- [Narrator] Amsterdam, Dutch Republic, the 1630s.
Here's how the story goes.
A sailor is doing some business with a merchant
and as they conclude their meeting,
the hospitable merchant rewards the sailor
for his good service
by giving him a fine red herring for breakfast.
But the sailor is disappointed.
A single herring doesn't really make a meal.
And spotting an onion on the table,
the sailor pockets it to have alongside the fish.
Technically stealing, of course,
but it's just an onion, right?
Then a while later,
as the sailor had just finished his pilfered breakfast,
the merchant finds him, backed by a mob.
After being seized, dragged through the streets,
and thrown in prison,
the confused sailor finally discovers
the source of his predicament.
See, the onion he stole and ate, wasn't an onion at all,
but a prized Semper Augustus tulip bulb,
valued at 3000 guilders.
Enough, the merchant says,
to feast the Prince of Orange and the entire court.
For the Netherlands, you see,
was in the grip of tulip mania.
(soft music)
Thanks so much to Curiosity Stream
for helping us pluck today's tale from history.
In the early 1600s, the Dutch Republic
was the most advanced economy in the world.
Newly independent from Spain and reaping the benefits
from the wildly successful Dutch East India Company,
they began an era of financial innovation,
creating formalized stock markets, business contracts,
investments and joint stock companies,
they positioned themselves at the cutting edge
of the financial world we know today.
And during this golden age,
Amsterdam exploded into a metropolis
made rich off the fruits of foreign trade,
backed by prudent investment.
Meaning, those living in the grand canal-side mansions,
were not aristocrats, but merchants, ship owners,
and heads of trading houses, but then the tulips came.
To summarize what happened,
let's turn to Charles Mackay's classic 1841 sociology text,
"Extraordinary Popular Delusions
and the Madness of Crowds,"
which I'm sure based on the title
is a very, very trustworthy source.
It states, in 1635 those eccentric Dutch upper classes
became fascinated by the tulip.
They loved and cherished them.
It was the fad to end all fads,
and everyone who was anyone had to own some.
These flowers, they realized, were nice flippin' tulips.
Especially prized, were the rare varieties;
the Viceroy, the Admiral of Admirals,
the Alexander the Great, and especially the Semper Augustus.
These were tulip strains with unusual designs
that changed with each flowering,
meaning each bulb was entirely unique
and unable to be replicated.
They really were for all intents and purposes,
non-fungible tulips,
and their prices rose higher and faster than the rest.
Seeing this, prudent investors realized
that tulips were appreciating in value
and decided to buy-in themselves.
After all, prices were going up fast,
and if you bought in and could find a buyer,
there was a neat financial turnaround
on these nice flippin' tulips.
Indeed, by 1636, the trade in tulips was so hot,
people decided they didn't even want to wait and see
what they were getting.
Okay, check this out.
When you bought a tulip in the standard way,
you often bought the flower whole
to transplant in your garden,
or you could buy the bulb of a tulip to replant,
which gave you a genetic copy of the flower that you saw.
But in that old fashioned way of thinking,
that meant that the trading season was confined
to the flowering season,
where you could see what kind of tulip you were buying.
But that changed when flower dealers
began offering contracts on tulips still in the ground
that would flower the next summer.
Now, people were not actually buying the tulips themselves,
rather buying a contract that allowed them to buy a tulip,
essentially, a futures market.
You could buy a piece of paper for 300 guilders,
guaranteeing you the option
of buying a specific tulip when it bloomed,
with the hopes that that tulip
would ultimately be worth more than that
and you could sell it for profit.
You were investing, essentially, in near future tulips.
But then people started trading the contracts
for near future tulips, and the market went out of control,
because you could turn a profit immediately,
provided you bought the contract,
then found someone to buy that contract off of you
for a higher price.
Some contracts changed hands that way 10 times a day,
with the price inflating with each exchange.
And it might have been all right
if new investors hadn't gotten involved
to make a quick buck.
As the price went up and up, everyone in the Netherlands
started throwing their money into tulips.
Carpenters took out loans on their tools to buy bulbs,
and chimney sweeps invested what little they had.
It became a financial run
where people snapped up every tulip available.
Those unable to purchase the most rare and expensive bulbs,
instead bought more common tulips in bulk,
glorying in the riches they would assuredly have
when they offloaded their baskets of full bulbs.
Absurdities became a daily occurrence.
A visiting English botanist, unaware of the craze,
cut open a bulb in order to demonstrate
a principle of his science, and was jailed.
Tulips began to sell for 5,000 guilders,
as much as a large well-appointed canal-side mansion,
when the yearly salary for a carpenter was 250 guilders.
A man even traded a profitable brewery
for a single Semper Augustus bulb.
These worthless flowers,
which no one really wanted except to sell,
had created the world's first financial bubble.
And when it burst in February, 1637,
it ruined some of the best merchants in the country,
and drove many into bankruptcy.
The economy entered a depression
and the canals of Amsterdam
were full of the pitiful splashes
of penniless businessmen committing suicide
by throwing themselves into the unforgiving waters.
This is the tulip mania as you see it in business articles,
textbooks, and even in the recent sequel to Wall Street.
