Tulip mania in the Netherlands
Would you be able to pay more than $ 1-2 million for one tulip? If your budget allows you to make such purchases, then you can not read our article further, because in this case you will not understand what exactly happened in Holland in the 17th century. This state is called the country of tulips. But that wasn’t always the case. Only at the end of the 16th century did these beautiful flowers appear in Europe. They were imported in 1593 from Turkey. This event is considered the beginning of tulipomania. In Holland, this incident is also called tulip fever, which caused serious economic problems not only for this country, but also for all European states.
How did tulips appear in Holland? History
The local population perceived these plants as beautiful flowers, but they did not find any other use. It is worth noting that the cost of a tulip bulb in Holland exceeded the price of “ordinary” flowers. People who were engaged in planting tulips began to notice that after a while these flowers began to change their color. Stripes of various shades could appear on the petals. At the time, tulip owners saw such changes as a miracle accomplished. The demand for such a unique flower has grown significantly. Many people wanted to get a tulip with an original color. Everyone tried to get hold of such a rare specimen. In Holland, the tulip boom began. People were ready to “fight” for this unique plant. If you are at least a little familiar with the economy, you should understand that when there is a significant demand for a product, its cost will increase.
Do you want to know why tulips change color? The answer is quite simple. According to scientific studies, the petals of this flower can change their color only if they were infected with a virus. There is no miracle in these changes. But scientists came to this conclusion only after there was a tulip boom in Holland.
What is the tulip exchange?
The local population, including merchants, farmers and artisans, noticed an increase in demand for these beautiful flowers, and also wanted to earn good money. Therefore, they decided to become participants in this market segment. Before the tulip boom occurred in the country, there was a fever in Holland that claimed the lives of many people. The population has noticeably decreased, there were not enough employees, and people’s wages began to rise. As people began to earn more money, they also became interested in buying tulips. Trying to behave like rich people, ordinary people began to “invest” their income in tulips. Some of them began to grow these flowers in the fields.
People have noticed that planting tulips can bring much more income than raising livestock or growing other plant crops. After some time, a wave of such magnitude took place in the country that special organizations were formed – exchanges that traded exclusively in tulips. Catalogues were created and published, where the description and cost of the rarest types of flowers were indicated. Tulipomania occurred not only in Holland, but also in other leading European countries.
At that time, these flowers could be purchased in the period from May to October, but due to the increased demand of the population for this flower, futures contracts appeared, that is, the contract was concluded for the supply of crops that had not yet sprouted. Money could be paid at the time of signing the contract, but flowers were brought only in the spring. At the same time, the difference between the purchase and sale costs was significant. Flowers were sold several times more expensive.
These contracts have become quite popular. The deal was as follows: the merchant signed a contract with the farmer for the supply of tulips, after which he could resell the contract to another person. Everyone who participated in this system took a bite out of the” pie”. Contracts were speculated as best they could. Everyone wanted to make a profit from the sale of tulips.
The uniqueness of this transaction was that no one saw the harvest. The situation in Holland reached such an extent that the stocks of futures contracts exceeded the number of flowers grown in the country. To cover all the obligations, Holland had to plant and supply all the crops for 14 years.
How much do tulips cost in Holland?
At the beginning of the 20th century, the rarest variety of these flowers could be purchased for 1000 florins. A few years later, the price of unique tulips increased to 6 thousand florins per bulb. To understand whether this is a lot or a little, it is necessary to take into account the fact that the average salary for a year of an ordinary employee was 150 florins. Thus, it turns out that a tulip is worth as much as ordinary people can earn throughout their entire life.
During the tulip crisis, the bulb variety could be exchanged for a whole crop of wheat, rye, a small number of pets and other food products. However, it is considered that this type is not among the most expensive.
In 1636, a fever led to an economic crisis. The peasants refused to produce anything other than tulips. Not only agriculture, but also industry fell into decline. The entire local population of the tulip country in Europe was busy selling flowers, which brought them huge profits. But this situation could not continue for long. When the price of flowers peaked, demand began to fall. No one has invested in these products yet. And the merchants tried to sell the bulbs at a fixed price. Due to mass sales, prices for tulips “collapsed”. In a few weeks, the cost of these flowers has dropped several hundred times.
Because of the tulip crash, many families who lived in the Netherlands and other countries went bankrupt. People, watching the constant increase in prices, mortgaged their house and everything they had. The tulip mania has been a financial disaster in all European countries, but the Dutch economy has suffered the most.