Tulipmania and the Econo-Cultural Breakdown
by Doug French by Doug French
Book Review: Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age by Anne Goldgar • University of Chicago Press • 2007 • 425 pages
Modern financial history is a long series of spectacular asset bubbles followed by equally dramatic crashes. Before, during, and after, the question always arises — whether it’s stocks, bonds, real estate, or collateralized debt obligations — what is the cause of such, as it appears in hindsight, folly?
A testament to this eternal search for the answer is the frequent publishing of new editions of Charles MacKay’s 1841 classic book on the subject, Extraordinary Popular Delusions and the Madness of Crowds, the latest of which was 2007 (paired with Gustave Le Bon’s The Crowd) after a handsome hardback edition with a photo of white tulips adorning the cover was just published in December 2003 by Harriman House, an edition ranked in the top twenty in sales at online bookseller Amazon in the economic-history category.
Economists and investors continue to be fascinated with the episode that the tulips on the cover of MacKay’s work represent. But historian Anne Goldgar contends that there were no crowds in Holland bidding up the price of tulip bulbs to absurd levels in the mid-1630s as Mackay contends. In her book, Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age, Goldgar argues that modern financial writers’ reliance on Mackay’s account of tulipmania is misplaced. Mackay’s source was the propagandist Johann Beckmann, whose sources were suspect, according to Goldgar.
In very thorough fashion, Dr. Goldgar, whose specialty is 17th- and 18th-century European cultural and social history, traces Beckmann’s various sources and the sources of those sources. Ultimately, Goldgar’s exhaustive research convinces her that tulipmania was not all that big a deal as an economic event. After all, the Dutch economy wasn’t destroyed after the bust, and despite what some have written, most of those who engaged in the tulip trade lived happily ever after (if they didn’t die from the plague, that is). "Tulipmania has always been more a warning than a historical event," claims the author.
Doug French [send him mail] is executive vice president of the Ludwig von Mises Institute and associate editor for Liberty Watch Magazine. He received the Murray N. Rothbard Award from the Center for Libertarian Studies. See his tribute to Murray Rothbard.