October 6, 2008

When the BULB-ble Burst

Fall is the time for planting tulip bulbs in flower gardens. Regardless of their beauty, there are no tulips in my garden because deer find tulips to be quite good. Yes, I could plant them inside the cottage garden, but the rabbits fit under the fence. In fact, I planted a few tulips the first year that we lived here. I now use other flowers, such as dianthus, lavender, azaleas and roses to bring spring color to the cottage garden.

So, why talk about tulips if I'm not planting tulips? I have no glorious tulip photos for you. I love interesting stories from the past that resemble today's events. So, all I have is a brief history lesson that I've gleaned from my research. Perhaps you’ve already heard variations of this story, so I'll try to keep it short. It goes something like this…

In the 1630s, newly-introduced tulip varieties were treasured and in high demand, a symbol of prosperity; a status symbol to those who could afford to grow tulips and an attractive investment to those who didn't grow tulips. Thus, pre-orders, or futures, were being sold by the growers. Demand was high; supply was short. Tulip contracts sold for 20 times the annual income of a skilled laborer. This was called Tulip Mania.

This demand (Tulip Mania) created a speculative bubble; probably the first in economic history. Folks believed that they could make a quick fortune by buying the bulbs low and selling high. In other words, most speculators weren't gardeners. People mortgaged their homes, farms or estates in order to invest in even one of these rare bulbs. Apparently, tulip bulbs could change hands up to ten times a day. That's fast flipping! Prices escalated so high that finally no one could afford to buy the tulip bulbs.

Of course, when the demand fell, the tulip market crashed. Panic swept the investors who were left owing mortgages that they could not pay. These speculators were unable to sell their high-priced tulip bulbs that were now worth a fraction of the original price. Lenders were left with unpaid mortgages. Outraged, the investors turned to the government for help. Dutch courts ruled that the investing in tulip futures was gambling. The government ended up allowing futures contracts to be voided at a 10% fee as a compromise for the losses.


Freelance travel writer. My current fiction writing projects include a completed manuscript and several works in progress.

By the way, my name is pronounced fred-ah, not freed-ah. Thank you.

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