Doomed to Fail - Ep 11 - Part 1: Blossoms and Bubbles: The Saga of Tulipmania

Episode Date: December 15, 2023

Dive into the fascinating world of Tulipmania with our latest re-release! 🌷💰 Join us as we unravel the captivating tale of the 17th-century Dutch craze that swept the nation, turning simple tulip bulbs into objects of desire and economic speculation.In this intriguing episode, we explore the origins of Tulipmania, its meteoric rise as a symbol of wealth and status, and the eventual bubble burst that sent shockwaves through the Dutch economy. Hear the stories of traders, collectors, and everyday citizens caught up in the allure of the tulip, and discover the parallels between this historical event and modern economic phenomena.Whether you're a history buff, a finance aficionado, or just curious about the quirky chapters of the past, this episode promises a bloom of knowledge and entertainment. Tune in now to unravel the petals of Tulipmania and understand why this floral frenzy remains one of the most intriguing episodes in economic history!👂 Listen, learn, and let history bloom on Doomed to Fail! Subscribe for more riveting explorations into the stories that shape our world. #Tulipmania #EconomicHistory #BotanicalObsession #PodcastDiscovery #ListenNow 🎧🌐 Doc - The Tulip BubbleBook - TulipomaniaBook - Memoirs of Extraordinary Popular Delusions: The Madness of CrowdsOH! Amazon tells Taylor that she purchased this from Amazon on August 9, 2016. Checks out. Join our Founders Club on Patreon to get ad-free episodes for life! patreon.com/DoomedtoFailPodWe would love to hear from you! Please follow along! Instagram: https://www.instagram.com/doomedtofailpod/  Facebook: https://www.facebook.com/doomedtofailpod  Youtube:  https://www.youtube.com/@doomedtofailpod TikTok: https://www.tiktok.com/@doomed.to.fail.pod Email: [e-mail] 

Hi friends, Taylor from Doom to Fail. Today we are re-releasing episode 11, part one on tulip media. It was the time in the Netherlands in the 1600s when people just went like out of their minds for tulips. And it wasn't even like the real flower. It was the bulb and the promise of the flower that it might deliver and the value of that flower in the future. So super interesting. People lost their homes. That lost all of their money on this like tulip bubble that happened and burst pretty quickly.

So hope you enjoy. If you have any questions, any ideas, if you like us, please tell Apple Podcasts. And we are at Doom to Fail at Gmail.com and Doom to Fail at all the socials. Enjoy this release. In a matter of the people of the state of California, first is Hortenthall James Simpson, case number B-A-019. And so, my fellow Americans, ask not what your country can do for you. Ask what you can do for your country. Okay, so we're recording, and I don't remember.

Actually, let's do the intro first. Okay. What do I say? Yeah. Welcome to the doom to fail. That's right. Welcome to Doom to Fail. I'm Fars, join here with my co-host, Taylor.

And every week, we're in you a true crime and a historical story about relationships that are doomed to fail. Taylor, how are you doing today? I'm good. I told you a second ago. I'm on kind of on vacation. I'm in a gorgeous, like, mansion, Airbnb in Temecula, California. It's raining, but it's a beautiful house.

So it's fun. I just made breakfast for a bunch of people and came up here. Did you rent the whole house? Yeah. Nice. That's where you do it. We have, well, I mean, there's, we used to be just adults. And now we're six adults and six kids.

So there's a lot going on. There's a full house. Thanks for you in time to actually do this and record today. Got it. Here in Austin, it is. South by Southwest starts now. So I'm doing everything in my power to avoid downtown and anything like an Austin native. Good job.

Yeah, I would assume that's typical or standard. So I don't remember who goes first this week? I think I do. You go first? Okay. Do you have a drink in mind? I do. Do you want to do yours first and then I'll go into mine?

I'm going to Google my drink right now because I totally forgot to come up with the drink. Okay, I'll tell you mine. Okay. Mine is a Heineken, which is a beer from Holland. Do you remember, did you watch Mad Men? No, I did not. Oh, there's like a thing in a Mad Men where the Don Draper is like, obviously, an advertising guy. And they do this thing where they are trying to get people to buy Heineken.

