Magazine article Management Today

The True Story of Flower Power

Magazine article Management Today

The True Story of Flower Power

Article excerpt

Forget pockets full of gold and silver and sacks full of wheat - there was once a time when wealth and social standing were measured by something rather less obvious.

Which commodity do you think was behind the world's first great market crash? Something valuable, like gold? Something sensible like wheat? You probably wouldn't plump for the tulip. But, back in the 1630s, in a horticulture-meets-Black. Tuesday scenario, the ubiquitous window box stalwart brought the Dutch economy to its knees.

Tulipomania - as the cognoscenti refer to it - had its roots in the mid-16th century when Conrad Gesner, a Swiss naturalist, introduced the tulip to Europe. The Dutch were at the time enjoying a golden age and, like any newly-enriched people, were susceptible to the most frivolous fashions. Soon, no man of social standing was without a tulip patch, border or, at the very least, a decent window box. Initially, as befits any novelty, the tulip commanded a small premium, but the race was soon on to possess a bloom rarer and flashier than the neighbours. Naturally, the more highly-regarded the tulip, the higher its price.

By the 1620s, a series of support industries had grown up to service the burgeoning tulip sector, and Amsterdam was the commercial centre of its day: bankers built bespoke tulip vaults; a good bulb was recognised as surety against a loan; there was even talk of ditching the gold standard in favour of the tulip. Come 1630, the Dutch economy, once vigorous, mercantile and universally praised, was entirely dependent on the genus Tulipa.

If this sounds ridiculous, it was but a curtain raiser. The Amsterdam stock exchange and the regional bourses spurned other business to trade in the increasingly lucrative bulbs. Every available inch of land was given over to their cultivation and the beau monde amused itself with tulip parties in conservatories, now the focal point of any house that could afford them. Meanwhile, the markets grew ever more sophisticated. Tulip jobbers, frustrated by the short trading season, began issuing futures contracts on as yet unharvested bulbs. Savvy market manipulators made fortunes and so rapacious was the market that a tulip vendor could often just name his price.

The high noon of this mass hysteria saw the emergence of the tulip analyst. These split into two camps: the market determinists who thought a bulb worth only what the market would bear, and the tulip-intrinsics, who scrutinised traits such as stem symmetry and petal pigmentation, to construct a given bulb's optimum market profile. …

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