Tulipomania: How a Flower was Worth a Fortune and a Scottish Songwriter Made a 17th Century Dutch Fad Famous

  A large mob has gathered on the streets of Amsterdam.  Standing at the center of the swelling, slowly moving crowd with his legs and wrists in shackles is a bookish rather mild looking middle-aged amateur botanist from London.

A wealthy merchant who has been intermittently jostling and shoving the unfortunate shackled Englishman shouts out to the crowd, “He cut my Admiral van der Eyck!  Death to this devil!”

Once the crowd hears what this amateur botanist has actually done their shouts reach a feverish blood-thirsty pitch.

“Death to the Englishman,” they chant.  “Death!  Death!”

The Admiral van der Eyck that the Englishman has cut is a flower.  It is a specific kind of tulip bulb, that at this moment in the winter of 1636 in Holland is worth a small fortune.  In December of 1636 Admiral van der Eyck tulips were selling in Dutch cities for 5,000 florins apiece, or twice the yearly salary of an average Dutch laborer.

This is the height of the Dutch tulip craze of the 1630’s.  And this hapless amateur botanist from England had simply been visiting a conservatory in Amsterdam and had been captivated by the strange and colorful tulip bulbs he saw and had decided to slice off a small piece of one to take back with him to his home country for further study.

Immediately he was placed under arrest and dragged off in shackles to face the magistrate where he was given a lengthy prison sentence that could only be commuted with the payment of a hefty fine equal in value to the price of the flower he had defiled.

In a similar situation, at about this same time during the height of the Dutch tulip craze, a sailor from Great Britain had seen a tulip on a nearby table at an inn while he was having breakfast.  The sailor mistakenly believed that this tulip was some type of exotic onion.  He took the tulip and slipped it into his pocket thinking that it might be something he could snack on later once he was aboard ship.

As he was leaving to board ship later in the day the tulip he had swiped and pocketed was discovered.  This sailor was placed in chains and dragged off to face the magistrate as well.

These stories of luckless Britishers being unjustly punished by zealous Dutchmen for crimes against tulips are from a work called Memoirs of Extraordinary Popular Delusions and the Madness of Crowds written by the prolific Scottish author and songwriter Charles Mackay in the year 1841.

In that work Mackay dubs what occurred in Holland during the 1630’s tulipomania and he reports these stories as representative of the crazed levels that Hollanders would go to during the years 1636 and 1637 to acquire and protect tulips.

The word tulip supposedly derives from a Turkish word meaning turban and is a reference to the flower’s distinctive bulblike shape.  Tulips first made their way to mainland Europe sometime in the middle of the sixteenth century and by the turn of the seventeenth century tulips were becoming highly sought after by many of Europe’s elite upper classes particularly in western Germany and in Holland.

Well-to-do Dutchmen began to pay small fortunes to export the precious flowers from Constantinople and speculative businessmen were not far behind in investing in tulips and in facilitating their transport.

The seventeenth century was a golden age for the Dutch.  Holland, at this time thanks to its large and far reaching trading ventures and mercantile economy,  was in the midst of an unprecedented economic boom.  Employment was high, the Dutch florin was literally worth its weight in gold, and the opportunities for Dutch economic expansion around the world seemed almost limitless.

It just so happened that in the 1630’s right when the Dutch Republic’s economy was at its peak, owning tulips in all types and in all colors, became all the rage in Dutch society.

Mackay reports that, “up until the year 1634 the tulip annually increased in reputation until it was deemed a proof of bad taste in any man of fortune to be without a collection of them.”

However, what makes the so-called “tulipomania” so interesting from an economic and sociological perspective is not the fact that people collected them, or sought to own them as a sort of status symbol, but it is the fact that people began to invest in tulips as a sort of commodity, or future, like a natural resource or precious metal.

This speculation in tulips occurred during the year 1636 because as the flower became ever more popular, prices increased at an exponential and inexplicable rate, causing more and more people to invest small fortunes, or their entire life savings in the purchase and trade of tulips thinking that, like gold or silver, surely tulips were now so valuable that their cost would never go down.