And so they put it in like grocery stores and they make the end cap, like, you know, the end of the display, like a big, like a windmill and stuff to be like, oh, it's from Holland. and then he has all of his work friends over and his wife is like, oh, I got this beer. It's called Heineken. It's from Holland. And all of the advertising guys are like, yeah, like we got her. Like it worked. And then she was really pissed because she was like, you sent me up to find this beer in the store and like fall for your ad. Anyway, I'm going to Holland.

Are we covering Mad Ben today? No, but I always think about that. Someone will know. You know. If you know, you know. If you know, you know. Awesome. So I didn't think about it.

a drink, but I think given the location of my story, it needs to be coffee. And also... I'm drinking coffee right now. Yeah, I was drinking coffee too, and it's the morning here, so it makes sense. It all tracks. And, sorry, you said you're

the one who goes first this week? Yeah. Okay. All right. So the other day, when you... This is, I have like 17 tensions, but when you did the toolbox killers, you were like, oh, maybe I'm going to do friends, not just romantic relationships. And I was like, I was

great idea because I don't think I can sustain this for like years with just like romantic relationships of history you know I'm like trying to find ones and like my cousin just sent me one and all these things but I'm also thinking like what about like other things that were failures like other like crazy times in history that maybe don't have like specific people involved but they were like a crazy thing so that's kind of what I'm going into today I also was like so here's a little bit a backstory once upon a time in 2016. I was looking at my Kindle and I found this book that I don't remember how it got there. Like I don't remember downloading it, but it is called, I'm going to ask you, it's called Extraordinary Popular Delusions and the Madness of Crowds. And it was written in 1841 by a Scottish

journalist named Charles McKay and it's like stories of people who are like kind of like doing crazy things and like more people are doing it together and so like I don't know how I got it on my Kindle but I think that I probably downloaded it when I because it was 2016 I was like mad that people were like falling for Donald Trump and I was like what is wrong with people you know that's why I think I got it if that makes sense the through line is there I understand I'm not. Did you have a big cow skull on your wall now? Is that new?

So I had it in my other, I had it up at the other house. And I, it was actually sitting on the ground here since I moved into this house. And I finally decided to put it up. It's very Texas. I like it. I did a screenshot. Smile, I'm going to do another one. Keep us in.

Perfect. It's just you. Okay. I just saw it. That's great. So this, this is like what I'm thinking about, like, this book. it's about. So this book is divided into three parts. There's national delusions, which are like rumors, myths and legends, like the Crusades is like one of the examples in that one. Then there's

peculiar folly, like alchemists and spiritualists. There's a chapter called haunted houses about like people falling for like seances and things like that that we talked about before. And there's another chapter on philosophical delusions, like people who think the world is flat, which is like always been a problem, which is hilarious. So a lot of stuff that like we'll talk about today, stuff that we see constantly like even now. So this, sorry, so this book is basically just a discussion of different variations of delusions and where they originally. Okay. Yeah. That sounds awesome. That's really fun. So it's a delight. So today we're going to talk about tulips, the flower. And specifically tulip mania in Holland in 1636 and 1637. Have you heard about this? No. Okay. Great. So it's

like a whole it's a it's a fun thing i was like i'm going to do something really easy this week because i'm going on vacation and then all of a sudden i'm like learning about botany and economics but whatever so here we are so i i watched a documentary called the tulip bubble i read a book called tulipomania another book about it book is very dry there's a lot of like numbers and we'll talk a little bit about conversion what they use guilders is like their their money that they're using at this time So there, I have, you know, a list of kind of like some conversions that we'll talk about in a little bit. So can you picture a tulip?

What is a tulip? It's probably the most generic looking flower outside of a rose, right? That's fair. Like a bulb on top of a stem. It actually that like it comes from, like kind of like the seed. It looks like an onion. So it's like a big bulb. You plant it and then the flower grows out of it.

