Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age
by Anne Goldgar
University of Chicago Press ₤17, 400 pages
FT bookshop price: ₤13.60

We think we know the story of ”tulipmania”: the 17th-century Dutch dropped fortunes on tulips, ruined their economy, even killed themselves over the bulbs. In short, tulipmania is remembered as the first market bubble. It has been used as an analogy for subsequent ones, most recently during the dotcom boom. However, Anne Goldgar tells us at the start of her excellent debunking book: ”Most of what we have heard of it is not true.” For instance, Goldgar couldn’t identify a single person bankrupted by tulipmania. In this dense academic work - with longueurs for readers who aren’t themselves tulipmaniacs - she tells a new story.

Tulips arrived in Europe in the mid-1500s, probably from Turkey. At the time, ships from the East were filling the Dutch Republic’s ports with previously unseen flowers, spices and plants. Goldgar quotes the estimate that 20 times more plants were introduced to Europe in the 16th century than in the previous two millennia.

Some pointed out that tulips were useless. The flower has no scent, no medicinal purpose, tastes disgusting (as many Dutch discovered during the ”Hungerwinter” of 1944-45), and is apparently no aphrodisiac. Most varieties bloom only a week or two a year.

But the new Dutch gardeners and collectors appreciated plants for their beauty, not their utility. These merchants and craftsmen grew tulips much as they collected paintings. Indeed, many tulip traders were also art collectors, dealers or painters. They sometimes traded art for bulbs (though paintings never approached the prices paid for flowers). The best analogy for tulipmania is therefore not the dotcom boom but today’s art market, in which a work by a young artist can cost as much as a London flat. Buyers of tulips chased beauty and status as much as profit.

While knowing about flowers was part of being a wealthy civilised Dutchman, Tulipmania was limited to ”a fairly small group”, writes Goldgar. In lore, Dutch chimney sweeps spent their savings on bulbs, but in fact the buyers were mostly merchants and craftsmen from the province of Holland. These are the smug burghers we know from portraits of the era. Many were Mennonites.

Some contemporary pamphleteers attacked the trade, baffled by what one Englishman called the ”incredible prices for tulip rootes”, and disquieted by the godless materialism of it all. They feared, wrongly, that the trade subverted the social order by making poor people rich. As almost no other contemporaries wrote about tulipmania, these biased pamphlets informed most later accounts.

Most tulip tales we know, scolds Goldgar, ”are based on one or two contemporary pieces of propaganda and a prodigious amount of plagiarism”.

The bubble grew from late 1636. Perhaps it was because a terrible plague was just ending, and the Dutch splashed out in ”the euphoria of survival”. Prices of Switsers bulbs, to cite one example, rose 12-fold from new year of 1637 to peak on February 3 at 1,500 guilders a pound. That was about four years’ income for a master carpenter; a modest house in Haarlem cost about 1,000 guilders.

The crash came in early February 1637, when prices fell by approximately 90 per cent. Nobody knows what prompted this. It might simply have been the excess of sellers lured by the boom. Yet the effects were modest. It’s a myth that tulipmania devastated the Dutch economy. How could it, when so few people traded tulips? Even those who did survived the crash. Tulips were merely a sideline to their real professions.

In any case, Goldgar explains, few buyers actually paid the exorbitant prices they had agreed. The crucial point is that this was a futures market. The flowers spent most of the year underground. Trades were made constantly, but were only paid for in summer when the bulbs were dug up. In the summer after the crash, most buyers simply refused to accept and pay for their bulbs. Some paid the sellers a small recompense, usually less than 5 per cent of the agreed price. These modest payouts don’t seem to have ruined anyone. Rather, tulipmania damaged the code of honour that underlay Dutch capitalism. When buyers reneged, trust suffered. Tulipmania was a social crisis, not a financial one, argues Goldgar.

The final myth is that the crash put the Dutch off tulips. In fact, a form of tulipmania never died. The famous bulb fields in my home region around Leiden date from long after 1637. Today the Netherlands has 90 per cent of the international flower trade. Fortunes really are made in tulips.