, seeing on the desk an onion that looked like peeled onions, decided that herring was good, but herring with onions was even better, put the onion in his pocket and departed in an unknown direction. A few minutes later, the merchant missed the tulip bulb Semper Augustus ("Eternal August"), for which he paid 3,000 florins. When the tramp was found, he had already finished eating herring with "onions". The poor guy went to jail for embezzlement of private property on an especially large scale.
Another apocrypha is about how the Haarlem tulip merchants heard about the Hague shoemaker who managed to breed a black tulip. A deputation from Haarlem visited a shoemaker and bought all the black tulip bulbs from him for 1,500 florins. After that, right in front of the amateur tulip grower, the Harlem people rushed to furiously trample the bulbs and calmed down, only turning them into mush. They were afraid that an unprecedented black tulip would undermine their well-established business. But the shoemaker could not bear the barbarity, took to his bed and died.

Many Dutch people quit their jobs and constantly gambled on the tulip exchange. In order to buy bulbs and resell them at a higher price, houses and businesses were mortgaged. Sales and resales were made many times, while the bulbs were not even taken out of the ground. Wealth doubled in an instant, the poor became rich, the rich became super-rich. The first financial pyramid began to be built, which even Mavrodi would envy. The tulip mafia has appeared, stealing bulbs.

And on Tuesday, February 3, 1637, Holland ended. And unexpectedly and for unknown reasons. The auction began with the sale of bulbs of the inexpensive White Crown variety at a price of 1,250 florins per lot. Yesterday there were many who wanted to buy this lot for a much higher price, but today there were no buyers at all.
The sellers realized that all the bulbs should be sold immediately, but there was no one. The terrible news spread throughout the city, and after some time throughout the country. Prices didn't just go down - the tulip exchange ceased to exist at once. Prices for bulbs fell by an average of one hundred times. Tens of thousands of people went bankrupt and became poor in a matter of hours. A wave of suicides swept across the country.

Many farms went under the hammer. Many poor people have become even poorer. And Holland suffered for a long time from the consequences of the speculative fever. Dealers from London and Paris, where she managed to transfer, also suffered. Tulips from "securities" again turned into just flowers, an object of delight for the eyes of passers-by and guests.