Hey guys it's Nick. The real story of tulip
mania part two right now.
So tulip mania. The real story. If you
haven't seen part one then go up and
watch part one now. Otherwise let's
continue with our story. Imagine you are
a wealthy merchant, more specifically, a
wealthy merchant in the Dutch Republic
in the late 1500s early 1600s. You've
grown in wealth. You want to start
showing off this wealth to your friends
and family by starting your collection
maybe you want to get some tulips in
fact you definitely want to get some
tulips. But they're kind of hard to get a
hold of there's not a lot going around
and of course the ones that are most
desired or the most rare and so it's
kind of hard to actually get your hands
on any tulips. How do you go about doing
it. Well this leads to the rise of some
ungentlemanly methods. One of the things
that people do they steal flowers from
each other all the time. Like it's funny
how much this goes on. Like you want
a flower garden and don't really want to
spend the time or money to actually do
it just steal it from some other buddy,
somebody else. You know it's just like oh.
So that's one method. The one that's
economically more important to our story
though is the different characters that
start to get involved. One of the first
characters are called the Rhizotomi or
the root cutters basically. These are
people who kind of travel around in the
countryside and they basically find
tulips that are growing wild and they
dig them up and they bring them back and
they sell them. This is good in
that helps increase supply but for the
people buying them they really don't
know what they're buying because it's
really hard to tell one tulip bulb
from another so there's a lot of fraud
that goes on. So these guys kind of have
an unsavory reputation in terms of
actually giving you the product that you
want. Some other guys that come in are the
apothecaries. You can kind of imagine
these guys like early modern
pharmacists. They kind of sold you stuff
that would 'fix your ills' you know. In
their travels around the countryside as
well they would run into tulips and they
would dig them up and bring them back
sell them. They kind of had an unsavory
reputation because a lot of their places
kind of doubled as like speakeasies or
like you know secret drinking dens.
Sometimes to gave medical evaluations
even though that was definitely not what
their job was supposed to be.
Of course... Why does this always happen.
They sold the tulips as aphrodisiacs. You
know what this bulb is good for...
your bulb. I wonder if the advertising at that
point time was like two people sitting
in a bathtub with a tulip bulb in the
middle between them..
just saying.
So anyway in the 1600s you really start to see
a market start to form for tulips and we
see a number of people on the supply
side right increasing the supply of
tulips. Because as we discussed
previously it's kind of hard to get the
to increase in any number due to
how they reproduce. So on the one hand
you have the Rhizotomi, the
apothecaries you also have the
connoisseurs who are adding to this
amount of tulips in circulation the
commercial growers. Additionally you also
have the fact that the tulip actually
grows really easily in the United
Provinces or the Dutch Republic. The
tulip likes poor soil and the Dutch
Republic just happens to have a... lot of
poor soil. I was going to say a different
word but we're keeping this family
friendly. So on the other side we had
the demand side right so there's the
things that we already talked about
about how this is becoming an item of
collecting. The fact that it does change,
that is spontaneous when it changes. The
novelty aspect right. There's a lot of
items over here that are the reason why
people want the tulips. A few of the
interesting new aspects is there is a
lot of money coming into the Dutch
Republic at this time period right. You
know the Spanish would rob the Native
Americans and then the Dutch would rob
the Spanish on their way back. Of
course they're also trading with the
East Indies at this point in time and
then they would sell that stuff to the
people in Europe and that would bring in
a ton of money. They actually establish
a Bank of Amsterdam at this point in
time which is like one of the first
deposit banks and really just helped
smooth out all the currency issues
because there's tons of debasement of
currency at this point in time. And a ton
of money just starts flowing into the
Dutch Republic because of this Bank as
well. Of course the more money you have
the more money you have to spend on
tulips for example. So this helps
increase the amount of demand that's
going into this luxury good. Additionally
you have a lot of new forces that are
coming in you have a lot of what we call
economic refugees right. The Dutch
Republic is still basically fighting its
war to remain a separate country you
know basically a revolutionary war
against the Spanish. During this war
they've actually blockaded the Spanish
part of the Netherlands, called
conveniently the
Spanish Netherlands, and you see a lot of
merchants down there who were living in
port towns who are earning a lot of
money and doing pretty well and then the
economy just tanks basically. And they're
like, "yeah you know what I don't really
like the Spanish that much anyway and now
I can't really make money here anymore
so I'm just going to go up to Dutch
Republic and take all my money my tulips
and all my trade contacts and kind of
everything I own up there. All Right
see ya." Right like they start coming up
at this point in time of course they're
also the bringing all their stuff
including their tulip bulbs but they're
also bringing their aristocratic tastes
which means more demand so they're
adding to both the supply and demand
side of this as well. Additionally we see
the rise of what we basically call the
traders right. These are the people who maybe
don't really care about the tulip as
much for its beauty but they see
that it's a way to make money at this
point in time.