And the flower itself only lasts for a first. few months and then you like cultivate the bulb and you do it again right now 80% of the world's tulips come from the netherlands and the actual flower is grown in these like really beautiful tulip fields or there's like lines of different color tulips it's really nice and then but really they want the bulbs so the bulbs they can like send all over the world and it's like mother and daughter bulbs where some of them will grow new flower some of them won't whatever there's like we to put things together to make a tool up. So we're in Holland in the 1600s, and the economy is booming, like more than other parts of Europe, because there have just been a bunch of wars over there,

but in Holland, everything has kind of avoided those wars. So they're not ruled by a royalty. They're ruled by citizen councils, which gives people a lot of autonomy and, like, the ability to, like, move up in society. And this creates a middle class for the first time ever. So for the first time ever, people have money and they don't have, like, a way to invest it because there isn't, like, a really, like, solid banking system. There isn't really a solid stock market. You can't really get in unless you are, like, Uber rich, but the middle class are looking for ways to, like, invest their money. And this story is, like, you could just plop it over any time period and find a story that's, like, very similar to this of just, like, people trying to get rich quick, you know? Yeah.

It actually reminds me of the most recent last. podcast episode of the Essex about how that's how you invested you just bought into a whaling ship and that was the stock market back then yeah exactly exactly you could like buy a boat or like you know buy more land but you didn't like weren't able to like like put your do like money things just with just money exactly so there's also the Dutch East India company that's trading and making the country really rich they also are enslavers are enslaving a lot of people but they're getting a lot of money from that there's also like some of the best painters coming from this time like the girl with a pearl earring that Vermeer that I'm sure you've seen and Rembrandt's like a golden age of

like art and things and people started to think like as it got more money like what can I do to like both like glorify God and show you know that I have all this money so they started building gardens and they you know didn't want to like cover themselves in gold so they would build these really big gardens so sorry so that was the way to reflect that you were wealthy yeah okay yeah yeah so to do a little bit of conversion and i'll come back to this like if i was going to buy i guess this is a hilarious i have a hilarious table but eight fat pigs are 240 guilders four fat oxen or 480 guilders so like and you could buy a ship for 500 guilders so like this is like how much start thinking about that money conversion and i'll come back to that but like

okay what you said ship last okay is that's 500 guilders well how much how much is that's 500 guilders well how much was a what was the other one eight fat pigs were 240 guilders wow a ship's kind of a bargain then it is kind of a bargain okay i don't know what kind a silver drinking cup is 60 guilders so people start so that's like as people are paying for things so that's holland that's where we are at this time period people are starting to have more money for the first time and that's where the tulip starts to kind be introduced into popular culture. Tulips actually come from Central Asia and Persia. Kazakhstan has a lot of the native tulips in nature.

They're shorter and they're really good in, like, colder weather. So they work in places that, like, high up in the mountains, and they don't need a lot of, like, sunlight. Right now, it's also a time. It's like a renaissance time, so people are starting to get interested in science. You know, they're, like, dissecting bodies for the first time and, you know, doing that, like, in public and, like, learning more about anatomy. me and learning about botany really for the first time.

They haven't really made it a science yet. And I say first time, like, in this time period, I'm sure that, like, ancient people thought about botany in different ways and people we don't know, but in this period. So there's a botanist named Carlos Clucius, Carolus Cus, and he's like one of the first people to be a botanist. And to bring the tulip into the Netherlands, he never makes a lot of money, but his friends, like, take care of him.

And he ends up getting a job with the University of Lighten and starting this first like botany school and he started breeding them and to breed them I think you have to move the pollen of one to another one and then like like a male and a female but like put their pollen together in a way that you that's like unexpected and that can make like a different color tulip I think that sounded very scientific doesn't it sound scientific I in the documentary I watched someone had a cue tip of pollen and was like putting it on like the stem the steam it's I don't know. Anyway, he started breeding them, which made different colors of tulips for the first time. You know, they were, like, really pretty and they have, like, cool stripes and stuff.

So, right, the tulips during the tulip craze that everybody wanted were white with these, like, really dark red stripes going up them. And I'll share pictures of them, like, they're really beautiful. But it's actually a virus that makes them that color. But they just didn't know anything about viruses. I actually thought the tulips were always one color. I didn't know that you could get, I'm going to look up pictures of tulips now. Yeah, it's like a red and white striped one. This is the silent portion of the podcast.

The visual portion. Wow, those are really cool looking. They look like marbles almost. Yeah, they're really pretty. But it's a virus that makes them that color, so it's hard to predict. And tulip bulbs all onions. So it's hard to really tell what's going to happen when you have the bulb and what kind of flower it's going to actually turn into. See, this is why I can't get into gardening because I don't have the patience for this.

