1 00:00:04,120 --> 00:00:06,440 Speaker 1: Hey, and welcome to the short Stuff. I'm Josh and 2 00:00:06,480 --> 00:00:08,440 Speaker 1: there's Chuck and Jerry sitting in for a Dave. And 3 00:00:08,480 --> 00:00:11,520 Speaker 1: this is short stuff about tulip mania. 4 00:00:13,119 --> 00:00:18,759 Speaker 2: That's right. Tulip Mania was perhaps the first financial bubble 5 00:00:19,560 --> 00:00:23,160 Speaker 2: to happen and then burst. And we should probably talk 6 00:00:23,160 --> 00:00:26,000 Speaker 2: a little bit about what an economic bubble is, don't 7 00:00:26,040 --> 00:00:26,360 Speaker 2: you think. 8 00:00:26,760 --> 00:00:29,920 Speaker 1: Yeah, it's where the price of a good or an 9 00:00:30,000 --> 00:00:33,560 Speaker 1: asset or something like that. Let's just say item sure 10 00:00:33,760 --> 00:00:38,280 Speaker 1: goes sky high way way way beyond any reasonable value 11 00:00:38,600 --> 00:00:41,960 Speaker 1: that it should have, and it's because of exuberant trading. 12 00:00:42,040 --> 00:00:44,360 Speaker 1: And the more exuberant the trading is, the more people 13 00:00:44,400 --> 00:00:46,159 Speaker 1: get sucked in by it, and they want to make 14 00:00:46,479 --> 00:00:49,640 Speaker 1: some money too, so more people start investing, and the 15 00:00:49,680 --> 00:00:52,760 Speaker 1: prices keep going higher and higher and higher. That's the 16 00:00:52,800 --> 00:00:57,200 Speaker 1: first part of the bubble. There's another less happy side 17 00:00:57,200 --> 00:00:58,240 Speaker 1: of the bubble too. 18 00:00:58,600 --> 00:01:02,520 Speaker 2: That's right, because as anyone who's ever been to a 19 00:01:02,560 --> 00:01:07,200 Speaker 2: bubble rave or a played bubbles with your kids or 20 00:01:07,480 --> 00:01:11,080 Speaker 2: just adult friends who enjoy bubbling, that bubble's going to burst. 21 00:01:11,120 --> 00:01:13,640 Speaker 2: They all will eventually, And that's what happens with an 22 00:01:13,680 --> 00:01:16,800 Speaker 2: economic bubble too. The price will drop usually pretty quickly, 23 00:01:17,360 --> 00:01:20,000 Speaker 2: and a lot of people start selling off very quickly, 24 00:01:20,040 --> 00:01:22,200 Speaker 2: and those who get out early enough can usually avoid it. 25 00:01:22,280 --> 00:01:25,760 Speaker 2: But every single time, someone is going to be left 26 00:01:25,800 --> 00:01:29,080 Speaker 2: holding that asset that is all of a sudden not 27 00:01:29,640 --> 00:01:31,760 Speaker 2: worth much of anything. And a lot of times the 28 00:01:31,880 --> 00:01:35,000 Speaker 2: people have invested their entire life savings in this stuff. 29 00:01:35,040 --> 00:01:36,839 Speaker 2: A lot of times they've bought this stuff on credit, 30 00:01:37,560 --> 00:01:39,440 Speaker 2: and all of a sudden, this thing isn't worth that 31 00:01:39,520 --> 00:01:42,119 Speaker 2: much money and they're in real, real financial trouble. 32 00:01:42,200 --> 00:01:43,320 Speaker 1: Yeah, it's a bad scene. 33 00:01:43,560 --> 00:01:44,120 Speaker 2: Yeah. 34 00:01:44,160 --> 00:01:46,120 Speaker 1: And so, like you said, all the way back in 35 00:01:46,160 --> 00:01:50,040 Speaker 1: the seventeenth century, people consider the first economic bubble to 36 00:01:50,160 --> 00:01:53,720 Speaker 1: have surrounded tulips and tulip bulbs in Holland. 37 00:01:54,760 --> 00:01:58,720 Speaker 2: That's right. And when you said tulip mania, that's really 38 00:01:58,760 --> 00:02:00,480 Speaker 2: what it was called. You weren't just being cheeky. 