Holland experienced the first widely-recorded economic collapses of the modern western era from 1634 to 1637.
In 1593, tulips were brought from Turkey to Holland. The new flower was quickly one of the most sought-after items throughout the country. Soon after, a non-fatal virus rocked the tulip populations throughout Holland, altering the colors and shading of the flowers’ petals.
While already yielding a premium price before the virus starting altering the flowers' look, certain types of tulips eventually reached a point where some were more valued than entire large estates. The Dutch quickly began to believe that the sky was the limit for the tulip market.
Needless to say, as the market reached such ridiculous prices, growers began to over plant and stockpile the tulips that they expected to yield the highest prices. Speculators began to liquidate assets, including family fortunes, life savings, and their estates in order to buy and sell tulips.
During the ramp-up, tulips prices went up 20 times over in just one crazy month. Needless to say, a market price that put a single special tulip at a price equivalent to an entire estate were unsustainable, especially once the hoards of tulips that speculators had liquidated to grow and buy flooded the market. Once the selling started, prices went into a freefall and contracts began to fall apart. Dealers just could not pay the prices they had promised growers and speculators.
In a futile attempt to quell the market, the Dutch government began offering 10% of the face value of contracts that were no longer being honored, but as prices continued to fall, the government had to halt the program and let the market correct itself (There was no selling treasury notes to China like today).
The Tulip Depression would have economic effects upon Holland for decades into the future.
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