Now there's a big crossover between the
traders and the people who just grow
tulips, the connoisseurs, there's a lot of
people who are one of the same thing
although they like to pretend that
they're all connoisseurs and stuff like
that. So you know a lot of that stuff
going on. In order to actually understand
who is actually involved in this, imagine
that you are a tulip trader, right. You're
one of these people that you have a
primary gig but you also like
talking about tulips this is something that's just
fun for you. You know you do it on
side basically. Who would you get
involved with on a daily basis right. So
you imagine you wake up in the morning
talk to your family hang out maybe you
talk to them about how the tulips are
doing you know how they're going to do
next year stuff like that you see a lot
of families be involved in tulip trading
you know it's how information is
spreading you head out your first stop
is to the Baker to pick up some bread
you know get some food maybe talk to him
about tulips and how they're doing then
maybe you stopped out shopkeeper by some
wares so if you need stuff like that
again talk to him about tulips maybe you
go out for the day and so doing your
normal business stuff and your normal
trade contacts you talk to them about
you know how it's business stuff like
that but you also talked about how
tulips doing then maybe at the end of
the day before you head home you head
through local inn / tavern have a few
drinks you talk to you know kind of
everybody there about - loves how
they're doing you see kind of networks
of people clustering around certain
taverns about talking about tulips and
how they're doing who sold what for what
how much etc
and then maybe occasionally see your
doctor and talk to him about tulips so
you see basically who the trainer's
interact with and who these people are
who are raising tulips who they interact
with are the people who end up getting
involved in trade and contrary to
popular opinion that's not everybody
right it's not the chimney-sweep it's
not the Baker's wife is not the nobleman
it's just people who have access to this
information you actually start buying
and selling tulips um on a regular basis
and what we find is they reside in the
city and they're basically middle-class
what we might call upper the middle
class they have a primary business which
is like baking or shopkeeping or
something like that but then they also
trade tulips on the side maybe for fun
hopefully they make some money at the
same time but it's not their main gig
one of the other aspects it's really
really interesting is how they're traded
at this point I'm you know there's a lot
of trades to kind of you know standard
boring stuff happens in people's gardens
and at homes and stuff like that but one
of the coolest ones is when it happens
at a tavern or the inn or basically your
local pub or bar right and the
experience that was just so common back
then it's just it's hard for us to
imagine today you know first of all
before you walked into the tavern you'd
be asked to surrender your weapons at
the door you imagine that guy who has
like four different knives on them he's
like all waking up getting sucks so then
once you get inside basically you have
to imagine someone's like your grandma's
house right it's just there's a lot of
coziness you know lowlights kind of
thing the only difference is that
everyone's smoking and not specifically
just like a little bit of smoke like the
whole room is hot-boxed
with smoke smoking is a huge thing there
in his time period and is thought to
have cured all sorts of ailments
including keeping you safe from the
plague of course they didn't smoke
cigars they actually had long pipes that
they would smoke at it at the time but
you get the idea so the whole Ament your
grandma's house is surrender your
weapons up to go door very cozy
additionaly museum quality artwork
hanging on the wall stuff that we would
hang in museums today is is hanging on
the walls and it's like yellowing
because of all the smoke here and and of
course since it's in everyone would also
be drinking then even once you got
inside how you actually traded it was
like interesting in it of itself and
again this comes from a story that was
basically propaganda gets the trade so
we need to take it with a lot of salt
but you'll get the idea basically the
first step when you walk in is don't be
honest don't say like hey I want to buy
some tulips anybody know where I can buy
some some tulips
you basically have to like drop super
veiled hints until somebody basically
gets it you have to say like I have a
lot of lights but I would like some
yellows you know and stuff like that for
a long time till someone's like oh your
boss dilip's all right yeah let's go
and then buyer and seller would
basically be handed this board in which
they're to write their bids and asks on
oh thank you and they'd be given a piece
of chalk and so basically you had to go
you imagine they'd be sitting across a
table from one another one person would