39 00:02:00,960 --> 00:02:04,960 Speaker 1: No, that's what it's referred to. I'm sure among economists, 40 00:02:05,600 --> 00:02:11,919 Speaker 1: among historians, among the Dutch, among podcasters, it's called tulipmania. 41 00:02:11,960 --> 00:02:13,520 Speaker 1: That wasn't just me being funny. 42 00:02:14,800 --> 00:02:17,480 Speaker 2: So a little bit about tulips native to places like 43 00:02:17,520 --> 00:02:21,119 Speaker 2: Kazakhstan and Eastern Europe and the Himalayas. They don't look 44 00:02:21,200 --> 00:02:23,839 Speaker 2: like the tulips in their original form that we think 45 00:02:23,840 --> 00:02:27,679 Speaker 2: of today, but they've been cultivated over the years and 46 00:02:27,919 --> 00:02:31,800 Speaker 2: you know, cross bread to where they look like they 47 00:02:31,800 --> 00:02:34,800 Speaker 2: look like tulips. Now, these these beautiful we have tulips 48 00:02:34,800 --> 00:02:39,240 Speaker 2: popping up here in Atlanta already this spring and they're lovely. 49 00:02:39,240 --> 00:02:42,360 Speaker 2: They're grown from bulbs and they're I don't know about 50 00:02:42,480 --> 00:02:45,280 Speaker 2: how easy or hard it is, but they, like I said, 51 00:02:45,360 --> 00:02:48,760 Speaker 2: are cross bread to create new and exciting varieties and colors. 52 00:02:49,080 --> 00:02:53,239 Speaker 1: Yeah. So tulips first arrived in Holland around sixteen hundred. 53 00:02:54,240 --> 00:02:58,200 Speaker 1: The Dutch East India Company was moving spices and exotic 54 00:02:58,280 --> 00:03:04,120 Speaker 1: goods from the East to Europe, Holland in particular, and 55 00:03:04,320 --> 00:03:07,640 Speaker 1: tulips arrived. And for the first couple decades they were 56 00:03:07,800 --> 00:03:11,440 Speaker 1: you know, if you were a plant enthusiast, you probably 57 00:03:11,480 --> 00:03:15,320 Speaker 1: had a tulip in your collection. If you were very, 58 00:03:15,440 --> 00:03:18,200 Speaker 1: very rich and just wanted to show off how cutting 59 00:03:18,280 --> 00:03:20,520 Speaker 1: edge you were, you might have some tulips in your garden. 60 00:03:20,720 --> 00:03:24,320 Speaker 1: But they weren't a big deal until sixteen thirty four. 61 00:03:24,840 --> 00:03:27,480 Speaker 1: And the reason they became a big deal almost overnight, 62 00:03:28,000 --> 00:03:31,799 Speaker 1: was because those same upper classes and nobility in Holland 63 00:03:32,280 --> 00:03:35,880 Speaker 1: decided that tulips were now a status symbol, and that 64 00:03:35,920 --> 00:03:38,760 Speaker 1: if you didn't have tulips growing in your garden and 65 00:03:38,800 --> 00:03:41,680 Speaker 1: you were a member of the aristocracy or nobility, you 66 00:03:41,760 --> 00:03:44,760 Speaker 1: were a total loser with a capital A. 67 00:03:45,520 --> 00:03:48,960 Speaker 2: That's right. So in this case you had, economically speaking, 68 00:03:49,080 --> 00:03:52,000 Speaker 2: you had a big time demand all of a sudden. 69 00:03:52,400 --> 00:03:54,240 Speaker 2: But not only was it a big time demand, it 70 00:03:54,280 --> 00:03:56,120 Speaker 2: was a big time demand of people that had a 71 00:03:56,160 --> 00:03:59,640 Speaker 2: lot of money. So the price went through the roof 72 00:04:00,240 --> 00:04:05,320 Speaker 2: very quickly. A bulb, a single bulb, one tulip bulb, 73 00:04:06,360 --> 00:04:10,600 Speaker 2: would fetch two thousand florin, And just to put it 74 00:04:10,600 --> 00:04:12,520 Speaker 2: into perspective of what you could buy back then, for 75 00:04:12,560 --> 00:04:17,520 Speaker 2: two thousand florin, sixteen thousand pounds of cheese, two hundred 