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CLASSIC: Were Tulips Really The Bitcoin of the 1600s? · Ridiculous History

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Speaker 1: Fellow Ridiculous historians, we are on the high seas, and
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Speaker 1: as a result, we are doing a run of classics here. Guys,
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Speaker 1: remember cryptocurrency back when it was tulips.
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Speaker 2: Well that's very meta, man, I'm having to parse that
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Speaker 2: one out. Yeah, it's still around, but it certainly was
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Speaker 2: a time where it was the beanie baby of our era.
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Speaker 2: And now the beanie baby of our era is la
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Speaker 2: Boo boo. So I don't even know where to start
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Speaker 2: with all of this stuff.
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Speaker 1: Oh my gosh, yeah, yeah, Noel. Back in twenty eighteen,
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Speaker 1: you and I asked each other what happened with the
0:34
Speaker 1: Dutch Republic and tulips. It's often used as a textbookcase
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Speaker 1: in marketing classes the world round. But is this tulip
0:45
Speaker 1: mania truly an economic boom and bust? We're gonna find out.
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Speaker 1: Mm hmm yep.
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Speaker 2: Let's talk about speculative flowers on Ridiculous History.
0:59
Speaker 1: Ridiculous History is a production of iHeartRadio. Originally it was
1:27
Speaker 1: called the Dull Band because of it's so called resemblance
1:31
Speaker 1: to a turban, and then it was called the Tulbent
1:34
Speaker 1: in Turkey, and then it was called the Tulip in France.
1:38
Speaker 1: And then in the fifteen seventies it was called the
1:41
Speaker 1: tulbe Today we call it the tulip ben. So you're
1:45
Speaker 1: telling me it's not because it resembles tulips pairs together. Apparently,
1:50
Speaker 1: you know, all this is in the eye of the beholder, Noll.
1:52
Speaker 1: But in this case, the name comes from the resemblance
1:56
Speaker 1: to a turban. That's right, because it came from the
1:59
Speaker 1: continent of Asia, right it did. It came from Western Asia,
2:03
Speaker 1: from Turkey. And the earliest known instance of a tulip
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Speaker 1: flowering in cultivation they were just growing wild beforehand, is
2:13
Speaker 1: in fifteen fifty nine a guy named Johann Heinrich Herwart
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Speaker 1: grew the tulip. I don't know if you're a fan
2:22
Speaker 1: of flowers or if our super producer, Casey Pegram is
2:26
Speaker 1: a fan himself.
2:28
Speaker 2: Well, Casey Pegrim is a flower in the desert, as
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Speaker 2: far as I'm concerned.
2:33
Speaker 1: A rose in the concrete, Yes, exactly exactly. So what
2:36
Speaker 1: about you, Noel are you? Would you say you're pro flower?
2:39
Speaker 2: Well I am, but I kill them so I am
2:43
Speaker 2: more of a succulent guy, because they're a little more,
2:47
Speaker 2: a little more sturdy, shall we say, aka, a little
2:50
Speaker 2: more resilient, and I don't kill them quite as often,
2:53
Speaker 2: but I still manage. I still manage.
2:55
Speaker 1: Yeah, succulents will be more hearty, for sure. I always
2:58
Speaker 1: thought one of the toughest flowers grow was the orchid.
3:01
Speaker 1: I only know one person who has a magic touch
3:04
Speaker 1: with orchids, and that's my mother. I don't know how
3:06
Speaker 1: she does it.
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Speaker 2: It's cause she's made a magic bend.
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Speaker 1: She's made of magic perhaps, and she would be making
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Speaker 1: a mint allegedly had she gone into the tulip game
3:17
Speaker 1: at a certain point in time. Because nowadays, it's pretty
3:20
Speaker 1: easy to buy tulips. You could go to your local nursery,
3:23
Speaker 1: you can go to your local even a hardware store
3:26
Speaker 1: will have some tulips for sale often.
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Speaker 2: Yeah, Like I think a dozen or so bulbs I
3:32
Speaker 2: found online for about eighteen dollars or something. And you
3:35
Speaker 2: know that's for every possible type of variety you could
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Speaker 2: think of. We're talking about a time where the price
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Speaker 2: of tulip bulbs just went completely bonkers, absolutely bananas.
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Speaker 1: So I propose we tackled today's episode in the following way.
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Speaker 1: Let's tell the story that's most familiar to everyone, and
3:57
Speaker 1: then let's after that see how much of this stacks up.
4:01
Speaker 1: You know what the fact and the fiction actually are.
