The History of Tulips and Economics

Tulips History

Tulips have taught a good deal in the area of economics just when most of the economic theories were underdeveloped. Whether Tulips originated in Europe or Turkey or in Northern China is something that I shall not repeat since I assume almost every Tulip lover with a slight interest in its history is aware that they were first found in Turkey. Well, scholars do believe that the Turks had been cultivating tulips as early as AD 1000.

The origin of the word Tulip

Though the actual origin of the word Tulip is not very well known, it is believed that Tulips got their name owing to their resemblance with the Persian turban. The Latin translation to which is 'Tulipa'. Though, I do not see much of an explicit resemblance, I just take it that people of that world had seen nothing in comparison to what we see in our daily lives. There are so many things to resemblances that we can make today.

The First Official Tulip Garden

Clusius Carolus was on of the famous botanist who had achieved great recognition for his work with medicinal herbs in Prague and Vienna during late 16th Century, was the first botanist who cultivated the bulbs and seeds of Tulips during his stint as Head Botanist of the Dutch University. Thus, introduced the flower to Holland. Little did he know then what Dutch was about to see in the coming years.

It was no less than a "Katrina" that hit Dutch during 1636 - 1637 and came to be known as the period of Tulip mania. Could anyone today believe that people may have gone crazy over a flower which is so widely available today!

Clusius and other horticulturists produced new color variations in tulips. Tulips came out to be so expensive that only the wealthiest aristocrats and merchants could afford the hybrid varieties. The first known crazy-driver among Tulips was the Semper Augustus which had flame like look of its flowers.

Now Tulip mania was more about the economics behind it than the love of people for it. This was the probable beginning of future markets. The practice of tulip speculation - only relevant to prized varieties of the flower (like Semper Augustus) - emerged.

The flower growers came up with a bright idea while the Tulips were still under cultivation cycle. They started selling promissory notes guaranteeing the future delivery of the tulip bulb. These notes got resold with a mark up to another buyer who in turn sold to another buyer, and so on and so forth, until the tulip became ready for delivery. The notes exchanged so many hands (and all with a mark up) that eventually, the final price summed up to be much higher than the original bid. The unlucky buyer was the person who could no longer resell the note because he now owned the actual tulip. This was a gamble as it is in today's future market with the only difference that trading is much easier and convenient these days with internet.

So though it was basically a matter of moolah, Tulips drove everyone in Dutch so crazy that people even started selling their homes so as to make an investment.

This Dutch trade began to be known as tulpenwindhandel, literally 'tulip wind trade,' because transactions involved nothing more than air. The corruption led many Dutch citizen to voice against the flower market when finally the government intervened and ended the tulpenwindhandel. And so was the end of Tulip mania. People have always been and shall always be crazy of two things - money and beauty. These both came together in the Tulip mania era.

I really wish I could also participate in Tulip Mania. The investment market was no different even in present times until last year when something just applied brakes.

Since then there have been a lot of various species available with online florists for Tulips delivery. However, not many know about the Tulip mania when ordering them online today for fun.