The 1841 Book Extraordinary Popular Delusions and the Madness of Crowds has this amusing anecdote about Tulipomania:
People who had been absent from Holland, and whose chance it was to return when this
folly was at its maximum, were sometimes led into awkward dilemmas by their
ignorance. There is an amusing instance of the kind related in Blainville's Travels. A
wealthy merchant, who prided himself not a little on his rare tulips, received upon one
occasion a very valuable consignment of merchandise from the Levant. Intelligence of its
arrival was brought him by a sailor, who presented himself for that purpose at the
counting-house, among bales of goods of every description. The merchant, to reward him
for his news, munificently made him a present of a fine red herring for his breakfast. The
sailor had, it appears, a great partiality for onions, and seeing a bulb very like an onion
lying upon the counter of this liberal trader, and thinking it, no doubt, very much out of
its place among silks and velvets, he slily seized an opportunity and slipped it into his
pocket, as a relish for his herring. He got clear off with his prize, and proceeded to the
quay to eat his breakfast. Hardly was his back turned when the merchant missed his
valuable Semper Augustus, worth three thousand florins, or about 280 pounds sterling.
The whole establishment was instantly in an uproar; search was everywhere made for the
precious root, but it was not to be found. Great was the merchant's distress of mind. The
search was renewed, but again without success. At last some one thought of the sailor.
The unhappy merchant sprang into the street at the bare suggestion. His alarmed
household followed him. The sailor, simple soul! had not thought of concealment. He
was found quietly sitting on a coil of ropes, masticating the last morsel of his "onion."
Little did he dream that he had been eating a breakfast whose cost might have regaled a
whole ship's crew for a twelvemonth; or, as the plundered merchant himself expressed it,
"might have sumptuously feasted the Prince of Orange and the whole court of the
Stadtholder."
"Research into tulip mania since then, especially by proponents of the efficient-market hypothesis,[17] suggests that his story was incomplete and inaccurate."
So there is an actual agenda ("the efficient-market hypothesis" and obviously also the political forces with anti-regulatory ideologies) behind many of the claims that the bubbles aren't anything to worry about, or that some specific even hasn't happened.
In the case of Anne Goldgar's work, claiming that she found only 37 people who paid for a bulb more than "quite good yearly wage" of that time doesn't disprove that many poorer people could have spent less and were actually bankrupt, but that their fate wasn't recorded the way it was for the highest transactions and their initiators. It should not be surprising that the 37 richest people involved (which is obvious because the poorer couldn't have even invested that much) weren't hit too hard with a single speculation.
>disprove that many poorer people could have spent less and were actually bankrupt, but that their fate wasn't recorded the way it was for the highest transactions and their initiators.
Sure, we can spend all day speculating about records may have existed but were lost. I mean, there are no evidence of alien involvement, maybe those records were lost too?
It's also possible that the Tulip bubble was both short-lived and not very widespread and is just one of those stories that keeps getting bigger the more it gets re-told.
> just one of those stories that keeps getting bigger
There are apparently still records of 37 transactions paying more than a what was then "good yearly wage" for a bulb.
Moreover, from another history book, after the "crash" "in Haarlem, the city with the biggest volume of tulip
bulb trading and thus the city with the most problems" ... "the
local court there refused to hear disputes relating to the tulip trade." That obviously lowered the chance of having the records about the direct effects of the crash.
That makes saying how many current dollars a guilder is pointless. Candles have gotten way cheaper, but land around Amsterdam much more expensive. IMO the only sensible comparison is how much time it took for an average tradesman to make X amount of money.
>“And in 2019, when you hear people complaining about Bitcoin and warning about it, what you are hearing are the voices of people in 1637 saying: you shouldn’t be involved in this trade. You’re the wrong person, you don’t know enough.”
Why would you torpedo a good article at the very end with such a stupid paragraph?
I had a similar qualm, but this summarizes it better: "The story of the tulip bubble boils down to a story of fools and greed, Goldgar says. And that’s why it sticks with us." There's something about reducing this to just greed. What I personally want, is a story that can contextualize that greed better, explore it more, and not just end with "that's greed for you" (paraphrasing).
Exactly. It's a complete mischaracterization to call every stock market boom and bust cycle a result of "greed," and yet people refuse to stop doing so. I guess it creates a sense of moral outrage, and makes readers feel righteously justified.
