
The Real Story of the Dutch Tulip Bubble? - a_zeisler
https://www.barrons.com/articles/the-real-story-of-the-dutch-tulip-bubble-is-even-more-fascinating-than-the-myth-youve-heard-51557666037
======
dang
All: could you please not take this thread into Bitcoinland?

Exercise: find the site guideline that is broken by doing so.
[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

------
RcouF1uZ4gsC
The 1841 Book Extraordinary Popular Delusions and the Madness of Crowds has
this amusing anecdote about Tulipomania:

People who had been absent from Holland, and whose chance it was to return
when this folly was at its maximum, were sometimes led into awkward dilemmas
by their ignorance. There is an amusing instance of the kind related in
Blainville's Travels. A wealthy merchant, who prided himself not a little on
his rare tulips, received upon one occasion a very valuable consignment of
merchandise from the Levant. Intelligence of its arrival was brought him by a
sailor, who presented himself for that purpose at the counting-house, among
bales of goods of every description. The merchant, to reward him for his news,
munificently made him a present of a fine red herring for his breakfast. The
sailor had, it appears, a great partiality for onions, and seeing a bulb very
like an onion lying upon the counter of this liberal trader, and thinking it,
no doubt, very much out of its place among silks and velvets, he slily seized
an opportunity and slipped it into his pocket, as a relish for his herring. He
got clear off with his prize, and proceeded to the quay to eat his breakfast.
Hardly was his back turned when the merchant missed his valuable Semper
Augustus, worth three thousand florins, or about 280 pounds sterling. The
whole establishment was instantly in an uproar; search was everywhere made for
the precious root, but it was not to be found. Great was the merchant's
distress of mind. The search was renewed, but again without success. At last
some one thought of the sailor. The unhappy merchant sprang into the street at
the bare suggestion. His alarmed household followed him. The sailor, simple
soul! had not thought of concealment. He was found quietly sitting on a coil
of ropes, masticating the last morsel of his "onion." Little did he dream that
he had been eating a breakfast whose cost might have regaled a whole ship's
crew for a twelvemonth; or, as the plundered merchant himself expressed it,
"might have sumptuously feasted the Prince of Orange and the whole court of
the Stadtholder."

------
dang
This same research was discussed in 2018:
[https://news.ycombinator.com/item?id=16399756](https://news.ycombinator.com/item?id=16399756)

~~~
acqq
And my favorite comment from there:

[https://news.ycombinator.com/item?id=16399944](https://news.ycombinator.com/item?id=16399944)

And a part from Wikipedia:

[https://en.wikipedia.org/wiki/Tulip_mania#Modern_views](https://en.wikipedia.org/wiki/Tulip_mania#Modern_views)

"Research into tulip mania since then, especially by proponents of the
efficient-market hypothesis,[17] suggests that his story was incomplete and
inaccurate."

So there is an actual agenda ("the efficient-market hypothesis" and obviously
also the political forces with anti-regulatory ideologies) behind many of the
claims that the bubbles aren't anything to worry about, or that some specific
even hasn't happened.

In the case of Anne Goldgar's work, claiming that she found only 37 people who
paid for a bulb more than "quite good yearly wage" of that time doesn't
disprove that many poorer people could have spent less and were actually
bankrupt, but that their fate wasn't recorded the way it was for the highest
transactions and their initiators. It should not be surprising that the 37
richest people involved (which is obvious because the poorer couldn't have
even invested that much) weren't hit too hard with a single speculation.

~~~
spaced-out
>disprove that many poorer people could have spent less and were actually
bankrupt, but that their fate wasn't recorded the way it was for the highest
transactions and their initiators.

Sure, we can spend all day speculating about records may have existed but were
lost. I mean, there are no evidence of alien involvement, maybe those records
were lost too?

It's also possible that the Tulip bubble was both short-lived and not very
widespread and is just one of those stories that keeps getting bigger the more
it gets re-told.

~~~
acqq
> just one of those stories that keeps getting bigger

There are apparently still records of 37 transactions paying more than a what
was then " _good yearly_ wage" for _a bulb_.

Moreover, from another history book, after the "crash" "in Haarlem, the city
with the biggest volume of tulip bulb trading and thus the city with the most
problems" ... "the local court there refused to hear disputes relating to the
tulip trade." That obviously lowered the chance of having the records about
the direct effects of the crash.

------
buzzdenver
_In 1637, one gilder was worth about $10 in today’s money. 300 gilders would
be about $3,000. That amounts to quite good yearly wage at the time._

How does that work? $3k is not "quite good yearly wage" in most places these
days.

~~~
csours
[https://en.wikipedia.org/wiki/Purchasing_power](https://en.wikipedia.org/wiki/Purchasing_power)

Purchasing power has increased along with inflation

~~~
buzzdenver
That makes saying how many current dollars a guilder is pointless. Candles
have gotten way cheaper, but land around Amsterdam much more expensive. IMO
the only sensible comparison is how much time it took for an average tradesman
to make X amount of money.

------
deadmetheny
>“And in 2019, when you hear people complaining about Bitcoin and warning
about it, what you are hearing are the voices of people in 1637 saying: you
shouldn’t be involved in this trade. You’re the wrong person, you don’t know
enough.”

Why would you torpedo a good article at the very end with such a stupid
paragraph?

~~~
dmos62
I had a similar qualm, but this summarizes it better: "The story of the tulip
bubble boils down to a story of fools and greed, Goldgar says. And that’s why
it sticks with us." There's something about reducing this to just greed. What
I personally want, is a story that can contextualize that greed better,
explore it more, and not just end with "that's greed for you" (paraphrasing).

~~~
logicx24
Exactly. It's a complete mischaracterization to call every stock market boom
and bust cycle a result of "greed," and yet people refuse to stop doing so. I
guess it creates a sense of moral outrage, and makes readers feel righteously
justified.

