When you’re in the market to sell something, the value you personally place on your item has no rendering on whether or not it sells. It all depends on the items perceived value in the eyes of your prospective buyers. It’s hard to believe that in the late 16th century, one of the most sought after items was something as simple as a tulip.
Looking back today, its hard to wonder why tulips could have caused such an uprising. But if you think about it, in 200 years, will we be doing the same? Will we be looking back and wondering why Pokemon cards or Beanie Babies were so popular in their short runs of childhood must haves? Will our great great grandchildren look back at us and laugh, wondering why we wasted our lives away checking our “Tweets” and updating our “Facebook” accounts.
But that’s neither here nor there. It all started in 1593, when a botanist from Constantinople brought tulips to Holland and planted them in his local garden. He refused to sell any to the locals as they were deemed strictly for medical research. Outraged, a couple of local “entrepreneurs” broke into his garden and stole some of the bulbs, eminently starting the “Dutch Tulip Trade.” Based simply off of its sheer beauty, the demand for the bulb skyrocketed. Subsequently, so did its price.
Over the next half century or so, the sheer volume of items bartered, just to be in possession of something as elementary as a tulip bulb, was outrageous. A contemporary author by the name of Munting documents one such trade as follows.
One Viceroy tulip was notably traded for:
- Two lasts of wheat
- Four lasts of rye
- Four fat oxen
- Eight fat swine
- Twelve fat sheep
- Two Hogsheads of wine [commonly, a hogshead = 63 gals.]
- Four tuns of beer [commonly, a tun = 252 gals.]
- One thousand lbs. of cheese
- A complete bed
- A suit of clothes
- A silver drinking-cup
Eventually, the tulip trade died down and I guess you could say the people of Holland came to their senses. The market shows no signs of rebounding to the once astronomical prices of the tulip and to this day, the Dutch remain one of the worlds largest exporters of the item. It just shows that no matter how short the time frame, or how illogical people can sometimes be, beauty is clearly in the eye of the beholder.
It reminds me of many market bubbles. The tech bubble. The real estate bubble. Will gold be the next bubble? It has all of the makings. Is the bond bubble bursting before our eyes? It also has many of the makings of a bubble bursting at the seams.
History tends to repeat itself. Let’s not forget about bubbles of the past, and learn from the Dutch as they sacrificed vast fortunes (of that day) for something as trite as a tulip.