write what they're willing to buy out
and the other person but right What's
Wrong Estella then they basically give
the boards to two other people those two
people would go off and discuss the
prices and try to figure out what they
think is a fair price meanwhile you have
the buyer and seller just sitting across
from each other at the table then the
boards would be handed back to them with
the new price written on it thank you
the buyer and seller would both look at
it and the offer could be accepted or
rejected from there and so you just get
a totally different idea of you know
modern stock market you know we buy and
sell we don't see each other on
computers play I mean this imagine like
in order to buy a stock you basically
have to go to like a smoke inundated bar
and then have a private negotiation with
somebody about a stock that's going to
do meanwhile you're drinking at the same
time and it's just like the totally
different aspect of this market that
doesn't even play into it today caveat
historians don't really think that much
trading actually ended up taking place
here at least any gold guard doesn't
think Tomas trading actually ended up
taking place at taverns it definitely
happened but it's not as much as we led
to believe by the accounts that were
handed down and if you remember at this
point in time tulips are starting to
develop into a futures market is one of
the other really unique aspects in this
point in time the futures markets
actually been created about 30 years ago
by the Dutch to deal with the risks of
the Baltic grain trade but it starts
getting applied to tulips because of the
necessity of how tulips grow you know
basically tulips are planted in the fall
and then they grow during the fall the
winter and then they bloom and spring
for like two weeks basically
and then they start dying and they go
dormant and then in the summer they're
dug up and they're preserved for what's
known as the dry bulb time the only time
you can really exchange like a normal
exchange that we think about is during
the summer this is when the bulbs are
out of the ground where you can just say
here's your bulb and I'll take your
money right this is the only time when
really bulbs can be treated like that if
you want to Bible any other time during
the year
you basically have to trade a futures
contract you have to say hey I know we
can't dig up this bulb now if I want to
buy it from you in the summer and I'll
buy it for you for from here for a
thousand guilders that sound good they
say ok and then basically sometimes they
write it down sometimes they're not but
basically it's kind of like a
gentlemen's agreement right the summer
comes around and they give them the
money they give it a tulip and it's good
but for that six months until the summer
comes around that's basically a futures
contract and they do this to get around
the seasons at the time but we'll see
that this ends up causing problems
because it's kind of a gentlemen's
agreement of source yes they write it
down a lot of times sometimes they don't
but there's no way to enforce it you
know imagine having a futures market
without the protections of a modern
futures market right this is kind of the
beginning right you're starting to learn
to ride a bike without the training
wheels right and people fall and they
hurt themselves you know a futures
market isn't just created and everybody
loves it there was actually a backlash
against the futures market it's seen as
immoral that you're not selling goods
that you currently have the cell and
it's seen as a form of gambling and
gambling is so prevalent at this point
in time it's hard to kind of wrap our
minds around it you know Rembrandt the
famous artist was one of a hundred
people to gamble that hew be alive next
year in 1624 this guy bet that he could
sail a trough meant for kneading dough
that amounts to what we would think of
as a wooden bathtub down a very
dangerous river and he ended up winning
the bet
the Dutch would bet on the outcome of
Wars he bet on the outcome of battles
supposedly one bet over a tool above got
so intense that when the loser died the
winner took his widow the court in order
to get the tulip bulb like this is
gambling's very prevalent at this point
in time a lot of authors have argued
that the tulip kind of fed into this
form of gambling that you know like hey
we're betting on everything else why not
bet on a to look and in some sense it's
kind of hard not to see that argument
but we have to remember this is an era
that's fraught with risk in every
direction like literally you could die
of the plague your city could get sacked
you know you could get stabbed one like
Lily like this is an era where like
there's so many risks that it's hard for
us to contemplate today I love this one
example by Annie Golgotha historian who
talks about just the risks involved in
overseas tree at this point in time
besides the unpredictability of supply
the uncertainty of markets and the
inability to get speedy information
overseas traders had to face the simple
problems of transport ships were not