76 00:04:17,560 --> 00:04:20,720 Speaker 2: and fifty tons of beer, a couple of hundred sheep, 77 00:04:20,839 --> 00:04:24,760 Speaker 2: or maybe sixteen grown oxen. And they were paying prices 78 00:04:24,800 --> 00:04:28,719 Speaker 2: in today's dollars. Thank you Investipedia for doing this weird translation, 79 00:04:29,760 --> 00:04:32,040 Speaker 2: but in today's dollars for a single tulip bulb, they 80 00:04:32,080 --> 00:04:35,559 Speaker 2: were paying fifty grand, one hundred and fifty grand even 81 00:04:35,600 --> 00:04:38,600 Speaker 2: sometimes for the rarest varieties, up to a million dollars 82 00:04:38,640 --> 00:04:39,520 Speaker 2: for a single bulb. 83 00:04:39,760 --> 00:04:42,279 Speaker 1: Yeah, that fifty you do one hundred and fifty grand. 84 00:04:42,400 --> 00:04:45,240 Speaker 1: That was like day to day stuff, right, that's what 85 00:04:45,560 --> 00:04:51,800 Speaker 1: a single tulip bulb, single bulb. It was nuts. Even 86 00:04:51,839 --> 00:04:53,800 Speaker 1: at the time, there were people who were watching this 87 00:04:53,880 --> 00:04:57,640 Speaker 1: and they're like, this is crazy. They're tulips, for God's sake. 88 00:04:58,200 --> 00:05:01,560 Speaker 2: Yeah, They're riding out a giant check with a feathered 89 00:05:01,560 --> 00:05:03,600 Speaker 2: pen and they're just like, I can't believe I'm paying 90 00:05:03,600 --> 00:05:04,520 Speaker 2: this amount of money. 91 00:05:04,279 --> 00:05:07,520 Speaker 1: For exactly I say, we take a break and come 92 00:05:07,560 --> 00:05:35,000 Speaker 1: back and talk more about tulip mania, Okay, Chuck. So 93 00:05:35,040 --> 00:05:38,400 Speaker 1: we were just talking about how crazy expensive a single 94 00:05:38,440 --> 00:05:41,160 Speaker 1: tulip bulb was in Holland in the sixteen thirties. 95 00:05:41,560 --> 00:05:42,880 Speaker 2: Single tulip bulbs. 96 00:05:43,160 --> 00:05:47,520 Speaker 1: Right, So, some people among the wealthy would use like 97 00:05:47,720 --> 00:05:52,159 Speaker 1: significant portions of their fortune, of their wealth to buy 98 00:05:52,200 --> 00:05:55,520 Speaker 1: tulips and just grow them. They weren't reselling them, they 99 00:05:55,560 --> 00:05:57,800 Speaker 1: weren't doing anything. They were buying tulips and growing them. 100 00:05:57,800 --> 00:06:01,799 Speaker 1: They were spending half of their worth to buy tulips 101 00:06:01,839 --> 00:06:02,800 Speaker 1: just to show off. Right. 102 00:06:03,400 --> 00:06:03,960 Speaker 2: Yeah. 103 00:06:04,040 --> 00:06:08,080 Speaker 1: At some point people started saying, like I think that 104 00:06:08,240 --> 00:06:10,440 Speaker 1: if I start buying tulips and then selling them for 105 00:06:10,440 --> 00:06:12,800 Speaker 1: a higher price, I could really make some money. And 106 00:06:12,839 --> 00:06:15,960 Speaker 1: as a matter of fact, I can start speculating where 107 00:06:16,080 --> 00:06:18,880 Speaker 1: I will go into futures contracts with people and say, hey, 108 00:06:19,120 --> 00:06:22,760 Speaker 1: I'll sell you X number of tulips in three weeks 109 00:06:23,160 --> 00:06:25,720 Speaker 1: for X number of dollars because I'm betting that the 110 00:06:25,760 --> 00:06:28,120 Speaker 1: price is going to go down, but you're betting that 111 00:06:28,120 --> 00:06:30,560 Speaker 1: the price is going to go up. Let's see who wins. 112 00:06:30,920 --> 00:06:35,680 Speaker 1: And speculation is one of the main drivers essentially of 113 00:06:35,760 --> 00:06:38,920 Speaker 1: an economic bubble. Like it's crazy that the single bulbs 114 00:06:38,920 --> 00:06:42,480 Speaker 1: were going for that. But once people started speculating and 115 00:06:42,520 --> 00:06:47,480 Speaker 1: creating like instruments and futures contracts based on that crazy 116 00:06:47,600 --> 00:06:50,800 Speaker 1: high price, that's when it really started to get troublesome. 