I was having trouble putting this into words, but now after having a think, I liked when Goldgar got into the historical context of the crisis. To heavily paraphrase, in that stratified society, speculation appeared to be a way to climb the social ladder. The article's author, the one quoting Goldgar, obviously didn't interpret it this way.
I'm not saying Goldgar sees the tulip bubble that way, or that it's a historically accurate narrative, but it's miles better than saying it was caused by "fools and greed", which is similar to saying that something was caused by evil. I guess my principal point is that stupidity, greed and evil are fundamentally socioeconomic symptoms, in that they are not explanations of themselves.
Excepting the ambiguous last sentence, the article transitions from the click-friendly topic, into a strange demagoguery spin of pushing Bitcoin speculation.
Summary message: The wealthy are discouraging the lower classes from speculating in Bitcoin, saying the lower classes don't understand it, only because they fear the undesirables will become rich like them.
> And in 2019, when you hear people complaining about Bitcoin and warning about it, what you are hearing are the voices of people in 1637 saying: you shouldn’t be involved in this trade. You’re the wrong person, you don’t know enough.
Only this exact analogy is trotted out every time the Bitcoin exchange rate swings up or down very quickly. It's happened about a half dozen times now over the last 10 years.
You see this on the way up and down. The line comes mostly from people don't understand the underlying technology or economics.
Nor do those sage finger-waggers point out that the tulip mania was over within less than one year between 1636 and 1637.
Whatever Bitcoin is, it's not like Tulip Mania, nor is it much like anything that's come before.
He's claiming that Bitcoin is sophisticated technology and network effects not easily replicated. Dot com era was a bubble too but valuable companies and services survived through that crash. It's not enough to observe that there's been a run up in prices and a subsequent sell off. That happens all the time in all markets.
Ah, bitcoin has moved. There already was the usual crypto-bubble-will-burst article on the frontpage, and here comes the inevitable dutch tulip mania post.
That chart is wrong, it says bitcoin appreciated 60 times (since 2014).
If you start counting from the first available public prices ($0.1), it's 200,000 times apreciations. If you start from the price when the first articles about it appeared on HN ($1), it appreciated 20,000 times.
"Eschew flamebait. Don't introduce flamewar topics unless you have something genuinely new to say. Avoid unrelated controversies and generic tangents." The interesting thing here is the history of the tulip bubble, not another Bitcoin war.
Wasn't trying to flame up anything. The article mentions
“And in 2019, when you hear people complaining about Bitcoin and warning about it, what you are hearing are the voices of people in 1637 saying: you shouldn’t be involved in this trade. You’re the wrong person, you don’t know enough.”
Was just adding other similar references I had heard before. I'm new to HN, are there a list of flamewar topics I can look up for next time?
The tulip bubble is the worst poster child of asset bubbles and irrational exuberance
But at this point, I don't think it matters. Colloquially, saying 'tulips' gets the point across. People know that you are criticizing the exuberance or volatility of an ephemeral asset. People know what asset price distortion you are comparing it to.
The Orchid Bubble (Orchidelirium) was comparable to the tulip bubble. Bulldozers were just digging up tons of Amazon soil and orchid plants and dumping them into ship's holds. Then the ships would lumber home, and have their cargo sorted out in port.
For some reason a tale of a governmental debt instrument being overvalued isn't quite as popular as one about tulips ;)
The South Sea Company is a remarkable example of people ignoring the fundamentals of a stock in order to speculate, though. Or perhaps a story of people knowing just enough about the fundamentals to get themselves into trouble... (Many comparisons were made to the East India Company, which had a similar trade monopoly, and that comparison made some sense - until you consider the fact that a trade monopoly with land your country owns is much more profitable than one where you're frequently at war with the owners)
I think the fashion for similarly marketed investments (including the infamous "an undertaking of great advantage but nobody to know what it is") is probably the biggest lesson.
That people in the seventeenth century didn't really understand how to value the fundamentals of a new government trade monopoly is unsurprising and its subsequent overvaluation perhaps not that great an indictment of seventeenth century investors; a more widely applicable lesson is that price movement in this stock spilled over into newfound speculator enthusiasm for absolutely ridiculous ventures and companies pretending to be raising money for one purpose and actually spending it on something else.
Exercise: find the site guideline that is broken by doing so. https://news.ycombinator.com/newsguidelines.html