Like, you get the bulbs, you plant them, you wait months and months for them to actually grow into a thing, then you can cross-pollinate them and you don't know what you're doing and maybe, actually, hold on, wait a minute, like, so if you cross-pollinate, okay, so, so hold on. So, there is no, there's no, there's no, there's no eggs. So, like, what do you get? No, okay, exactly. So that's a good question. good question so what you get is after the flower dies you dig up the root and the root is a new bulb so that bulb you can like continue to like plant but if you put like the new pollen in it it will change like the anatomy of that bulb i have no idea does that sound that could be true i feel like i don't know i mean if you say anything with confidence it's people are going to believe you but like i mean that sounds like so hold on so okay so you do this weird

plant sex thing and then in theory that generates this bulb that only is produced after the death of the female flower okay yes yes it's sort of like if you were it is sort of like an onion if it had a flower at the top of it you know like you have like you like well that concept yeah yeah that concept i'm familiar with it's just like it's just it never dawned on me like what is the actual reproductive component of all this well so yeah okay i guess yeah you get a bulb cool yeah yeah so some people were trying to like make their tulips different colors they didn't understand really how it happened so they would like dissect them and try to splice the bulbs together they would soak them in red wine you know like trying to figure out how to do it all good ideas but it ended up

being something kind of super unpredictable because it's they're pretty and they're rare they start to get more expensive you know like anything and there's some fun story worries about like and they may or may not be true but of like someone going to someone's house and like seeing it to a bulb and thinking it's an onion and eating it and then like the guy's like that was so expensive and then like you know someone else like dissecting it because they're like what is this interesting onion and then the person being like I can't believe you would do this like sending them to jail like people are really freaking out about it there's a lot of Kramer-esque antics that we're going on with through the bulbs exactly exactly so then this is where it starts to get like in like economics so in this time there's also So a lot of like gambling happening in pubs, I don't know, like always. And they describe these pubs and in the documentary that I watched, they do a great like reenactment of the pub because you can imagine people like the men have like those big, big frilly collars, you know, go out like six inches like around their, around their necks and like, you know, big like fun outfits on and everyone smokes constantly.

And they think like it's also like there's like the plague sometimes during this. time. So I think that smoking will keep you healthy from that. And they smoke in these like really cool, long, like, I'm sure you like a long white pipe. So you're in this pub. There's a lot of gambling. Everyone's a little bit drunk. Everyone's smoking. You can't really see across the room because it's full of smoke. Also like, like the fireplaces and everything, people start to trade tulip bulbs in these pubs, like in the back rooms. And so they weighed them like you would weigh gold. And they used like the measurement for weighing gold and ACE. to weigh the tulip bulbs. I don't even know if the weight of the tulip bulb has any effect on the flower itself, but that's like how they were selling them. Yeah, I mean, I guess it makes sense. You break anything down into like that's how you, the unit measurement, like it's the weight. How much is the weight?

How much is this much caviar, this much gold? Yeah, exactly. So they did a, they had obviously since, you know, it was a long time ago, they had like chalkboards, everybody to have like a little chalkboard. And the person selling the tulip bulb would put down what they would accept as a bid. give it to like the guy in charge. Then the guy in charge would collect little chalkboards from every person and every person's bid would be on there and that he would find like the bid that made the most sense, show it to the seller and the seller would either agree or disagree and then

that was how it would get sold. So people were just kind of following along. You could trade and sell the same bulb like several times in a night, you know, just like have like the value kept increasing because people were willing to buy it and it started to turn into something like an NFT because it didn't exist. Like, you would be trading a bulb that didn't, for a flower that doesn't exist. So the tulip isn't really the thing anymore. People don't really care about the flower. They care about the value of the bulb.