117 00:06:51,279 --> 00:06:53,839 Speaker 2: Yeah, for sure, they were actually sold on the Dutch 118 00:06:53,920 --> 00:06:58,000 Speaker 2: stock Exchange, and these were, you know, some wealthy investors, 119 00:06:58,000 --> 00:07:01,120 Speaker 2: but everybody got in on the gang, like the gang 120 00:07:01,400 --> 00:07:07,680 Speaker 2: the game, just regular middle working class people, even like 121 00:07:08,240 --> 00:07:12,120 Speaker 2: people of the lower classes. They started cashing in everything 122 00:07:12,160 --> 00:07:14,800 Speaker 2: they could, selling their houses, in some cases, selling the 123 00:07:15,440 --> 00:07:18,400 Speaker 2: tools of their trade that they were previously making money 124 00:07:18,400 --> 00:07:22,480 Speaker 2: on to invest in these tulips. And you know what's 125 00:07:22,480 --> 00:07:24,640 Speaker 2: going to happen is that eventually is going to burst 126 00:07:25,120 --> 00:07:28,920 Speaker 2: and it did so less than two years after this 127 00:07:29,080 --> 00:07:31,760 Speaker 2: frenzied investment stuff started in sixteen thirty six. 128 00:07:32,440 --> 00:07:35,920 Speaker 1: Yeah, the bubble bursts because some people, like we said 129 00:07:36,160 --> 00:07:38,880 Speaker 1: earlier that there were some people who are like, this 130 00:07:39,000 --> 00:07:41,760 Speaker 1: is crazy, and even some speculators and people who are 131 00:07:41,800 --> 00:07:44,200 Speaker 1: invested in tulips were like, this is not going to 132 00:07:44,280 --> 00:07:47,280 Speaker 1: last much longer. I'm going to get out. And as 133 00:07:47,360 --> 00:07:50,440 Speaker 1: more people started to decide to get out, you can 134 00:07:50,480 --> 00:07:53,000 Speaker 1: trigger a panic. And if you trigger a panic, all 135 00:07:53,000 --> 00:07:55,560 Speaker 1: of a sudden, the bubble bursts and the price just 136 00:07:55,680 --> 00:08:01,280 Speaker 1: drops precipitously. And that's what happened with the tulip mania bubble. 137 00:08:01,640 --> 00:08:04,520 Speaker 1: A bunch of people who had large stocks of tulip 138 00:08:04,520 --> 00:08:09,680 Speaker 1: bulbs when the price dropped almost overnight, were ruined financially. 139 00:08:10,000 --> 00:08:13,320 Speaker 1: They had, say, hundreds of thousands of dollars worth of 140 00:08:13,320 --> 00:08:16,440 Speaker 1: tulips that they'd paid hundreds of thousands of dollars for 141 00:08:16,800 --> 00:08:20,360 Speaker 1: that were now worth hundreds of dollars, and it was 142 00:08:20,400 --> 00:08:22,800 Speaker 1: a bad jam for anybody who was caught with tulip 143 00:08:22,840 --> 00:08:24,160 Speaker 1: bulbs when the bubble burst. 144 00:08:24,800 --> 00:08:28,480 Speaker 2: Yeah, I mean it affected the wealthy obviously in some cases, 145 00:08:28,520 --> 00:08:30,360 Speaker 2: but it also affected a lot of those people that 146 00:08:30,800 --> 00:08:33,400 Speaker 2: were looking to get wealthy and did sometimes you know, 147 00:08:33,640 --> 00:08:35,760 Speaker 2: make a lot of money during this you know, less 148 00:08:35,760 --> 00:08:38,360 Speaker 2: than two year period. But you know, like I said, 149 00:08:38,400 --> 00:08:40,040 Speaker 2: some people sold their homes and all of a sudden, 150 00:08:40,120 --> 00:08:42,040 Speaker 2: they don't have a home and they're stuck with all 151 00:08:42,040 --> 00:08:45,760 Speaker 2: these tulips. The trades people who you know sold their 152 00:08:45,800 --> 00:08:48,640 Speaker 2: tools because they were like, hey, I'm in the tulip 153 00:08:48,679 --> 00:08:52,560 Speaker 2: game now I don't need these iron working skills or tools. 