In 1636 demand for tulips was so high, and speculation so rampant, that stock markets dealing solely in different varieties of tulip bulbs were set up in Amsterdam, Rotterdam, Haarlem, Leyden and most other Dutch cities.

It seemed logical in 1636 for Hollanders to assume that a passion for tulips was here to stay, so to speak, and that it was only a matter of time before people from all over Europe would begin to pour money into Holland to acquire them from the country which had cornered the import/export market in tulips and which was now leaps and bounds ahead of every other nation on earth when it came to cultivating the flower.

Slowly, though, over the course of late 1636 and early 1637, it became apparent that the wealthy were no longer purchasing tulips to display them and cultivate them in their own private gardens, but rather, people were buying up tulips to quickly flip them for profit in a sort of seventeenth century version of day trading.

Confidence in the tulip itself as a stable long term investment among the middle classes was quickly shaken and the price of the bulbs began to drop precipitously.  As more and more of  Holland’s wealthy and affluent attempted to sell off their stockpiles of tulips, the prices of tulips dropped accordingly, until by the end of February 1637, the flowers now sold for a mere fraction of what they had been worth only six months before.

In an unprecedented move for the time, and because the sell off in tulips was so quick and so all-pervasive, the Dutch government intervened in the economic speculation to bail out middle class merchants and keep individuals and businesses that had to much capital locked up in tulips solvent with bailouts by buying out tulip futures for more than the market value.

The tulip craze of 1636 and 1637 is thought by many economists and historians to be one of the modern world’s first examples of an economic bubble and subsequent burst, which we today who have lived through the dotcom bubble of 1999/2000 and the real estate bubble and burst of 2008, know all too well.

But was it really an economic bubble and burst or was it something entirely different?

Charles Mackay, who popularized the economic bubble theory and coined the term “tulipomania” in his work Memoirs of Extraordinary Popular Delusions and the Madness of Crowds was a prolific and entertaining Scottish writer and poet of the mid nineteenth century.  He is actually best remembered as a songwriter having written the lyrics in 1846 for an immensely popular song called Cheer Boys Cheer and he also gained fame for an historical novel popularizing the story of William Fitz Osbert who was an advocate for the poor in 12th century England.

Scottish writer Charles Mackay

        Mackay’s work is filled with entertaining anecdotes and makes for very entertaining reading to this day, however, most of the sources his writing was based upon were poetic in nature and not meant to be taken literally when it came to recounting the supposed calamitous impact of tulipomania.  Instead many contemporary sources from the seventeenth century were more concerned with the moral and spiritual impact of the tulip craze than they were with any economic ramifications that it may have had.  Mackay, by viewing what had happened in the 1630’s through the economic lens of 1841, may have misplaced some of his judgements regarding the event which he dubbed “tulipomania”.

Simply put, most historians today would agree that when the tulip bubble of the seventeenth century burst, it in reality had little to no impact on the Dutch economy at the time.  Even without tulips employment in the Dutch Republic continued to remain high, the florin continued to be one of the world’s most prized currencies and trade and expansion remained robust.

However, what was most shocking to the citizens of Holland four-hundred years ago and what remains the most curious to us today, is the lengths to which people went to protect and acquire a simple flower that could be grown easily and in abundance, simply because it was the popular and trendy thing to do.

If anything, the Dutch tulip craze of 1636 and 1637 is the modern world’s first example of mass, frivolous consumerism gone out of control.  Tulipomania is a prime example of the idea of ‘keeping up with the Joneses’ running amok and nearly completely taking over an affluent and progressive society.

Today tulips remain an integral part of Dutch identity and are still closely associated with the nation of Holland, but never again would tulips reach the speculative values that they achieved in the 1630s.  Let’s hope that we can learn something from tulipomania and not let our desires for affluence and social acceptance runaway with our better judgements as a society and civilization.