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Speaker 2: That's the only way to do it, ben.
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Speaker 1: Yeah, all right. So, in the early seventeenth century, the
4:09
Speaker 1: Dutch Republic experienced what a lot of people will tell
4:12
Speaker 1: you was the first example of an economic boom and bust. Right,
4:18
Speaker 1: we know about this kind of stuff here in the
4:20
Speaker 1: US today with the housing bubble that burst in two
4:23
Speaker 1: thousand and eight. We know about this in various other
4:27
Speaker 1: points in time, but people will tell you that the
4:31
Speaker 1: Dutch Republic in the early seventeenth century, the sixteen hundreds
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Speaker 1: experienced the very first recorded economic bust and it was
4:40
Speaker 1: called toulip Mania to lipmania to Lipmania. So what happens exactly.
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Speaker 2: Well, it all revolves around the idea of speculation. Speculation
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Speaker 2: being predicting what something will be worth in the future
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Speaker 2: and placing your bets that it will be worth that
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Speaker 2: or more, and then the bottom out potentially when that
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Speaker 2: speculative price reaches completely disproportionate heights with the thing itself.
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Speaker 1: Does that make sense, Yeah, yeah, and all of a
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Speaker 1: sudden becomes overvalued or people realize it's overvalued for a
5:16
Speaker 1: series of reasons that we'll get into yes, yeah, for
5:18
Speaker 1: a series of reasons that can vary depending on the
5:23
Speaker 1: specific cases. In the case of tulips, essentially, the way
5:29
Speaker 1: you'll hear this story pitch is that people in the
5:31
Speaker 1: Dutch Republic went absolutely bonkers for tulips, began paying exorbitant
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Speaker 1: rates for them, that it gripped the country and then
5:39
Speaker 1: eventually that's the sound of a bubble popping. But how
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Speaker 1: do we get here? What made tulip so popular?
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Speaker 2: Let it starts earlier than this fellow, but he's kind
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Speaker 2: of the main dude that really introduced tulip culture into
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Speaker 2: the Netherlands. His name was corlus Clusius, and he created
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Speaker 2: a very very influential guard and at the University of Leiden,
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Speaker 2: and that was in the late fifteen hundreds. He started
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Speaker 2: this kind of tradition among horticulturists which became kind of
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Speaker 2: a gentlemanly pursuit of trading, you know, clippings and seeds
6:15
Speaker 2: and all kinds of tulip related things bulbs between each
6:18
Speaker 2: other in the interest of kind of spreading this tradition around.
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Speaker 2: But it was within a very small set of very
6:25
Speaker 2: particular types of learned individuals, right. But then it kind
6:29
Speaker 2: of started getting a little bit out of control, and
6:32
Speaker 2: instead of just doing trades, these folks who had the
6:36
Speaker 2: tulip bulbs started charging money for them, and then members
6:40
Speaker 2: of the merchant class, for example, who wanted to flaunt
6:42
Speaker 2: their newfound wealth. Because this was kind of a relatively
6:45
Speaker 2: new class of people that could afford the finer things
6:48
Speaker 2: in life. In this part of the country, they were
6:50
Speaker 2: experiencing boom times, they decided they wanted to get in
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Speaker 2: on this craze because these flowers were very beautiful, and
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Speaker 2: some of them, particular that had kind of miscolored discolorations
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Speaker 2: almost they were even more desirable.
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Speaker 1: They were like rare POGs or pokemon exactly, and you
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Speaker 1: have to catch them all. Yes. So this this guy,
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Speaker 1: Carolus Clusius, got this whole craze going around fifteen ninety three.
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Speaker 1: And tulips had several strong advantages that made that set
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Speaker 1: them apart from other flowers of the time. First, and
7:26
Speaker 1: we need to emphasize this, as you said earlier in
7:28
Speaker 1: nol they had these intense colors that other plants in
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Speaker 1: the area just didn't have. Secondly, and perhaps even more importantly,
7:37
Speaker 1: it turns out that tulips can grow pretty well in
7:40
Speaker 1: this climate. This area the Dutch Republic doesn't have very
7:45
Speaker 1: good soil for you know, most of the country. And
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Speaker 1: it turns out that tulips love what is called poor soil.
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Speaker 1: So not only can you have these beautiful, striking flowers,
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Speaker 1: but you can actually grow them in a successful man
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Speaker 1: in a place where you know, a lot of other
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Speaker 1: flowers wouldn't grow.
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Speaker 2: Here's the thing, though, Ben, and I didn't know this
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Speaker 2: at all. Tulips take a really long time to grow.
