mailing list archives
From: David Farber <dave () farber net>
Date: Mon, 29 Sep 2008 10:10:10 -0400
Begin forwarded message:
From: "Mary Shaw" <mary.shaw () gmail com>
Date: September 29, 2008 9:56:42 AM EDT
To: dave () farber net
Subject: Re: [IP] tulips
Didn't we all re-read that chapter as the dot-com boom went bust?
And betting on re-packaged mortgage defaults is even crazier than
betting on a Powerpoint package of business ideas, which you can at
least pretend to understand.
Will we never learn?
On Mon, Sep 29, 2008 at 9:38 AM, David Farber <dave () farber net> wrote:
Begin forwarded message:
From: "Dave Wilson" <dave () wilson net>
Date: September 29, 2008 9:00:00 AM EDT
To: "David Farber" <dave () farber net>
I decided to reread the chapter on the Dutch tulip mania of the 17th
century from a 19th century tome, "Extraordinary Popular Delusions and
the Madness of Crowds" by an English journalist, Charles Mackay (note
that modern free market thinkers believe this account is BS, because
there can by definition be no speculative manias in a free market).
Anyway, I was struck by this paragraph, which details what happened
after a few years when the music stopped and the price of tulip bulbs
stopped going up (the subsequent decline marks, coincidentally or not,
the end of the Netherlands as a world power):
" At last, however, the more prudent began to see that this folly
could not last for ever. Rich people no longer bought the flowers to
keep them in their gardens, but to sell them again at cent. per cent.
profit. It was seen that somebody must lose fearfully in the end. As
this conviction spread, prices fell, and never rose again. Confidence
was destroyed, and a universal panic seized upon the dealers. A had
agreed to purchase ten Sempers Augustines from B, at four thousand
florins each, at six weeks after the signing of the contract. B was
ready with the flowers at the appointed time; but the price had fallen
to three or four hundred florins, and A refused either to pay the
difference or receive the tulips. Defaulters were announced day after
day in all the towns of Holland. Hundreds who, a few months
previously, had begun to doubt that there was such a thing as poverty
in the land, suddenly found themselves the possessors of a few bulbs,
which nobody would buy, even though they offered them at one quarter
of the sums they had paid for them. The cry of distress resounded
everywhere, and each man accused his neighbour. The few who had
contrived to enrich themselves hid their wealth from the knowledge of
their fellow-citizens, and invested it in the English or other funds.
Many who, for a brief season, had emerged from the humbler walks of
life, were cast back into their original obscurity. Substantial
merchants were reduced almost to beggary, and many a representative of
a noble line saw the fortunes of his house ruined beyond redemption."
RSS Feed: https://www.listbox.com/member/archive/rss/247/
Powered by Listbox: http://www.listbox.com
- tulips David Farber (Sep 29)
- <Possible follow-ups>
- Re: tulips David Farber (Sep 29)