Tulip mania wasn't that big of a deal

Lorraine Boissoneault (citing Anne Goldgar) writes that Tulip mania — the wild trade in Dutch tulips that ended with tulips worth more than mansions and a market meltdown illustrative of capitalism's flaws ‐ is mostly fable. Rather than a classic speculator-driven bubble that affected all levels of society, it was a fad among the rich of little economic consequence.

There werent that many people involved and the economic repercussions were pretty minor, Goldgar says. I couldnt find anybody that went bankrupt. If there had been really a wholesale destruction of the economy as the myth suggests, that wouldve been a much harder thing to face.

Thats not to say that everything about the story is wrong; merchants really did engage in a frantic tulip trade, and they paid incredibly high prices for some bulbs. And when a number of buyers announced they couldnt pay the high price previously agreed upon, the market did fall apart and cause a small crisisbut only because it undermined social expectations.In this case it was very difficult to deal with the fact that almost all of your relationships are based on trust, and people said, I dont care that I said Im going to buy this thing, I dont want it anymore and Im not going to pay for it. There was really no mechanism to make people pay because the courts were unwilling to get involved, Goldgar says.

Goldgar's book, Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age [Amazon} sounds like a good antidode to Tulip Fever,a recently-released movie that indulges the myths.