154 00:08:53,080 --> 00:08:54,640 Speaker 2: All of a sudden they couldn't even go back to 155 00:08:54,679 --> 00:08:56,640 Speaker 2: that trade because they didn't have the stuff they needed 156 00:08:56,640 --> 00:08:59,440 Speaker 2: to do it. And the people who bought those future 157 00:08:59,480 --> 00:09:02,439 Speaker 2: contracts were the people that were really really in trouble. 158 00:09:02,240 --> 00:09:06,800 Speaker 1: Right, Yeah, because again you're saying, I will buy a 159 00:09:06,920 --> 00:09:11,200 Speaker 1: thousand tulip bulbs in four weeks at you know, a 160 00:09:11,320 --> 00:09:15,640 Speaker 1: million dollars, and when the bubble burst and those tulip 161 00:09:15,720 --> 00:09:19,640 Speaker 1: the thousand bulbs were now worth one thousand dollars and 162 00:09:19,679 --> 00:09:22,240 Speaker 1: you're on the hook to pay a million dollars for them. Yeah, 163 00:09:22,280 --> 00:09:25,000 Speaker 1: those speculators were like I'm not I'm sorry, I'm not 164 00:09:25,160 --> 00:09:28,360 Speaker 1: doing this, or they can't. Yeah, they might not have 165 00:09:28,360 --> 00:09:31,760 Speaker 1: been able to any longer. But the suppliers who had 166 00:09:31,800 --> 00:09:35,600 Speaker 1: these tulip bulbs and were technically owed a million dollars 167 00:09:35,640 --> 00:09:39,360 Speaker 1: regardless of what the tulip bulbs were were worth. They 168 00:09:39,440 --> 00:09:44,160 Speaker 1: won their bet, but they they still the buyers would 169 00:09:44,160 --> 00:09:48,120 Speaker 1: not pay the suppliers, and that's what really created this 170 00:09:48,280 --> 00:09:52,240 Speaker 1: huge financial crisis, and it got bad enough. At first 171 00:09:52,280 --> 00:09:55,280 Speaker 1: the Dutch governments of the big cities and I think 172 00:09:55,320 --> 00:09:58,760 Speaker 1: the monarchy did not get involved. They did not want 173 00:09:58,800 --> 00:10:00,640 Speaker 1: to get involved. The courts were like, we're not going 174 00:10:00,679 --> 00:10:03,959 Speaker 1: to hear any cases because these are bets as far 175 00:10:03,960 --> 00:10:06,960 Speaker 1: as the law is concerned, and a bet isn't legally binding. 176 00:10:08,000 --> 00:10:10,680 Speaker 1: But it was so bad. The Dutch economy was in 177 00:10:10,800 --> 00:10:14,040 Speaker 1: such tatters because so many people had gotten into tulips 178 00:10:14,080 --> 00:10:16,720 Speaker 1: chuck that they just like you said, trades, people just 179 00:10:16,760 --> 00:10:21,040 Speaker 1: sold their tools, people sold their houses. The regular economy 180 00:10:21,080 --> 00:10:23,520 Speaker 1: that was built on that kind of work and stuff 181 00:10:23,559 --> 00:10:28,480 Speaker 1: like that, it sagged. It was unmaintained during this tulip mania. 