8:08
Speaker 2: It's true. Yeah, so you can do it with seeds,
8:11
Speaker 2: but seeds. Tulips grown from seeds take like up to
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Speaker 2: six or seven years to grow. And then you have
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Speaker 2: I guess what would be the same as like making
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Speaker 2: a clone of any other type of plant, but it's
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Speaker 2: a bulb. I guess it's called an offshoot, I believe, Ben,
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Speaker 2: and those only take three or four years, maybe even
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Speaker 2: two years if I'm not mistaken. And that was what
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Speaker 2: people wanted. And here's the thing that's also interesting about
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Speaker 2: this whole story is that it kind of introduced some
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Speaker 2: of the concepts surrounding futures trading, right because you're not
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Speaker 2: buying a full grown tulip, because you can't uproot a
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Speaker 2: full grown tulip or it will die. You have to
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Speaker 2: wait until the summer. When they go dormant, they literally
8:52
Speaker 2: go back down into these bulbs, and only then can
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Speaker 2: you dig them up. So people, these merchants, these aristocrats,
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Speaker 2: these whomever that were just going wild for these tulips
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Speaker 2: had to buy the promise of a future tulip right.
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Speaker 1: They would sign contracts before a notary to buy tulips
9:11
Speaker 1: at the end of the dormant season, which was from
9:14
Speaker 1: June to roughly September, that's when you could actually pull
9:17
Speaker 1: them out of the ground. And because of this, the Dutch,
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Speaker 1: who had already developed a lot of techniques of modern finance,
9:27
Speaker 1: created this durable goods futures market for tulip bulbs. And
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Speaker 1: it went insane pretty quickly, you know, because you're not
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Speaker 1: buying tulips today, you're buying tulips tomorrow.
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Speaker 2: Now glad they pay you tuesday for a hamburger today,
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Speaker 2: only the other way around.
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Speaker 1: And then when you hear that other people in the
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Speaker 1: market are paying increasingly extravagant prices, then you start to
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Speaker 1: move with the market as well, whether you are selling,
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Speaker 1: whether you are buying, whether you are just trading tulip futures.
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Speaker 2: Yeah, and let's remember too that these were not native
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Speaker 2: to the Netherlands, and so they were already relatively scarce
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Speaker 2: because they take so long to grow. They weren't just overflowing, right.
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Speaker 2: There was a scarcity and a rare quality to them,
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Speaker 2: and that is what drives that kind of gotta have
10:20
Speaker 2: them all mentality. Right, Yeah, if anyone could have them,
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Speaker 2: no one would care.
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Speaker 1: Right exactly, kind of like hammer Pants in the nineteen eighties.
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Speaker 1: I don't know, I think we're both too young to
10:31
Speaker 1: really deliver that reference. I just remember him, see hammer
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Speaker 1: So we said fifteen ninety three, this is when it
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Speaker 1: starts catching on the early adopters, right, the learned fans
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Speaker 1: of flowerdom and horticulture start buying up tulips. By sixteen
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Speaker 1: thirty three. In some transactions, tulip bulbs actually replace currency.
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Speaker 1: History Mike Dash found documentation of actual properties being sold
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Speaker 1: for what he said were handfuls of tulip bulbs. And
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Speaker 1: then more and more people heard the sort of friend
11:08
Speaker 1: of a friend of a friend's stories about someone who
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Speaker 1: got into the market, bought and sold tulips, and now
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Speaker 1: they're set for life. And by that same year, sixteen
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Speaker 1: thirty three, when this stuff is really escalating, a single
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Speaker 1: bulb of a tulip variety called Simper Augustus was already
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Speaker 1: worth five five hundred guilders.
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Speaker 2: Yeah, and Simper Augustus is that one with the with
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Speaker 2: the stripes. It's got kind of red flame like stripes
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Speaker 2: on it. And this is super interesting. It turns out
11:37
Speaker 2: that what causes that condition is actually a virus. Yes, yeah,
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Speaker 2: it's correct. And no one knew how to breed them
11:45
Speaker 2: to I mean, I've known breeds not the right word
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Speaker 2: to cultivate them to look like that. So they tried
11:50
Speaker 2: all kinds of crazy stuff, didn't they then.
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Speaker 1: Yeah, they tried. They tried a ton of very strange things.
11:57
Speaker 1: They would let's see what was one of them. They
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Speaker 1: buried it in a certain type of mud.