And everything from the dot-com bubble
to the housing bubble, to Beanie Babies,
Pokemon cards, the rise of Bitcoin,
and yes of course, the scourge that is NFTs,
have been compared to the infamous time
Holland ruined itself over worthless flowers
except, and I hate to do this to you,
almost none of what we just recounted is accurate.
Exactly, yeah.
Turns out pop culture's whole understanding
of this event is also not fully true.
Oh, and those stories about the sailor
and the English botanist,
they're both likely total fabrications.
In the last decade, however,
historians have returned to the tulip mania
and begun to reevaluate what happened
and the lessons we should draw from it.
So here's what's true.
In the 1630s, the Netherlands was a financial powerhouse,
and it did have a brisk trade in tulips.
Some of those tulip prices,
such as those going for the value of a house,
are well documented and accurate.
It's even true that people traded futures contracts
for tulips, and there was, indeed,
a steep decline in value in 1637.
So tulip mania was a real,
often kind of hilarious thing that did happen.
It's just the details of the popular version of the story
are fundamentally wrong.
So we're going to spend this series
laying out how the myths formed, what really happened,
and what this historical tale can teach us.
According to recent scholarship,
like that of historian Anne Goldgar,
the tulip trade had a relatively
small number of participants.
It was nowhere near as fevered as it's often claimed,
and crucially, it didn't cause an economic depression.
In fact, Goldgar couldn't find records
of a single bankruptcy resulting from the tulip mania.
There's even a debate
over whether this famous first asset bubble
was really a bubble at all.
This is partially because financial bubbles happen
when an asset is overvalued,
since people are investing in order to make money,
rather than because they want the asset.
In other words, I don't necessarily want
this ugly picture of a monkey.
I just think I might be able to sell it
to some sucker later for more than I paid for it.
But here's the thing,
people in the 17th century Netherlands,
really, really wanted tulips.
A rare tulip was a status symbol
that marked you out as educated, wealthy,
and of discerning taste.
People had their portraits painted, holding prized tulips,
and displayed them in their gardens
in front of those canal-side mansions,
the ones they weren't committing suicide out of.
They wanted them because tulips were beautiful,
extremely collectible and difficult for people to grow,
meaning they were rare in the classic sense of the word,
not in some sort of digital design scarcity scheme.
Now I know how all that sounds, tulips rare in Holland.
Yeah, because let's do a thought experiment real quick.
Close your eyes.
No, like actually close them,
and imagine what Holland means to you visually.
Okay, now open them.
First of all,
if you saw the sloth on the surfboard, you cheated.
But second, I'm going to bet you imagined windmills,
wooden clogs, canals, and fields of tulips, right?
But here's the kicker,
tulips aren't native to the Netherlands.
In fact, they're from Western Asia
and only arrived in the Netherlands
shortly before tulip mania began.
And the story of how they got there
is a great, big, neat, fun tale,
which includes nomad horsemen, Ottoman sultans,
and pleasure gardens.
Plus next time,
we'll see how these very serious,
soberly dressed Dutch Calvinists
went gaga for flowers whose beauty came,
not from breeding, but from a disease.
(soft music)
But enough flowery language.
It's time for us to petal our favorite streaming service
that we're always rooting for, Nebula.
Yeah, Jeff Buns all day, high five.
Nebula is our by creators for creators streaming service
that's home to a ton of our other favorite
educational entertainers on the internet,
such as Joe Scott, Real Science, and Tier Zoo.
Plus you'll get to see some of our Nebula originals
on topics like Tipu Sultan, Cowboy Bebop, and BioShock,
along with my erroneously titled show,
The ONLY* Podcast about Movies.
Yeah, there's an asterisk in there somewhere.
Where Shahir Daud and I
just discussed my absolute favorite film this year
I've seen thus far, Everything Everywhere All At Once,
which you should totally check out, it is a delight.
And because Curiosity Stream loves us
independent educational creators,
they've teamed up with us over at Nebula,
so that we can offer you a pretty amazing two for one deal.
Sign up for Curiosity Stream using our link
right at the bottom of the frame there,
and you'll get a matching Nebula subscription for free.
And that's on top of Curiosity Stream's
thousands of big budget, non-fiction videos
and award-winning original series
curated across their ginormous platform.
One of which I really enjoyed was the doc,
The Billion Dollar Flower Market,
where I learned that not only is the flower industry
a hundred billion dollar business today,
but it's actually still controlled by the Dutch.
Well for now,
because a new competitor is entering the field of flowers.
Get it? 'Cause tulips in the fields,
you know what, I'll just move on.
So head on over to CuriosityStream.com/ExtraCredits
right now to get both of these phenomenal streaming services
for the limited time price of under $12 for an entire year.
That's 42% off the regular price
which still blows my mind for the amount of content you get.
And when you do, not only will you get to watch
some of the best content on this whole series of tubes,
but you'll also be directly helping out Extra Credits
in the process, which we wanna let you know,
we're incredibly thankful for.
The most legendary thanks
to Ahmad Ziad Turk, Alicia Bramble, Angelo Valenciana,
Arkhalight Games, Casey Muscha, Dominic Valenciana,
Joseph Blaim and Kyle Murgatroyd.
(light playful music)