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A skilled craftsworker at the time earned about 300 guilders a year. Dutch Republic during the 17th century. Among the most notable centered on the tulip market, at the height of tulip mania. Research is difficult because of the limited economic data from the 1630s — much of which come from biased and speculative sources.
Some modern economists have proposed rational explanations, rather than a speculative mania, for the rise and fall in prices. The high asset prices may also have been driven by expectations of a parliamentary decree that contracts could be voided for a small cost—thus lowering the risk to buyers. Mackay claims that many such investors were ruined by the fall in prices, and Dutch commerce suffered a severe shock. Although Mackay’s book is a classic, his account is contested.
Many modern scholars feel that the mania was not as extraordinary as Mackay described and argue that not enough price data are available to prove that a tulip bulb bubble actually occurred. In a commentary on the economic folly, one monkey urinates on the previously valuable plants, others appear in debtor’s court and one is carried to the grave. The tulip was different from every other flower known to Europe at that time, with a saturated intense petal color that no other plant had. As a result, tulips rapidly became a coveted luxury item, and a profusion of varieties followed. The multicolor effects of intricate lines and flame-like streaks on the petals were vivid and spectacular and made the bulbs that produced these even more exotic-looking plants highly sought-after. Growers named their new varieties with exalted titles.
Admiral of Admirals” and “General of Generals”. However, naming could be haphazard and varieties highly variable in quality. Most of these varieties have now died out. Tulips grow from bulbs, and can be propagated through both seeds and buds. When a bulb grows into the flower, the original bulb will disappear, but a clone bulb forms in its place, as do several buds. Properly cultivated, these buds will become bulbs of their own.
Propagation is greatly slowed down by the virus. In the Northern Hemisphere, tulips bloom in April and May for about one week. 1610, which was reiterated or strengthened in 1621 and 1630, and again in 1636. Short sellers were not prosecuted under these edicts, but their contracts were deemed unenforceable. Thompson had no price data between February 9 and May 1, thus the shape of the decline is unknown. The tulip market is known, however, to have collapsed abruptly in February. As the flowers grew in popularity, professional growers paid higher and higher prices for bulbs with the virus, and prices rose steadily.
By 1634, in part as a result of demand from the French, speculators began to enter the market. The contract price of rare bulbs continued to rise throughout 1636, but by November, the price of common, “unbroken” bulbs also began to increase, so that soon any tulip bulb could fetch hundreds of guilders. Traders met in “colleges” at taverns and buyers were required to pay a 2. The entire business was accomplished on the margins of Dutch economic life, not in the Exchange itself. By 1636 the tulip bulb became the fourth leading export product of the Netherlands, after gin, herrings and cheese. The price of tulips skyrocketed because of speculation in tulip futures among people who never saw the bulbs.
Many men made and lost fortunes overnight. 37, when some bulbs were reportedly changing hands ten times in a day. No deliveries were ever made to fulfil any of these contracts, because in February 1637, tulip bulb contract prices collapsed abruptly and the trade of tulips ground to a halt. While the existence of the plague may have helped create a culture of fatalistic risk-taking that allowed the speculation to skyrocket in the first place, this outbreak might also have helped to burst the bubble. The lack of consistently recorded price data from the 1630s makes the extent of the tulip mania difficult to discern. Economist Peter Garber collected data on the sales of 161 bulbs of 39 varieties between 1633 and 1637, with 53 being recorded by GW. Ninety-eight sales were recorded for the last date of the bubble, 5 February 1637, at wildly varying prices.
The sales were made using several market mechanisms: futures trading at the colleges, spot sales by growers, notarized futures sales by growers, and estate sales. In fact, Beckmann’s account, and thus Mackay’s by derivation, was primarily sourced to three anonymous pamphlets published in 1637 with an anti-speculative agenda. Mackay’s vivid book was popular among generations of economists and stock market participants. 1980s economists have debunked many aspects of his account. By way of comparison, a ton of butter cost around 100 florins, a skilled laborer might earn 150-350 florins a year, and “eight fat swine” cost 240 florins.