12:01
Speaker 2: Yeah, there was a pigeon dung i believe, or pigeon
12:05
Speaker 2: iguana or whatever you want to call it. Pigeon poop poop.
12:07
Speaker 2: There you go, that's the right word. That's the science.
12:09
Speaker 2: That's the science word. They also would even tie like
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Speaker 2: a red and a white together and then bury them
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Speaker 2: in the hopes that they would somehow commingle and create
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Speaker 2: yea tulip b osmosis very much so. My favorite is
12:21
Speaker 2: they would sprinkle the soil with pigments that they would
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Speaker 2: hope would somehow seep into the soil, and you know,
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Speaker 2: there was they didn't know what they were doing, no.
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Speaker 1: But they were just trying different things exactly. I think
12:31
Speaker 1: most people at the time would have made similar attempts.
12:36
Speaker 1: Those are just a few examples we know of, but
12:38
Speaker 1: we know that there were many other techniques, most of
12:41
Speaker 1: which were cartoonish failures. And this just made these failures
12:46
Speaker 1: just made the specific types of high end tulips even
12:50
Speaker 1: more appealing. Now we see the market explodeving. You would
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Speaker 1: think maybe that by sixteen thirty three someone would have
13:03
Speaker 1: looked around, seen a Simper Augustus bulb and said, I
13:06
Speaker 1: don't think this is really worth five thousand, five hundred guilders.
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Speaker 1: But no, the bubble kept growing.
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Speaker 2: Yeah, and we actually had situations where these deals were
13:18
Speaker 2: being made in back rooms of like inns and pubs
13:22
Speaker 2: and stuff, and it was all pretty organized. They apparently
13:25
Speaker 2: are these smoke filled rooms where people were getting their
13:28
Speaker 2: drink on and their smoke on, and they had like
13:32
Speaker 2: these pieces of wood that they would write they would
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Speaker 2: essentially bid on these tulip lots, and it was like,
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Speaker 2: I don't know. I saw this fantastic video series on
13:42
Speaker 2: YouTube that I was telling you about Ben that I
13:44
Speaker 2: think you had seen two on a channel called Economics Decoded.
13:48
Speaker 2: And the guy I don't see his name here, he
13:50
Speaker 2: doesn't really announce himself for lower third himself, but he
13:52
Speaker 2: does a fantastic job with illustrations and sound effects, and
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Speaker 2: I really recommend checking it out. It is a three
13:57
Speaker 2: part series on tulimania, and he liked it to if
14:01
Speaker 2: when we had to go and buy a stock, if
14:04
Speaker 2: we had to literally have a conversation with a bunch
14:07
Speaker 2: of dudes in a smoky room and arrive at an
14:10
Speaker 2: agreed upon price, because we take for granted how quickly
14:13
Speaker 2: information travels these days, and how the price of things
14:17
Speaker 2: are just set, it's understood by algorithm.
14:19
Speaker 1: Or they change it in almost uniform manner.
14:21
Speaker 2: Totally uniform, Whereas this was like a series of mini
14:25
Speaker 2: markets in different parts of the country that were pretty
14:28
Speaker 2: isolated because you could only get information to another part
14:31
Speaker 2: as fast as a guy could ride there on a horse,
14:33
Speaker 2: right exactly. That's that's true. That's that's something that we
14:38
Speaker 2: can easily forget in the modern age of microsecond transactions
14:43
Speaker 2: and AI quote unquote helping people trade stocks. So the
14:48
Speaker 2: way the story goes is that this craze continues. By
14:53
Speaker 2: sixteen thirty five, you could see records of forty bulbs,
14:58
Speaker 2: just forty bulbs sold for one hundred thousand guilders or florins,
15:03
Speaker 2: and by way of comparison at that time, in the
15:06
Speaker 2: same year, one ton of butter costs around one hundred guilders,
15:12
Speaker 2: and someone who was a pretty skilled laborer, someone who
15:15
Speaker 2: practiced a trade of some sort, like a blacksmith or
15:19
Speaker 2: a ferrier or something, they might earn as much as
15:21
Speaker 2: one hundred and fifty to three hundred and fifty guilders
15:25
Speaker 2: a year. So this is a massive amount of money involved.
