Bubble Spotting - Dutch Tulip Mania

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One of the earlier recorded market bubbles was the so-called "Dutch Tulip Mania" or "Dutch Tulip Bubble". This presentation gives a short overview on what happened

http://bubblespotting.blogspot.com/

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Bubble Spotting - Dutch Tulip Mania

  1. 1. BUBBLE SPOTTING SERIES - 2014 QUICK SUMMARY FORMAT
  2. 2. This short presentation on the Dutch Tulip Crisis forms part of a larger presentation on Market Bubbles Front page graphic - Flickr - The shifted librarian
  3. 3. BACKGROUND Tulips were introduced to the Dutch in 1593 by a botanist, Carolus Clusius, who brought the bulbs from Constantinople (now Istanbul, Turkey). www.dwc.knaw.nl/biografie/clusius/
  4. 4. These new exotic flowers quickly grabbed the imagination of the people – so much so that his own neighbours apparently broke in to his house in order to steal some bulbs.
  5. 5. Semper Augustus – the most expensive bulb sold during the height of the mania wikicommons
  6. 6. Tulips quickly became a luxury must-have for the rich and wealthy, and tulip farms sprung up all over.
  7. 7. Investors traded tulip bulbs on what effectively were Futures Markets, making fortunes for themselves in the process.
  8. 8. In 1934 speculators joined the market. The increased demand from speculators caused the market to hit a peak during the winter of 1636–37, during which time it is rumoured that some bulbs changed hands 10 times per day.
  9. 9. At the high of the craze, a single tulip bulb was worth about ten times a craftsman’s annual income.
  10. 10. There is a famous story about a hungry sailor, who mistook one of these expensive bulbs for a small onion, and ate it with his fish for breakfast. The bulb’s owner was furious and had him dragged to court, where he was promptly jailed for several months.
  11. 11. A single Viceroy (type of tulip) bulb could (allegedly) be swopped for : Two lasts of wheat Twelve fat sheep 1,000 lb. of cheese Four lasts of rye Two hogsheads of wine A complete bed Four fat oxen Four tuns of beer A suit of clothes Eight fat swine Two tons of butter A silver drinking cup
  12. 12. The Tulip craze also spread to other countries. The collapse started in February 1637, when traders refused show up for an auction. Panic spread and that was the beginning of the end.
  13. 13. Unfortunately limited data is available on the exact impact of the crash, but suffice it to say that significant fortunes were lost in the aftermath.
  14. 14. LIKED IT? ”Like” and “Share” this presentation now
  15. 15. Dutch Tulip Bulb Mania (Bubble) –Sources and further reading http://www.investopedia.com/features/crashes/crashes2.asp http://www.economist.com/blogs/freeexchange/2013/10/economic-history http://www.thebubblebubble.com/tulip-mania/ http://www.damninteresting.com/the-dutch-tulip-bubble-of-1637/ http://www.thetulipomania.com/ http://en.wikipedia.org/wiki/Tulip_mania
  16. 16. This presentation is provided in the sake of public interest, and has been compiled based on publically available information sources on the web. While great care has been taken in the preparation and compilation of information indicated here, the author does not accept any legal or other liability for any inaccuracy, mistake, misstatement or any other error of whatsoever nature contained herein. This presentation is not investment advice, not a solicitation for any type of investment, financial or otherwise, nor is this presentation an opinion expressed on, nor endorsement of markets, commodities or investments. Any names, trademarks and images are copyright their respective owners and rights in the graphic artwork and photos used in this presentation belongs to, and are courtesy of the respective owners thereof. Unless where otherwise indicated, I don’t claim to have any rights therein.

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