built to endure some of the conditions
they faced the risk of shipwreck was
always high and storms were not the only
danger pirates took a heavy toll and
sunken or catch bird ships and sailors
held for ransom in 1928 a dutch english
ship was captured or sunk by dunkers
pirates on an average of every 36 hours
if a ship actually arrived at its
destination merchants often had to trust
and rather vague agreements made about
the sale and unloading of new goods the
risk of mistreatment by local officials
was always high arrest and seizure of
goods was always a concern that's just a
stuff involved in overseas trading
additionally she says people had to
worry about changeable market spoilage
cyclical interruptions to production the
toll taken on labor or raw materials by
food disease or famine we see this in an
era when any number of bad things might
happen to you and so when you say the
tulip is you know a form of gambling
because it's so risky we have to ask
ourselves what is it risky at this point
in time like literally living is just a
huge risk at this point in time there's
a good chance they're not even going to
make it to adulthood if you're born at
this point in 1635 there's a lot of this
trading going on in taverns and the
plague strikes and it just kills so many
people you know it's hard to imagine the
plague actually shows up in on the 14th
century a few hundred years earlier but
people are still dealing with this thing
and this kills you know like basically
1/7 of the population now a lot of
people have argued that this the plague
has kind of played into a culture of
risk-taking with tulips that you know
what do I have left lose I'm going to
die from the plague anyway might as well
buy some tulips take us some speculative
risks but
it doesn't seem to have actually done
that but the plague has had one effect
that's very noticeable the plague means
death and death means inheritance which
means a lot more money flowing into the
trade this brings us to the crescendo of
our story the fall of 1636 this is
really when prices start to take off
right there are a few things that are
happened obviously the market has kind
of grown to such a point that a lot of
people are taking it seriously a lot of
people are trading it not numbers were
always led to believe but definitely a
lot of people at the same time the
plague ends and so this might have
contributed to kind of a thrill of
survival that you didn't die of the
plague so yeah why not go spend some
money on tulips who cares and so you
start to see the final price rises which
really kind of go crazy over the winter
this is where you know flowers are
already pretty rare and already pretty
desirable basically double in price and
the ones that aren't as desirable but
they kind of need something to trade so
these kind of get pressed in the
circulation almost 12 times their price
level you know this is a huge rise
obviously we see this happen
up until the highest prices paid or
what's known as basically this auction
for orphans at a home in achma a lot of
the prices for the bulbs sold or normal
quote-unquote normal prices paid but
there are a few that just astonished the
contemporaries of the time you know you
have a few flowers which go for like
five thousand guilders or four thousand
guilders and to put that in perspective
a thousand guilders would buy about five
thousand pounds of meat about thirteen
vats of butter five thousand pounds of
raisins you know so these are really
high prices that are being paid for some
of these flowers you know we do have to
put this in perspective right the people
who are buying and not normal people you
know especially with these prices these
are people who are really well-off this
is definitely not an insignificant
purchase for them but it's not
significant right like these are people
who are already making a lot every year
right it's not it wouldn't be weird for
you to see a really rich person maybe
who has a lot of money in the bank buy a
car worth half a million dollars right
you know you might think wow that's an
expensive per
just but it's not going to break your
bank or anything the auction not this
orphanage is what's considered basically
the highest prices paid for tulips but
what they wouldn't know is that a day
before in the city of Harlem an auction
was held where no one did and the price
was lowered and still no one bid the
price was lowered again and still no one
bid and panic ensued is bursting into a
gigantic fireball tulips when the prices
start to drop that's when the knives
come out right everybody starts blaming
everybody else for all the problems
almost to me the most interesting part
of it next week we're going to talk
about how this thing just blows up in
everybody's face if you aren't
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you can check that out when it comes out
next week otherwise if for some reason
the videos already been released who
knows maybe it's already been a week
later then you can check the video out
here alright guys see you later