15:29
Speaker 2: And I really enjoy the part in the Tulipmania series
15:35
Speaker 2: on Economics Decoded where he walks us through the strange
15:40
Speaker 2: occurrence of February sixteen thirty seven. At this point, the
15:47
Speaker 2: price of a single Simper Augustus bulb that was worth
15:50
Speaker 2: five thy five hundred gilders in sixteen thirty three is
15:54
Speaker 2: easily worth ten thousand guilders. The center cannot hold. Things
16:01
Speaker 2: are going to fall apart. Right, That's not what shinua
16:04
Speaker 2: Achebe was talking about in his book, but you can
16:07
Speaker 2: see how this applies. And so according to the story,
16:11
Speaker 2: the tulip market crashes very very quickly, and people start
16:17
Speaker 2: to reneg on those contracts that they had signed. So
16:22
Speaker 2: someone would say, look, you owe me this much money
16:26
Speaker 2: for these tulips, and they would just refuse to pay. Yeah,
16:29
Speaker 2: And they got into a real sticky situation where the
16:32
Speaker 2: sellers had the tulips now at that delivery period where
16:35
Speaker 2: they'd gotten out of the ground, and there's only a
16:37
Speaker 2: limited amount of time before they are going to not
16:40
Speaker 2: be viable anymore, that they have to rebury them. But
16:44
Speaker 2: nobody's like accepting them. People are like, no, I don't
16:46
Speaker 2: want them, I'm not going to pay you. And I
16:48
Speaker 2: think small claims court got involved where they they had
16:51
Speaker 2: to essentially get the courts to help them come up
16:55
Speaker 2: with a system of you know, repayment that was agreeable
17:00
Speaker 2: by both parties and ended up being a small percentage
17:03
Speaker 2: of three percent of the price promised or where. Because
17:06
Speaker 2: again these futures and again this wasn't really exactly futures
17:09
Speaker 2: trading It was sort of like some of the same
17:12
Speaker 2: style of economics as futures trading, but future trading has
17:15
Speaker 2: protections built in that this just didn't. And this is
17:18
Speaker 2: kind of just like the wild West, and so you
17:20
Speaker 2: wouldn't pay full price and you'd get like a you
17:22
Speaker 2: would get a deal because you're taking on risk your
17:27
Speaker 2: tulip might not turn out, and you don't get to
17:29
Speaker 2: just say, oh, my tulip didn't turn out, I'm not
17:31
Speaker 2: going to pay for it. That's technically not allowed, even
17:35
Speaker 2: though that's kind of what these people were doing. But
17:37
Speaker 2: it wasn't about the tulip not turning out. It was
17:39
Speaker 2: more about the whole system kind of falling. Yeah, well,
17:42
Speaker 2: you don't pay full price, you pay a little bit
17:44
Speaker 2: less because you're soaking up some of that risk for
17:47
Speaker 2: the grower.
17:48
Speaker 3: Yeah.
17:48
Speaker 1: Yeah, And there's an interesting step here that I want
17:51
Speaker 1: to make sure we don't miss. Because of the precipitous
17:56
Speaker 1: rise the price of tulip's, most speculators by sixteen thirty
18:01
Speaker 1: seven couldn't afford to buy even the cheapest tulips, and
18:05
Speaker 1: this is what triggered the collapse in demand. And then
18:09
Speaker 1: when the demand disappeared, the flowers quickly became worth maybe
18:13
Speaker 1: ten percent of what they had been worth the day
18:16
Speaker 1: or the week before. And this sounds funny, this sounds
18:21
Speaker 1: like some sort of Doctor Seus's parable, But the real
18:24
Speaker 1: time effect and the real life effect of this is
18:27
Speaker 1: that people encountered financial catastrophe. People's lives were ruined when
18:32
Speaker 1: the tulip trade collapsed, and as you said, with the
18:36
Speaker 1: courts getting involved, these vicious fights over debt continued for
18:42
Speaker 1: years and years and years, and thus the Tulip Boom
18:46
Speaker 1: and Bust of the Dutch Republic became one of the
18:49
Speaker 1: most well known financial cautionary tales in the Western world
18:54
Speaker 1: until about nineteen eighty when people realized that there might
18:59
Speaker 1: be bored to the story, because it turns out that
19:04
Speaker 1: the story we just related to you, ridiculous historians is
19:09
Speaker 1: primarily based on a work of a Scottish journalist named
19:14
Speaker 1: Charles McKay. In eighteen forty one, he wrote a book
19:17
Speaker 1: called Extraordinary Popular Delusions and the Madness of Crowds. He
19:23
Speaker 1: sourced his story about this tulip Boom and Bust from
19:27
Speaker 1: a guy named Johann Beckman, who in seventeen ninety seven
19:31
Speaker 1: wrote a book called A History of inventions, discoveries and origins.
