There Never Was a Real Tulip Fever

[Steve]

For decades, economists have pointed to 17th-century tulipmania as a warning about the perils of the free market. Writers and historians have reveled in the absurdity of the event. The incident even provides the backdrop for the new film Tulip Fever, based on a novel of the same name by Deborah Moggach.

The only problem: none of these stories are true.

http://www.smithsonianmag.com/histor...g1xP9VSQJlG.99

[khisanth]

I remember this being a story in my economics book.

It was intended to be a warning about bubbles and speculation. a la Beanie Babies, dotcom, housing, etc.

http://theweek.com/articles/461977/g...ie-baby-bubble

[Richard W]

Damn, does this mean I'm going to have to abandon the phrase I just picked up, "As happy as a Dutchman with a tulip like no other", as historically inaccurate? I'd thought that it would be a good thing to say if I ever had to pretend to be an 18th century bigot. (I had the impression that tulip-mania was in the 18th century; according to the article it would have been a 17th century phenomenon if it had existed. So there's one thing I was wrong about already.) Or just if I wanted a good phrase for a happy person. I got the phrase from Balzac, I think, who was writing in the early 19th century.

At least the South Seas Bubble was real, and that's the one that we actually learned about in school. Tulips might have been mentioned, but it was the South Seas Bubble we concentrated on. And the dot-com bubble definitely happened. I was there, and made money from it, and knew it wasn't sustainable, and then saw it collapse.

That’s not to say that everything about the story is wrong; merchants really did engage in a frantic tulip trade, and they paid incredibly high prices for some bulbs. And when a number of buyers announced they couldn’t pay the high price previously agreed upon, the market did fall apart and cause a small crisis—but only because it undermined social expectations.

... Yes, OK, that's not far different from what I'd thought had happened. And surely "only because it undermined social expectations" would describe any sort of collapse of a market that doesn't have obvious inherent worth that matches its speculative value?

To me this is a bit of a straw man... the article tells me I believed some things I didn't believe, and then says they're not true and that actually the truth is closer to the stuff I did think was the case. So, fair enough I suppose. It still seems as though the speculation on tulips was significant enough to be used as an example of an arbitrary financial bubble, regardless of whether it crashed any economies.

[DawnStorm]

So I guess the myth just blossomed?

That was just too tempting tulip it go......

[ganzfeld]

Another thread to petal your puns?

[ChasFink]

Originally Posted by ganzfeld

Another thread to petal your puns?

Hey bud, it's not nice tulip off like that!

Originally Posted by Richard W

To me this is a bit of a straw man... the article tells me I believed some things I didn't believe, and then says they're not true and that actually the truth is closer to the stuff I did think was the case.

How dare you not misbelieve what you're told to. How can you ever be corrected?

[Brad from Georgia]

Nuts. There goes my plans to write a musical called "Tulip Night Fever." Figured Travolta would be in it in a comeback role as a dancing Dutchman.

[snopes]

And surely "only because it undermined social expectations" would describe any sort of collapse of a market that doesn't have obvious inherent worth that matches its speculative value?

I think the author was trying to say that the only widespread "crisis" caused by the tulip market collapse was social, not economic.

[Beachlife!]

Thanks for posting that. I have a copy of 'Extraordinary Popular Delusions and the Madness of Crowds' and read the tulip story many years ago. I'm almost disappointed that its less than fully true.

[Steve]

Another article on the topic: https://theconversation.com/tulip-ma...ampaign=buffer

[Judecat]

All I ever heard about Tulip Mania before now was that it could lead to personal financial crisis, sort of like those people who would pay $400 for a first-year Barbie doll because if you had the complete collection of all the dolls you would become a Millionaire. Yeah, there were women in my family like that - wasted the money the could have put into their grandchildren's college fund to buy every Barbie ever made so that the kids would become rich when they sold the collection. Fortunately not really my side of the family -- it was my brother's mother in law. The only person who made a profit on Barbies was me -- I was given one the first year they came out, and I hated the thing -- never opened it, stuck it in the back of a closet. When I enlisted I cleaned out the closet, offered the thing for sale in the Pennysaver for best offer, and had crazy grandma call me telling me, she'd give me $400 and "not a penny more". Well, of course, I took the $400. Which is at least $380 more than expected to get.

