When the nature of this trade is considered, it will readily be perceived, that to get possession of these flowers was not the real object of it, though many have represented it in that light. The price of tulips rose always higher from the year 1634 to the year 1637; but had the object of the purchaser been to get possession of the flowers, the price in such a length of time must have fallen instead of risen. “Raise the prices of the productions of agriculture, when you wish to reduce them,” says Young; and in this he is undoubtedly right, for a great consumption causes a greater reproduction. This has been sufficiently proved by the price of asparagus at Göttingen. As it was much sought after, and large prices paid for it, more of it was planted, and the price has fallen. In like manner plantations of tulips would have in a short time been formed in Holland, and florists would have been able to purchase flowers at a much lower price. But this was not done; and the chimney-sweeper, who threw aside his besom, did not become a gardener, though he was a dealer in flowers. Roots would have been imported from distant countries, as asparagus was from Hanover and Brunswick to Göttingen; the high price would have induced people to go to Constantinople to purchase roots, as the Europeans travel to Golconda and Visapour to procure precious stones; but the dealers in tulips confined themselves to their own country, without thinking of long journeys. I will allow that a flower might have become scarce, and consequently dearer; but it would have been impossible for the price to rise to a great height, and continue so for a year. How ridiculous would it have been to purchase useless roots with their weight of gold, if the possession of the flower had been the only object! Great is the folly of mankind; but they are not fools without a cause, as they would have been under such circumstances.
During the time of the Tulipomania, a speculator often offered and paid large sums for a root which he never received, and never wished to receive. Another sold roots which he never possessed or delivered. Oft did a nobleman purchase of a chimney-sweep tulips to the amount of 2000 florins, and sell them at the same time to a farmer; and neither the nobleman, chimney-sweep or farmer had roots in their possession, or wished to possess them. Before the tulip season was over, more roots were sold and purchased, bespoke and promised to be delivered, than in all probability were to be found in the gardens of Holland; and when Semper Augustus was not to be had, which happened twice, no species perhaps was oftener purchased and sold. In the space of three years, as Munting tells us, more than ten millions were expended in this trade in only one town of Holland.
To understand this gambling traffic, it may be necessary to make the following supposition. A nobleman bespoke of a merchant a tulip-root, to be delivered in six months, at the price of 1000 florins. During these six months the price of that species of tulip must have risen or fallen, or remained as it was. We shall suppose that at the expiration of that time the price was 1500 florins; in that case the nobleman did not wish to have the tulip, and the merchant paid him 500 florins, which the latter lost and the former won. If the price was fallen when the six months were expired, so that a root could be purchased for 800 florins, the nobleman then paid to the merchant 200 florins, which he received as so much gain; but if the price continued the same, that is 1000 florins, neither party gained or lost. In all these circumstances, however, no one ever thought of delivering the roots or of receiving them. Henry Munting, in 1636, sold to a merchant at Alkmaar, a tulip-root for 7000 florins, to be delivered in six months; but as the price during that time had fallen, the merchant paid, according to agreement, only ten per cent. “So that my father,” says the son, “received 700 florins for nothing; but he would much rather have delivered the root itself for 7000.” The term of these contracts was often much shorter, and on that account the trade became brisker. In proportion as more gained by this traffic, more engaged in it; and those who had money to pay to one, had soon money to receive of another; as at faro, one loses upon one card, and at the same time wins on another. The tulip-dealers often discounted sums also, and transferred their debts to one another; so that large sums were paid without cash, without bills, and without goods, as by the Virements at Lyons. The whole of this trade was a game at hazard, as the Mississippi trade was afterwards, and as stock-jobbing is at present. The only difference between the tulip-trade and stock-jobbing is, that at the end of the contract the price in the latter is determined by the Stock-exchange; whereas in the former it was determined by that at which most bargains were made. High- and low-priced kinds of tulips were procured, in order that both the rich and the poor might gamble with them; and the roots were weighed by perits, that an imagined whole might be divided, and that people might not only have whole, but half and quarter lots. Whoever is surprised that such a traffic should become general, needs only to reflect upon what is done where lotteries are established, by which trades are often neglected, and even abandoned, because a speedier mode of getting fortunes is pointed out to the lower classes. In short, the tulip-trade may very well serve to explain stock-jobbing, of which so much is written in gazettes, and of which so many talk in company without understanding it; and I hope, on that account, I shall be forgiven for employing so much time in illustrating what I should otherwise have considered as below my notice52.
At length, however, this trade fell all of a sudden. Among such a number of contracts many were broken; many had engaged to pay more than they were able; the whole stock of the adventurers was consumed by the extravagance of the winners; new adventurers no more engaged in it; and many, becoming sensible of the odious traffic in which they had been concerned, returned to their former occupations. By these means, as the value of tulips still fell, and never rose, the sellers wished to deliver the roots in natura to the purchasers at the prices agreed on; but as the latter had no desire for tulips at even such a low rate, they refused to take them or to pay for them. To end this dispute, the tulip-dealers of Alkmaar sent in the year 1637 deputies to Amsterdam; and a resolution was passed on the 24th of February, that all contracts made prior to the last of November 1636 should be null and void; and that, in those made after that date, purchasers should be free on paying ten per cent. to the vender.
The more people became disgusted with this trade, the more did complaints increase to the magistrates of the different towns; but as the courts there would take no cognizance of it, the complainants applied to the states of Holland and West Friesland. These referred the business to the determination of the provincial council at the Hague, which on the 27th of April 1637 declared that it would not deliver its opinion on this traffic until it had received more information on the subject; that in the mean time every vender should offer his tulips to the purchaser; and, in case he refused to receive them, the vender should either keep them, or sell them to another, and have recourse on the purchaser for any loss he might sustain. It was ordered also, that all contracts should remain in force till further inquiry was made. But as no one could foresee what judgement would be given respecting the validity of each contract, the buyers were more obstinate in refusing payment than before; and venders, thinking it much safer to accommodate matters amicably, were at length satisfied with a small profit instead of exorbitant gain; and thus ended this extraordinary traffic, or rather gambling.
It is however certain, that persons fond of flowers, particularly in Holland, have paid, and still pay, very high prices for tulips, as the catalogues of florists show53. This may be called the lesser Tulipomania, which has given occasion to many laughable circumstances.