19:36
Speaker 1: And then Beckmann's story when we trace this back, comes
19:40
Speaker 1: from three anonymous pamphlets that were published in sixteen thirty seven,
19:46
Speaker 1: the same year Everything went to pot and they were
19:48
Speaker 1: hit pieces.
19:49
Speaker 2: Bennis slicing the air like a knife with his hand
19:51
Speaker 2: right now, because he feels very strongly about this, and
19:53
Speaker 2: I agree for a good reason, hit pieces. Indeed, because
19:56
Speaker 2: he had an axe to grind. He did not like
19:59
Speaker 2: the practice of spec at all, and neither did McKay.
20:02
Speaker 2: And even today, this idea of futures is considered a
20:07
Speaker 2: moral by many, and it's a lot of it is
20:10
Speaker 2: felt to be a type of gambling because you're making
20:14
Speaker 2: bets on things that you don't actually own.
20:16
Speaker 1: Right, you know what I mean.
20:17
Speaker 2: Right, You're taking this piece of paper it says I
20:20
Speaker 2: own the idea of this thing what does not yet exist,
20:24
Speaker 2: and then you're selling it to somebody else for an
20:26
Speaker 2: inflated price based on this imaginary number that keeps getting
20:31
Speaker 2: higher and higher and higher. It's sort of like subprime mortgages,
20:34
Speaker 2: for example, where you keep betting on something and people
20:38
Speaker 2: don't fully understand you know, what the market is going
20:41
Speaker 2: to do, and then it does a thing that no
20:44
Speaker 2: one quite saw coming. And then all of a sudden,
20:46
Speaker 2: all those bets you made you got to pay them,
20:48
Speaker 2: but nobody has the money to pay them.
20:50
Speaker 1: Yeah, the research was not done, and at least in
20:53
Speaker 1: the subprime mortgage crisis, there is overwhelming evidence that several
20:58
Speaker 1: people knew exactly what was happening and just decided to
21:01
Speaker 1: let it happen.
21:02
Speaker 2: Well, because you can make money. That's the thing about bubbles, right,
21:04
Speaker 2: if you ride it out at the right time, you
21:06
Speaker 2: ride that wave correctly, you can make a lot of money.
21:09
Speaker 1: And we see other examples of this, Beanie babies, that's
21:12
Speaker 1: an example, POGs. I was talking off air a while
21:16
Speaker 1: back with Casey about bitcoin. Casey, do you remember Do
21:20
Speaker 1: you remember bitcoin?
21:22
Speaker 3: I do remember bitcoin? Yes?
21:24
Speaker 2: Are you?
21:25
Speaker 1: Are you involved? Are you a bitcoiner? No?
21:27
Speaker 3: No, I got out of bitcoin a long time ago,
21:30
Speaker 3: So no, I don't have a stake in bitcoin anymore.
21:32
Speaker 1: But didn't you get out like a little too early?
21:35
Speaker 3: I did? Indeed, Yeah, I bought when it was like
21:39
Speaker 3: maybe like a dollar or something per bitcoin, and then
21:42
Speaker 3: at its height it was worth some crazy amount like
21:45
Speaker 3: maybe close to twenty thousand dollars a bitcoin. But I
21:48
Speaker 3: sold when it was far less than that. There's like
21:50
Speaker 3: a lot of people who have parked way too much
21:52
Speaker 3: money in bitcoin who have lost a lot over the
21:54
Speaker 3: last several months.
21:55
Speaker 2: Yes, it's really interesting. It's a really interesting kind of comparison.
21:58
Speaker 1: And they're more bitcoins on the market, right.
22:01
Speaker 3: Oh yeah, there's like Ethereum, there's there's a bunch, Yeah.
22:04
Speaker 1: There's there's doge coin.
22:06
Speaker 3: Yeah yeah, there's there's all these weird like meme coins.
22:08
Speaker 3: And there's one I was reading about called stable coin,
22:12
Speaker 3: which is literally just peg to the US dollar. So
22:14
Speaker 3: it's kind of like, what's even the point, But apparently
22:17
Speaker 3: the ideas you can kind of I don't know, longer
22:20
Speaker 3: money with it or something. So you know, oh good
22:23
Speaker 3: the world of crypto. Yeah, so so.