Some of the, like, really pretty ones and, like, most famous ones may never have even existed because they had, like, these beautiful books that they would get and see all these paintings of these different tulips, but no one had ever, like, seen it. And you couldn't guarantee anything anyway. But they would be like, oh, this bulb. was going to be this beautiful tulip and just like that value is based on that assumption that may or may not have been true but it didn't really matter and were these things getting planted not even really because this happens and like happened in like a year and it takes a year for this whole thing to happen

anyway so what it turned into is a futures market and now I'm like oh god and I'm trading on futures like oh my god this is spayed over my head but I need to call my dad because he used to be a commodities broker in Chicago so he would totally understand this the fact the the fact that you just called out like NFTs, like the hair just stood on the back of my neck. I know. Trading in futures is having the right to buy something at a certain time in the future at a certain price. Now you have ownership of something that doesn't exist yet, but you're saying when it exists, I'm going to pay this much money.

So you can make a lot of money if you say, like, I'm going to pay for, you know, $300 for this in six months. And if in six months it's worth $600, you just made $300. dollars. So there's like a, but it is a gamble. So they're trading it again and again and again before the tulip bulb even exists. Sometimes it hasn't even come out of the ground yet. And they're saying, like, I own this tulip bulb and they have this little piece of paper and they're trading it back and forth. So you're able to like agree that the price is going to be this much in the future. And so people just kept trading and trading. And it gave people the ability to make a lot of money really quickly. Makes sense. That makes sense. And as you know, everyone loves a get

rich quick scheme. So everyone started to get involved in it. So a ton of people like sold their houses sold all their stuff to get into this toilet market with the assumption that it would never go down. So Taylor, one thing I'm confused up, was this literally the only access point for building wealth at the time? It was. It wasn't like the only one. But in like this only this is this whole thing only happens over a few months. So I think it was like a exciting quick one that was like on the news on the news obviously but like people were talking about it so yeah this was this was the game stop of their generation exactly you can you can put it over so many things that are happening today and be like oh like that was valued at this and that was valued at nothing you know okay so people

were buying them at 10% of the future price so if I pay $10 for a future price is $90 I sell it for $200 you know I made $100 all those things so at the height of the craze some tool it bulbs were selling for more than 10 times the annual income of a skilled craftsman. That's like, you know, how I said like a boat was like 500 guilders. They would sell for like 10,000 guilders for a tool at bulb that like didn't exist with the assumption that the price would continue to go up. I know that hindsight is 2020. This is really stupid though.

I know. What is just in the stock market. It's just like the same thing. You're like, assume somebody's going to have value and continue to go up. No, it's not like that because the thing that you are investing. in can generate money. This is a bulb for a tulip that can't generate anything but a singular tulip. But they assume that the value of that tulip is going to go up and up. But to your point, no one ever gets a tulip. Well, okay, so like maybe if the theory was, I'm going to, I'm going to

sell, I'm going to, if this is the market, I can get a second mortgage on my house, buy two really pretty, I assume toolups that'll generate a very pretty, but then you paid the two tulips any whatever i'm not gonna ascribe no one never got no one never really got a tool up it was all just speculation it because it was all like you know i assumed that this tulip is going to keep rising so people keep buying it and then assuming that some they'll always have a buyer so people people do crazy shit okay we'll just leave it in that okay there's a story of um a man named who who who died and left his children a bunch of tulip bulbs like actual tulip bulbs that sold to go into the market, and his kids made 90,000 guilders, which is like enough money to

be billionaires. They were like the richest people in town. And then at the height of the of the tulip mania, people are, you know, selling their things, putting all their money into tulips, assuming that this will never ever go down. People just stop bidding on them. And as soon as the prices stop going up, people freak out and sell them. And that is a bubble. So it's just like the housing bubble, just like the tech bubble, it's, you know, valued and valued and valued until it's not. And then everybody panic sells. And so people are ruined because they lost all their money and they cannot sell these tulip bulbs to anyone. And they can't get their money back because they had done that like promise the person they bought it from. This feels like when I

bought Tesla stock, like literally right before Elon Musk put a bit out on Twitter. And when we all realize that he lost his mind. I was like, oh, no, this is awful. Everything just tanked. Exactly, exactly. So on February 24th, 1637, the Dutch florists guild, because also like the government wasn't really involved in this. It was like people in like backrooms of pubs and like florists and things. They made, they had to enter, they had to intercede and save some people because basically they had to do bailouts because people were like lost all their money. So they made some rules that like contracts after a certain time were null and void you get a certain percentage back and get like a certain percentage of the contract price back but other than that like people

sort of moved on after it but it was like one of the it's like a documented time of people kind of going crazy over a thing learning about trading learning about futures trying to figure out like how they can make the most money with the assumption that things will never ever stop being expensive and then that bubble bursting and people's lives being ruined in like a very short period of time. That makes sense. Taylor, did you do this because of Silicon Valley Bank? No, I just, that happened yesterday, but.

