Tulip Mania

Had you walked into certain taverns in the Dutch city of Haarlem in the winter of 1636, you might have found a group of men around a table, drinking, arguing and writing out contracts for flowers that nobody could see. It was the wrong season for tulips: the bulbs lay in the frozen ground and would not be lifted until the summer. What was being bought and sold was not the bulbs themselves but promises to deliver them, and the price of those promises was rising week by week. The Dutch had a name for this kind of trade, windhandel, or "trading in the wind".

Tulips had arrived in the Netherlands only a few decades earlier, and the rarest varieties, whose petals were marked with feathered streaks of colour (caused, we now know, by a virus), had become symbols of wealth and refinement. The most admired of all, the Semper Augustus, was said to have changed hands for thousands of guilders at a time when a skilled craftsman might earn around three hundred in a year. Then, in the first days of February 1637, the music stopped. According to accounts from the time, at an auction in Haarlem the buyers simply failed to appear, and however far the sellers lowered their prices, nobody would bid. Within days, the market had collapsed.

This is the version that most of us know, and it owes a great deal to a Scottish journalist, Charles Mackay, who included it in his 1841 book Extraordinary Popular Delusions and the Madness of Crowds. Mackay described a whole nation gripped by fever, in which wealthy merchants and humble chimney sweeps alike poured their savings into bulbs, and in which the crash left countless families ruined. He also told the tale of a sailor who mistook a merchant's precious bulb for an onion, ate it with his herring and was thrown into prison for months.

Modern historians are far less convinced. When Anne Goldgar studied the surviving contracts and court records for her 2007 book Tulipmania, she found that the trade had been carried on by a fairly small circle of merchants and skilled craftsmen rather than by the whole country. Moreover, she could identify fewer than half a dozen people who got into serious financial trouble at the time, and even for them it was unclear whether tulips were to blame. Many contracts were simply never honoured; in May 1637, the city of Haarlem ruled that buyers could cancel their deals by paying the seller just 3.5 per cent of the agreed price. Had the crash truly devastated the Dutch economy, one would expect to find far more evidence of it.

Where, then, did the madness come from? Much of it, Goldgar argues, came from a handful of pamphlets published after the crash, many of them written by moralists who saw in the tulip trade a warning against greed and vanity. Later writers borrowed from these pamphlets, and then from one another, each retelling adding a little more colour, until Mackay gave the tale its most famous form. Personally, I find it hard not to enjoy the irony: the story of a fever that swept through an entire society has itself been spreading, largely unchecked, for nearly four centuries.