22:25
Speaker 1: We do see an interesting comparison there. We also know
22:34
Speaker 1: that the tulip story itself, the story of tulip mania,
22:39
Speaker 1: may have been a case of people playing telephone throughout
22:44
Speaker 1: history based on essentially works of propaganda that were anti speculative,
22:50
Speaker 1: anonymously published pamphlets, and this means that this means that
22:55
Speaker 1: we have more research ahead of us. There are some
22:58
Speaker 1: wonderful books about tulipmania. There are two that are both
23:02
Speaker 1: called tulipmania, right, and the authors of these books will
23:08
Speaker 1: assure you and assure us that the phenomenon was actually exaggerated,
23:14
Speaker 1: that contrary to what McKay says, it was not a
23:17
Speaker 1: situation wherein every single person in the nation, from paupers
23:22
Speaker 1: to royalty, were losing their minds and gouging their eyes
23:25
Speaker 1: out to buy more tulips.
23:27
Speaker 2: Because I learned something in this research is that the
23:29
Speaker 2: Dutch more or less invented the model for the modern
23:33
Speaker 2: stock exchange. So it would certainly make sense that this
23:36
Speaker 2: was something that happened in their neck of the woods.
23:37
Speaker 2: And they also, you know, were a huge trading empire,
23:41
Speaker 2: and they established New York City and all of you know,
23:44
Speaker 2: the Dutch East India Trading Company and all of that.
23:46
Speaker 2: I mean, it was definitely in their national identity.
23:50
Speaker 1: Right. Harlem is originally a town in the Netherlands.
23:54
Speaker 2: Harlem is where the infamous collapse of the market supposedly
24:00
Speaker 2: happened during that auction where nobody bid.
24:03
Speaker 1: Yeah, that's Harlem with two eights, that's right.
24:06
Speaker 2: And another thing that I want to point out too,
24:07
Speaker 2: from that video series. We mentioned the guy in that
24:11
Speaker 2: video series points out something that I think should not
24:14
Speaker 2: be ignored is that gambling was a huge, another huge
24:18
Speaker 2: part of their public, their national consciousness. People would make
24:23
Speaker 2: bets on the craziest things.
24:25
Speaker 1: I think.
24:25
Speaker 2: He points out one about a guy who bet that
24:27
Speaker 2: he could ford a river in a tiny wooden barrel
24:32
Speaker 2: or like a trough or something like that, and I
24:35
Speaker 2: believe it was Rembrandt, the famous painter, who bet on
24:38
Speaker 2: whether he'd be alive the next year or not. So,
24:41
Speaker 2: I mean, it was definitely a thing that was very popular.
24:44
Speaker 2: So it's almost like, you know, why not, let's bet
24:47
Speaker 2: on tulips. And also we haven't mentioned the fact that
24:49
Speaker 2: the plague was a big part of this, and people's
24:52
Speaker 2: life expectancy was very short. Yeah, it was kind of like, yolo,
24:55
Speaker 2: let's do this, you know.
24:57
Speaker 1: Yeah. And with these important instrumental pieces of context, we
25:02
Speaker 1: can unpack a little bit of the fact versus fiction
25:06
Speaker 1: around tulip Mania. We mentioned people did have their lives
25:11
Speaker 1: ruined financially at the time. That is true, but it
25:14
Speaker 1: may have been far fewer people than McKay would have
25:18
Speaker 1: us believe. In fact, some researchers have found fewer than
25:23
Speaker 1: half a dozen people who experienced financial trouble in that
25:26
Speaker 1: time period during the tulip boom and bust, and hear
25:31
Speaker 1: people argue that although prices had risen, money had not
25:35
Speaker 1: actually changed hands between buyers and sellers, so the profits
25:39
Speaker 1: were never realized for the sellers unless they had made
25:42
Speaker 1: other purchases on credit expecting their tulip money to come
25:46
Speaker 1: in sometime between June and September. So the collapse and prices,
25:50
Speaker 1: the argument goes, did not actually cause a ton of
25:53
Speaker 1: people to lose real tangible money, just had a series
25:58
Speaker 1: of interesting, increasingly desperate conversations.
26:01
Speaker 2: Yeah, it's actually really cool that we got to do
26:04
Speaker 2: this story because I just the other day was asking
26:06
Speaker 2: my girlfriend's stepdad. He's a big Scotch fan, and I
26:11
Speaker 2: was something I've always wondered. I asked him, was how
26:15
Speaker 2: is it sustainable to have these Scotches that you age
26:18
Speaker 2: for twenty thirty years or whatever and have that be
26:21
Speaker 2: viable when you need to be selling stuff selling product
26:24
Speaker 2: right away? And I think I'm explaining this right, But
26:27
Speaker 2: it was another form of futures where you have a
26:29
Speaker 2: certain elite that are investing in barrels, investing in particular
26:33
Speaker 2: lots or whatever, of the good stuff, the really long
26:36
Speaker 2: aged kind of fancy stuff that they do in smaller
26:38
Speaker 2: batches in order to finance the quicker turnaround product. And
26:43
Speaker 2: I just thought that was really interesting that this is
26:45
Speaker 2: a very similar example to that, Like, how do you
26:47
Speaker 2: take something that requires years to actually generate a tangible
26:51
Speaker 2: thing and make that a market where people are actually
26:54
Speaker 2: going to pay into it? And that's how you do
26:56
Speaker 2: It's very similar to with whiskey.