~~~
dmos62
I was having trouble putting this into words, but now after having a think, I
liked when Goldgar got into the historical context of the crisis. To heavily
paraphrase, in that stratified society, speculation appeared to be a way to
climb the social ladder. The article's author, the one quoting Goldgar,
obviously didn't interpret it this way.

I'm not saying Goldgar sees the tulip bubble that way, or that it's a
historically accurate narrative, but it's miles better than saying it was
caused by "fools and greed", which is similar to saying that something was
caused by evil. I guess my principal point is that stupidity, greed and evil
are fundamentally socioeconomic symptoms, in that they are not explanations of
themselves.

------
apo
> And in 2019, when you hear people complaining about Bitcoin and warning
> about it, what you are hearing are the voices of people in 1637 saying: you
> shouldn’t be involved in this trade. You’re the wrong person, you don’t know
> enough.

Only this exact analogy is trotted out every time the Bitcoin exchange rate
swings up or down very quickly. It's happened about a half dozen times now
over the last 10 years.

You see this on the way up and down. The line comes mostly from people don't
understand the underlying technology or economics.

Nor do those sage finger-waggers point out that the tulip mania was over
within less than one year between 1636 and 1637.

Whatever Bitcoin is, it's not like Tulip Mania, nor is it much like anything
that's come before.

~~~
neffy
so you're claiming... "It's different this time" ?

~~~
chrisco255
He's claiming that Bitcoin is sophisticated technology and network effects not
easily replicated. Dot com era was a bubble too but valuable companies and
services survived through that crash. It's not enough to observe that there's
been a run up in prices and a subsequent sell off. That happens all the time
in all markets.

------
johnwheeler
That was _less_ fascinating than the myth, to me.

~~~
dang
Alright, we'll take that bit out of the title above.

~~~
amibang
"All: could you please not take this thread into Bitcoinland?"

Is that what all are saying? Or is it an instruction to us all?

~~~
dang
The latter. It's a device I use to address everybody reading the thread.

------
devereaux
HN in 2010: don't touch bitcoin.

HN in 2019: it's Dutch Tulip Bubble! (in the midst of the next bull run)

Meanwhile, those who followed contrarian advice did great.

It feels like Slashdot calling the iPod lame.

Sometimes, it's not irrationality, but a true change.

~~~
geezerjay
> Meanwhile, those who followed contrarian advice did great.

...except everyone who did not.

"Bitcoin crash: This man lost his savings when cryptocurrencies plunged"

[https://money.cnn.com/2018/09/11/investing/bitcoin-crash-
vic...](https://money.cnn.com/2018/09/11/investing/bitcoin-crash-
victim/index.html)

Some people do great in pump-and-dump schemes, and they keep pumping even when
everyone got fleeced.

------
lqet
Ah, bitcoin has moved. There already was the usual crypto-bubble-will-burst
article on the frontpage, and here comes the inevitable dutch tulip mania
post.

------
flyingplasma
The best reference of the Tulip bubble I heard on business news was a guy
saying, "Bitcoin is giving tulips a bad name"

Just goes to show how crazy a ride bitcoin has had in historic terms.
[https://www.marketwatch.com/story/why-bitcoin-is-now-the-
big...](https://www.marketwatch.com/story/why-bitcoin-is-now-the-biggest-
bubble-in-history-in-one-chart-2017-12-13)

~~~
dang
"Eschew flamebait. Don't introduce flamewar topics unless you have something
genuinely new to say. Avoid unrelated controversies and generic tangents." The
interesting thing here is the history of the tulip bubble, not another Bitcoin
war.

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

~~~
flyingplasma
Wasn't trying to flame up anything. The article mentions “And in 2019, when
you hear people complaining about Bitcoin and warning about it, what you are
hearing are the voices of people in 1637 saying: you shouldn’t be involved in
this trade. You’re the wrong person, you don’t know enough.”

Was just adding other similar references I had heard before. I'm new to HN,
are there a list of flamewar topics I can look up for next time?

------
caprese
The tulip bubble is the worst poster child of asset bubbles and irrational
exuberance

But at this point, I don't think it matters. Colloquially, saying 'tulips'
gets the point across. People know that you are criticizing the exuberance or
volatility of an ephemeral asset. People know what asset price distortion you
are comparing it to.

~~~
walshemj
I think the south sea bubble which even caught Isaac Newton out might be the
worst.

~~~
DuskStar
For some reason a tale of a governmental debt instrument being overvalued
isn't quite as popular as one about tulips ;)

The South Sea Company is a remarkable example of people ignoring the
fundamentals of a stock in order to speculate, though. Or perhaps a story of
people knowing _just enough_ about the fundamentals to get themselves into
trouble... (Many comparisons were made to the East India Company, which had a
similar trade monopoly, and that comparison made some sense - until you
consider the fact that a trade monopoly with land your country owns is much
more profitable than one where you're frequently at war with the owners)

~~~
notahacker
I think the fashion for similarly marketed investments (including the infamous
"an undertaking of great advantage but nobody to know what it is") is probably
the biggest lesson.

That people in the seventeenth century didn't really understand how to value
the fundamentals of a new government trade monopoly is unsurprising and its
subsequent overvaluation perhaps not that great an indictment of seventeenth
century investors; a more widely applicable lesson is that price movement in
this stock spilled over into newfound speculator enthusiasm for absolutely
ridiculous ventures and companies pretending to be raising money for one
purpose and actually spending it on something else.

