Posts Tagged ‘Tulip Mania’
“Fortune’s bubbles rise and fall”*…
Gordon Gekko talks tulips. Wall Street: Money Never Sleeps / scottab140
Right now, it’s Bitcoin. But in the past we’ve had dotcom stocks, the 1929 crash, 19th-century railways and the South Sea Bubble of 1720. All these were compared by contemporaries to “tulip mania,” the Dutch financial craze for tulip bulbs in the 1630s. Bitcoin, according some sceptics, is “tulip mania 2.0”.
Why this lasting fixation on tulip mania? It certainly makes an exciting story, one that has become a byword for insanity in the markets. The same aspects of it are constantly repeated, whether by casual tweeters or in widely read economics textbooks by luminaries such as John Kenneth Galbraith.
Tulip mania was irrational, the story goes. Tulip mania was a frenzy. Everyone in the Netherlands was involved, from chimney-sweeps to aristocrats. The same tulip bulb, or rather tulip future, was traded sometimes 10 times a day. No one wanted the bulbs, only the profits – it was a phenomenon of pure greed. Tulips were sold for crazy prices – the price of houses – and fortunes were won and lost. It was the foolishness of newcomers to the market that set off the crash in February 1637. Desperate bankrupts threw themselves in canals. The government finally stepped in and ceased the trade, but not before the economy of Holland was ruined.
Yes, it makes an exciting story. The trouble is, most of it is untrue…
Drawing on ten years of research for her new book, Tulip mania: Money, Honor and Knowledge in the Dutch Golden Age, tells a different story, one that’s just as illuminating, but very different: “Tulip mania: the classic story of a Dutch financial bubble is mostly wrong.”
Like most trends, at the beginning it’s driven by fundamentals, at some point speculation takes over. What the wise man does in the beginning, the fool does in the end.” The world went mad. What we learn from history is that people don’t learn from history. — Warren Buffett, 2006 Berkshire Hathaway annual meeting
* John Greenleaf Whittier
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As we curb our enthusiasm, we might recall that it was on this date in 1933 that banks began to re-open after the “Bank Holiday” declared by the Roosevelt Administration to calm the market after bank runs had threatened the nation’s financial system during the Depression.
“Earth laughs in flowers”*…
The promise of gold, oil and king crab has lured fortune seekers to Alaska for decades. But Alaska’s newest profit-making industry stems from a most unusual source: flowers. Specifically, peonies — the kind that people will delay weddings over.
To date, over 100,000 roots have been planted in the state, and because peonies take years to mature, the industry is poised for steep growth. The projected harvest in 2017 is over 1 million stems, which could bring in somewhere between $4 to $5 million in sales. Still, this is a drop in the bucket compared to worldwide peony sales — Holland alone can sell over 30 million stems in a single month. But the northernmost state in the U.S. has one advantage over all other markets.
Alaska, it turns out, is one of the few places on Earth where peonies bloom in July…
A blooming bonanza, or another Tulip Mania in the making? Find out at “From Fish to Flowers– Is Peony Farming Alaska’s Next Gold Rush?”
* Ralph Waldo Emerson, “Hamatreya”
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As we take our pick, we might send pleasantly-cool birthday greetings to John Gorrie; he was born on this date in 1803. As a young physician, Gorrie found himself in Apalachicola, Florida, where he cared for folks suffering from malaria. Noting that people in colder climes rarely got the disease, he (illogically, but correctly) concluded that ice– more generally, cold– would help treat his patients’ fever. He first suspended ice in basins above his patients to cool the air around them. Later, he built a small steam engine to drive a piston in a cylinder immersed in brine. The piston first compressed the air, and then on the second stroke, when the air expanded, it drew heat from the brine. The chilled brine was used to cool air or make ice. He was granted the first U.S. Patent for mechanical refrigeration (No. 8080) on May 1851. Dr. Gorrie’s statue stands in Statuary Hall in the U.S. Capitol.
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