26:58
Speaker 1: Yeah, wine would be another great comparison. I believe this story,
27:03
Speaker 1: while it does seem to have a cautionary aspect to it,
27:07
Speaker 1: and while it does seem to be sort of a
27:10
Speaker 1: morality tale, we know that it's been exaggerated. It hasn't
27:15
Speaker 1: been completely made up. This really did happen, And I
27:18
Speaker 1: would say that this means it still functions as a
27:23
Speaker 1: crucial lesson in these our modern days. Don't buy tulips
27:27
Speaker 1: for too much money, you know what I mean? And
27:29
Speaker 1: don't we have to be we have to be very
27:32
Speaker 1: cognizant and very self aware of group think and group panics.
27:38
Speaker 1: Something like this will come along every so often.
27:40
Speaker 2: Oh and another interesting little tidbit I picked up along
27:42
Speaker 2: the way is that what happens when you start increasing
27:46
Speaker 2: supply over years in a market that relies on scarcity
27:52
Speaker 2: right to create the actual value of the thing itself,
27:54
Speaker 2: all of a sudden it ain't so scarce anymore.
27:57
Speaker 1: And then people are like, well, well, here's another example
28:01
Speaker 1: that's tangentially related. And that's a good point in Opek
28:05
Speaker 1: recently met to reduce production of petroleum, and they did
28:12
Speaker 1: that not because they're worried about running out of reserves,
28:15
Speaker 1: but because the price globally of oil fell too low
28:20
Speaker 1: for their liking. And now, technically speaking, the US is
28:25
Speaker 1: how you measured out. The US is the world's largest producer.
28:28
Speaker 2: Interesting, right, and that's where future is really coming to
28:31
Speaker 2: play today, is with things like oil, like absolutely necessary
28:35
Speaker 2: tangible goods. Yeah, yeah, it's supposed to tulips, which are
28:39
Speaker 2: kind of like frivolous. And if if you heard that
28:42
Speaker 2: that mighty Python sketch about the loopins.
28:44
Speaker 1: Oh yes, I think Gabe reminded me of that one too.
28:48
Speaker 2: Maybe we should go out on that because it's such
28:50
Speaker 2: a fun reminder of how absurd this whole story really is.
28:53
Speaker 1: Let's do that. That's a good idea. Thank you so
28:56
Speaker 1: much for tuning in. Everyone, We hope that you enjoyed
28:59
Speaker 1: this episode. We want to hear your opinions on other
29:03
Speaker 1: economic crazes and if you had fun listening, let us
29:07
Speaker 1: know in lieu of sending us tulips. Why not head
29:10
Speaker 1: over to our Facebook page Ridiculous Historians, or drop by
29:14
Speaker 1: Apple podcast and give us a rating. My fine friends,
29:20
Speaker 1: now false moves.
29:21
Speaker 3: Please, I want you to hand over all the loopins.
29:24
Speaker 1: You've got loopins?
29:26
Speaker 3: Yes, loopins?
29:27
Speaker 1: Come on, come on, what do you mean lupins? Don't
29:31
Speaker 1: try and play for time? I'm not you mean the
29:34
Speaker 1: flower loopins.
29:35
Speaker 3: That's right.
29:36
Speaker 1: Oh, we haven't got any loopins. Not, my fine friends,
29:40
Speaker 1: I happen to know that this is the loop in.
29:42
Speaker 1: Express your tiny mind.
29:46
Speaker 3: Get out of the coach.
29:48
Speaker 1: Oh so much of the lupins. Denis mores More galloping
29:55
Speaker 1: cruits more, Dennis More, Denis More at his horse concord.
30:00
Speaker 1: He steals from the ridge packets.
30:03
Speaker 3: To the board, mister bools.
30:08
Speaker 1: I'll be back for more podcasts from iHeartRadio.
30:16
Speaker 2: Visit the iHeartRadio app, Apple Podcasts, or wherever you listen
30:19
Speaker 2: to your favorite shows.