That's weird timing. It's still happening. I know. No, totally. Like having a run on the bank is the same as having like, except people stop bidding on tulips. It's, um, yeah, it's, I think it's, I mean, I'm, I'm terrible at economics. Um, I've taken a lot of economics classes and like, it's hard for me to wrap my head around it.

But like, when you see things like this, you're like, oh, this is the same thing that has happened forever. whether it's like now with my, you know, virtual money in a bank or then with all my, like, little pieces of paper saying I own tulips that don't exist yet. You know what? I also did this with Bitcoin. I also bought Bitcoin at the highest. I literally only buy high and sell low. That's the only way invest. That's the opposite of what you're supposed to do. I know. I know. I'm not good at it. Yeah. That's really cool. So a question, why was it tulips and not like roses or whatever? A good question. I think it was just because they were, like, new, and they were, like, rare because they take a while to cultivate. They take that, like, full year cycle. So you can be like, oh, I have it for, you know, a little bit of time. And then you have to, like, take the bulb out, take good care of it over the winter and then, like, replanted in the spring. So I think it was just because they have, like, that, like, long life cycle. And, you know, they were new and they were getting these, like, beautiful varieties because of a virus, like, that they couldn't control we didn't really understand it but still they were like seeing that so i think that was part of it it was you know kind of a it's like exciting new thing yeah because i already

had roses so it wasn't it wasn't cool you know the other weird synchronicity here taylor is after i finished recording this i'm going to go to home depot and buy a bunch of plants because i realize they need to like start taking care of like the garden space near the house nice well now is the time to buy tulip because they're also a very Easter flower. So you'll have them out for Easter. And then also now a day is because of like science and technology and everything. Like you don't have to wait that long. You can buy tulips any time. You know, like they've like modified them to be able to like, you know, grow at different times and they're a lot more like, you know, you can use them a lot differently than it wasn't like back then where you had to like really

have to wait. So in this case, is there a doom to fail premise or were we just completely abandoning that the red flag part of this no i i am i know i think i think it's a it's a group failure you know that's what i that's what i think it really is because i think well like the the the book the memoirs of extraordinary popular delusions it's like people you know together making a decision to do something that is you know in hindsight kind of crazy you know so would this be a classification of folly adieu adieu no i do no because it's it's more than just two people. Like, follow you do is like if like you and I are like locked in a house together and I convinced you that someone was trying to kill us and we kill each other. Like that's all you do.

But it's a like, it's like a group delusion, you know, where people are like, I have all this stuff. Like I have all this, you know, these pieces of paper that say on this thing that's going to increase in value. And then you're like, oh my God, I want it. I'll pay you more. And then I paid you. And like people just kept doing it assuming that like the price would always go up. So I think it's a, it's a failure. And I think it's one of those things that afterwards they were like embarrassed. they were like oh we went a little nuts with the tulip thing and then they're like some people have like lost a lot of stuff some people lost a lot of money but they were already rich they were like me but also like with the game stop thing then like the poorer people the people who have the least amount of money do you have the most to lose because they are you know investing in something at like with more money than they might have did you watch the game stock documentary on netflix no i didn't these people made so much money They made so, they made like retirement, like 20-year-olds were making like retirement money. I forgot one guy put like 50K in or something and cashed out $8 million.

It was unbelievable. Yeah, and that's like the people who cashed out, get it. And then some people didn't and lost everything, right? Yeah. Yeah. So cool. Well, thanks for sharing that, Taylor. I'm going to look at tools when I go to Home Depot and I'm probably going to plant them because I'm lazy.

And I just need something that's going to keep coming back year over year. And tulips don't sound like you over year. No, I really don't. That, I feel like that's too much. The idea of, like, having to plant the same flower every year because that doesn't come back. That feels exhausting. Yeah. But.

So, okay, well, I'll make the transition over to the ever-shifting premise of the show, which.