- [Narrator] Amsterdam,
Dutch Republic, the 1630s. Here's how the story goes. A sailor is doing some
business with a merchant and as they conclude their meeting, the hospitable merchant rewards the sailor for his good service by giving him a fine red
herring for breakfast. But the sailor is disappointed. A single herring doesn't
really make a meal. And spotting an onion on the table, the sailor pockets it to
have alongside the fish. Technically stealing, of course, but it's just an onion, right? Then a while later, as the sailor had just finished
his pilfered breakfast, the merchant finds him, backed by a mob. After being seized, dragged
through the streets, and thrown in prison, the confused sailor finally discovers the source of his predicament. See, the onion he stole and
ate, wasn't an onion at all, but a prized Semper Augustus tulip bulb, valued at 3000 guilders. Enough, the merchant says, to feast the Prince of
Orange and the entire court. For the Netherlands, you see, was in the grip of tulip mania. (soft music) Thanks so much to Curiosity Stream for helping us pluck
today's tale from history. In the early 1600s, the Dutch Republic was the most advanced
economy in the world. Newly independent from Spain
and reaping the benefits from the wildly successful
Dutch East India Company, they began an era of financial innovation, creating formalized stock
markets, business contracts, investments and joint stock companies, they positioned themselves
at the cutting edge of the financial world we know today. And during this golden age, Amsterdam exploded into a metropolis made rich off the fruits of foreign trade, backed by prudent investment. Meaning, those living in the
grand canal-side mansions, were not aristocrats, but
merchants, ship owners, and heads of trading houses,
but then the tulips came. To summarize what happened, let's turn to Charles Mackay's
classic 1841 sociology text, "Extraordinary Popular Delusions and the Madness of Crowds," which I'm sure based on the title is a very, very trustworthy source. It states, in 1635 those
eccentric Dutch upper classes became fascinated by the tulip. They loved and cherished them. It was the fad to end all fads, and everyone who was
anyone had to own some. These flowers, they realized,
were nice flippin' tulips. Especially prized, were
the rare varieties; the Viceroy, the Admiral of Admirals, the Alexander the Great, and
especially the Semper Augustus. These were tulip strains
with unusual designs that changed with each flowering, meaning each bulb was entirely unique and unable to be replicated. They really were for all
intents and purposes, non-fungible tulips, and their prices rose higher
and faster than the rest. Seeing this, prudent investors realized that tulips were appreciating in value and decided to buy-in themselves. After all, prices were going up fast, and if you bought in
and could find a buyer, there was a neat financial turnaround on these nice flippin' tulips. Indeed, by 1636, the trade
in tulips was so hot, people decided they didn't
even want to wait and see what they were getting. Okay, check this out. When you bought a tulip
in the standard way, you often bought the flower whole to transplant in your garden, or you could buy the bulb
of a tulip to replant, which gave you a genetic copy
of the flower that you saw. But in that old fashioned way of thinking, that meant that the
trading season was confined to the flowering season, where you could see what kind
of tulip you were buying. But that changed when flower dealers began offering contracts on
tulips still in the ground that would flower the next summer. Now, people were not actually
buying the tulips themselves, rather buying a contract that
allowed them to buy a tulip, essentially, a futures market. You could buy a piece of
paper for 300 guilders, guaranteeing you the option of buying a specific
tulip when it bloomed, with the hopes that that tulip would ultimately be worth more than that and you could sell it for profit. You were investing, essentially,
in near future tulips. But then people started
trading the contracts for near future tulips, and
the market went out of control, because you could turn
a profit immediately, provided you bought the contract, then found someone to buy
that contract off of you for a higher price. Some contracts changed hands
that way 10 times a day, with the price inflating
with each exchange. And it might have been all right if new investors hadn't gotten involved to make a quick buck. As the price went up and up,
everyone in the Netherlands started throwing their money into tulips. Carpenters took out loans
on their tools to buy bulbs, and chimney sweeps invested
what little they had. It became a financial run where people snapped up
every tulip available. Those unable to purchase the
most rare and expensive bulbs, instead bought more common tulips in bulk, glorying in the riches
they would assuredly have when they offloaded their
baskets of full bulbs. Absurdities became a daily occurrence. A visiting English botanist,
unaware of the craze, cut open a bulb in order to demonstrate a principle of his
science, and was jailed. Tulips began to sell for 5,000 guilders, as much as a large well-appointed
canal-side mansion, when the yearly salary for a
carpenter was 250 guilders. A man even traded a profitable brewery for a single Semper Augustus bulb. These worthless flowers, which no one really wanted except to sell, had created the world's
first financial bubble. And when it burst in February, 1637, it ruined some of the best
merchants in the country, and drove many into bankruptcy. The economy entered a depression and the canals of Amsterdam were full of the pitiful splashes of penniless businessmen
committing suicide by throwing themselves into