[Seaboe Muffinchucker]

Originally Posted by Judecat

- wasted the money the could have put into their grandchildren's college fund to buy every Barbie ever made so that the kids would become rich when they sold the collection.

I take issue with one phrase in this. "wasted the money they could have put into their grandchildren's college fund" because to me, it sounds as if you think the grandmother had an obligation to contribute to the fund.

It's her money. She can spend it any way she pleases.

I agree that, if her only reason for collecting the Barbies was to finance grandchildren education, then yes, it was probably a poor choice of investment. Still, it was her choice to make, and her money to spend.

Seaboe

[Skeptic]

Originally Posted by Judecat

All I ever heard about Tulip Mania before now was that it could lead to personal financial crisis, sort of like those people who would pay $400 for a first-year Barbie doll because if you had the complete collection of all the dolls you would become a Millionaire. ... .

I saw a lady on one of those "Is it trash or treasure" shows who had amassed a huge collection of small nick-nacks. She had several thousand of them displayed, and was talking about values of hundreds of thousands of dollars. The valuer wasn’t impressed, as they were "mass-made collectibles", and gave it a value of about 20,000 dollars for the entire lot.

[WildaBeast]

One bit of wisdom I learned from Pawn Stars: Anything marketed as "collectable" probably isn't, at least in the sense that it will dramatically increase in value.

[Skeptic]

Originally Posted by WildaBeast

One bit of wisdom I learned from Pawn Stars: Anything marketed as "collectable" probably isn't, at least in the sense that it will dramatically increase in value.

Especially as "Only 100,000 will be made". That is, until next month when the next item comes out.

[thorny locust]

The trick to any of these things is to save them before anybody else is saving them -- but to choose something people will be collecting later. The second part of that of course is the really tricky part.

Action Comics #1 is worth that kind of money because, for quite some time after it came out, nobody kept old comic books; they were considered trash. If all the original copies had been carefully stashed away, none of them would be worth anywhere near as much. (I just checked; there were 200,000 of them. Probably less than 100 still exist, and most of those aren't in good shape.)

So anything being sold as a collectible now probably won't be worth much, though some of them may go up a bit more than inflation. The question is, what is everybody throwing out right now that people are going to want 20 or 50 years from now? But if we knew that, we wouldn't be throwing it out --

[WildaBeast]

When I was in middle school I bought a bunch of baseball cards -- even though I didn't actually like baseball. I assumed that if I just bought them and held onto them for a few decades they'll be worth millions of dollars. Because that's what happens with old baseball cards, right? Except everyone else did the same thing I did, and now baseball cards from that era really aren't worth very much at all.

[Seaboe Muffinchucker]

Collect things because you enjoy it or them. Not for the economics of it. I have a large collection of craft and costume books. I collect them because I make costumes and do crafts. Are they worth money? A few of them, maybe. But to get that money I'd have to sell them, which defeats the purpose of having them.

It doesn't matter how much something in a collection is supposedly worth. If you don't sell it, it's only worth the pleasure you get from owning it.

Seaboe

[Alarm]

Originally Posted by thorny locust

The trick to any of these things is to save them before anybody else is saving them -- but to choose something people will be collecting later. The second part of that of course is the really tricky part.

Action Comics #1 is worth that kind of money because, for quite some time after it came out, nobody kept old comic books; they were considered trash. If all the original copies had been carefully stashed away, none of them would be worth anywhere near as much. (I just checked; there were 200,000 of them. Probably less than 100 still exist, and most of those aren't in good shape.)

So anything being sold as a collectible now probably won't be worth much, though some of them may go up a bit more than inflation. The question is, what is everybody throwing out right now that people are going to want 20 or 50 years from now? But if we knew that, we wouldn't be throwing it out --

Or collect something, then have most of them destroyed in some weird kind of catastrophe like what was rumoured to have happened to the Spawn 18 shipment. If you're collecting something, nothing drives up the price like an event that makes most of it's contemporaries disappear.

[Don Enrico]

But to orchestrate such an event is difficult and, in most cases, illegal...