182 00:10:28,559 --> 00:10:31,200 Speaker 1: So it was a big problem that the Dutch had. 183 00:10:31,280 --> 00:10:34,920 Speaker 1: So finally some of the higher ups got involved and 184 00:10:34,960 --> 00:10:36,080 Speaker 1: tried to figure this out. 185 00:10:36,600 --> 00:10:39,760 Speaker 2: Well, they tried to, yeah, not too much effect, but 186 00:10:39,920 --> 00:10:41,760 Speaker 2: they the courts finally said, all right, we have to 187 00:10:41,760 --> 00:10:43,800 Speaker 2: do something here, So why don't we work out a 188 00:10:43,840 --> 00:10:46,600 Speaker 2: deal where the traders paid ten percent of the contract's 189 00:10:46,600 --> 00:10:49,720 Speaker 2: face value. But nobody was happy with that because the 190 00:10:49,760 --> 00:10:53,719 Speaker 2: suppliers were still losing tons of money. The buyers still 191 00:10:54,120 --> 00:10:56,960 Speaker 2: were in bad shape because the value of those tulips 192 00:10:57,120 --> 00:11:00,880 Speaker 2: just you know, plummeted and ten percent of future contract 193 00:11:01,480 --> 00:11:04,640 Speaker 2: was a lot more than they were worth now. And so, 194 00:11:05,400 --> 00:11:07,480 Speaker 2: you know, nobody really won in the end, and it 195 00:11:08,000 --> 00:11:11,640 Speaker 2: wrecked the Dutch economy for you know, it took a 196 00:11:11,640 --> 00:11:14,600 Speaker 2: couple of decades to sort of naturally heal itself back 197 00:11:14,640 --> 00:11:15,400 Speaker 2: to where it was. 198 00:11:15,600 --> 00:11:18,520 Speaker 1: Yeah, that's what the Dutch government ultimately decided to do, 199 00:11:18,600 --> 00:11:21,680 Speaker 1: is nothing, and it just had to mend itself naturally 200 00:11:21,720 --> 00:11:24,559 Speaker 1: as people got back to work and people sold their 201 00:11:24,559 --> 00:11:27,400 Speaker 1: tulip bulbs for way less. But they did sell their 202 00:11:27,400 --> 00:11:31,480 Speaker 1: tulip bulbs because the Dutch were still and are still 203 00:11:31,559 --> 00:11:34,760 Speaker 1: kind of crazy for tulips. Oh yeah, I read that 204 00:11:34,800 --> 00:11:38,080 Speaker 1: they still pay higher prices than other countries for tulip 205 00:11:38,120 --> 00:11:40,720 Speaker 1: bulbs because people just know that the Dutch are crazy 206 00:11:40,760 --> 00:11:44,200 Speaker 1: for tulips and they'll pay it. And I guess about 207 00:11:44,200 --> 00:11:47,120 Speaker 1: this time of year every year, the Dutch country side 208 00:11:47,160 --> 00:11:48,680 Speaker 1: just explodes in color. 209 00:11:49,440 --> 00:11:54,160 Speaker 2: Yeah, it's gorgeous. And I can also recommend a classic 210 00:11:54,200 --> 00:11:57,600 Speaker 2: Conan O'Brien bitt when he used to go on location 211 00:11:57,720 --> 00:12:01,120 Speaker 2: and do remote stuff. He has a very very funny 212 00:12:01,160 --> 00:12:05,640 Speaker 2: one from I believe his first iteration of his show 213 00:12:06,080 --> 00:12:09,960 Speaker 2: where he and Andy went to Amsterdam and went out 214 00:12:09,960 --> 00:12:12,600 Speaker 2: with the camera to the tulip farms and the tulip markets, 215 00:12:12,600 --> 00:12:14,400 Speaker 2: and it was very very funny. 216 00:12:14,400 --> 00:12:16,520 Speaker 1: I'm sure you can still find out. Thanks. Thanks for 217 00:12:16,559 --> 00:12:19,120 Speaker 1: the recommendation. You got anything else? 218 00:12:19,600 --> 00:12:22,800 Speaker 2: I have no other recommendations other than plant tulip bulbs. 219 00:12:22,760 --> 00:12:23,640 Speaker 2: They're gorgeous. 220 00:12:23,720 --> 00:12:27,520 Speaker 1: Yeah, and beware economic bubbles. Yeah, that too short. Stuff 221 00:12:27,559 --> 00:12:28,320 Speaker 1: is app. 222 00:12:31,480 --> 00:12:34,400 Speaker 2: Stuff you Should Know is a production of iHeartRadio. For 223 00:12:34,480 --> 00:12:38,640 Speaker 2: more podcasts my heart Radio, visit the iHeartRadio app, Apple Podcasts, 224 00:12:38,760 --> 00:12:40,600 Speaker 2: or wherever you listen to your favorite shows.