the unforgiving waters. This is the tulip mania as you
see it in business articles, textbooks, and even in the
recent sequel to Wall Street. And everything from the dot-com bubble to the housing bubble, to Beanie Babies, Pokemon cards, the rise of Bitcoin, and yes of course, the
scourge that is NFTs, have been compared to the infamous time Holland ruined itself
over worthless flowers except, and I hate to do this to you, almost none of what we
just recounted is accurate. Exactly, yeah. Turns out pop culture's
whole understanding of this event is also not fully true. Oh, and those stories about the sailor and the English botanist, they're both likely total fabrications. In the last decade, however, historians have returned
to the tulip mania and begun to reevaluate what happened and the lessons we should draw from it. So here's what's true. In the 1630s, the Netherlands
was a financial powerhouse, and it did have a brisk trade in tulips. Some of those tulip prices, such as those going for
the value of a house, are well documented and accurate. It's even true that people
traded futures contracts for tulips, and there was, indeed, a steep decline in value in 1637. So tulip mania was a real, often kind of hilarious
thing that did happen. It's just the details of the
popular version of the story are fundamentally wrong. So we're going to spend this series laying out how the myths
formed, what really happened, and what this historical
tale can teach us. According to recent scholarship, like that of historian Anne Goldgar, the tulip trade had a relatively small number of participants. It was nowhere near as
fevered as it's often claimed, and crucially, it didn't
cause an economic depression. In fact, Goldgar couldn't find records of a single bankruptcy
resulting from the tulip mania. There's even a debate over whether this famous
first asset bubble was really a bubble at all. This is partially because
financial bubbles happen when an asset is overvalued, since people are investing
in order to make money, rather than because they want the asset. In other words, I don't necessarily want this ugly picture of a monkey. I just think I might be able to sell it to some sucker later for
more than I paid for it. But here's the thing, people in the 17th century Netherlands, really, really wanted tulips. A rare tulip was a status symbol that marked you out as educated, wealthy, and of discerning taste. People had their portraits
painted, holding prized tulips, and displayed them in their gardens in front of those canal-side mansions, the ones they weren't
committing suicide out of. They wanted them because
tulips were beautiful, extremely collectible and
difficult for people to grow, meaning they were rare in the
classic sense of the word, not in some sort of digital
design scarcity scheme. Now I know how all that
sounds, tulips rare in Holland. Yeah, because let's do a
thought experiment real quick. Close your eyes. No, like actually close them, and imagine what Holland
means to you visually. Okay, now open them. First of all, if you saw the sloth on
the surfboard, you cheated. But second, I'm going to
bet you imagined windmills, wooden clogs, canals, and
fields of tulips, right? But here's the kicker, tulips aren't native to the Netherlands. In fact, they're from Western Asia and only arrived in the Netherlands shortly before tulip mania began. And the story of how they got there is a great, big, neat, fun tale, which includes nomad
horsemen, Ottoman sultans, and pleasure gardens. Plus next time, we'll see how these very serious, soberly dressed Dutch Calvinists went gaga for flowers whose beauty came, not from breeding, but from a disease. (soft music) But enough flowery language. It's time for us to petal our
favorite streaming service that we're always rooting for, Nebula. Yeah, Jeff Buns all day, high five. Nebula is our by creators for
creators streaming service that's home to a ton of our other favorite educational entertainers on the internet, such as Joe Scott, Real
Science, and Tier Zoo. Plus you'll get to see some
of our Nebula originals on topics like Tipu Sultan,
Cowboy Bebop, and BioShock, along with my erroneously titled show, The ONLY* Podcast about Movies. Yeah, there's an asterisk
in there somewhere. Where Shahir Daud and I just discussed my absolute
favorite film this year I've seen thus far, Everything
Everywhere All At Once, which you should totally
check out, it is a delight. And because Curiosity Stream loves us independent educational creators, they've teamed up with us over at Nebula, so that we can offer you a
pretty amazing two for one deal. Sign up for Curiosity
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non-fiction videos and award-winning original series curated across their ginormous platform. One of which I really enjoyed was the doc, The Billion Dollar Flower Market, where I learned that not
only is the flower industry a hundred billion dollar business today, but it's actually still
controlled by the Dutch. Well for now, because a new competitor is
entering the field of flowers. Get it? 'Cause tulips in the fields, you know what, I'll just move on. So head on over to
CuriosityStream.com/ExtraCredits right now to get both of these
phenomenal streaming services for the limited time price of
under $12 for an entire year. That's 42% off the regular price which still blows my mind for
the amount of content you get. And when you do, not only
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helping out Extra Credits in the process, which
we wanna let you know, we're incredibly thankful for. The most legendary thanks to Ahmad Ziad Turk, Alicia
Bramble, Angelo Valenciana, Arkhalight Games, Casey
Muscha, Dominic Valenciana, Joseph Blaim and Kyle Murgatroyd. (light playful music)
