Original subtitles

In both splendor and abundance one of flower on this planet out shines the rest. Each spring the dutch lowlands a set aflame by myriads of brightly colored glasses.

This might be the best known planting the world.

But who knows it's secret history.

The beauty of this flower has and treat beguiled and bewitched rich and poor alike.

Once it's boats were worth their weight in gold.

Three centuries ago it's luxurious patterns in hughes crazed an entire nation.

It's bulbs became the object a fantastic financial speculation.

Astronomical bets were placed on that rising price.

But when the market crashed thousands of investors tumbled into women.

It was the first big bust in the history of booze.

The burst.

Yeah.

No.

The netherlands in february sixteen thirty seven.

The news spread like wildfire.

For the first time a cute auction had fallen short of expectations.

Over months prices have soared to fantastic models.

But suddenly to lips were no longer board.

Overnight treasured contracts turned into trash.

Dreams of super profits not last long.

The value of a coveted commodity had proven volatiles.

The tulip fever had infested a large part of the netherlands population.

Everyone wanted to profit from the rising demand for these colorful flowers.

But now.

The party was over.

Those with little capital were hit the hardest.

People from all walks of life had been infected by the craze.

Laborers craftsman and gamblers.

People like adrian the miller.

There was crazy a true mania too speculative bubble because it made no sense that anybody would bet on an ever increasing price of a flower.

Economists peter and gaba is a market analyst for major international bank.

There are obvious parallels between the seventeenth century tulip fever and developments and days financial markets.

In both situations people were and are betting unrealistically on rising prices.

Why do people stumble into the very same trap over centuries.

British historian mike dash has been wondering about this question.

There is something in the human mind in the human spirit which makes is not want to believe the truth about stock market bubble.

Most people participate in a bubble in spite of better knowledge.

This was made apparent for the first time by the seventeenth century tulip mania.

During the first half of the seventeenth century.

The netherlands had an exceptional position in europe.

While the rest of the continent was devastated by the thirty years war the netherlands enjoyed that golden age.

It was the era of touch painting of great masters like rembrandt.

Friend's house.

Rubens.

And the man.

Thanks to the overseas trade the national economy was booming.

The netherlands were not ruled by costly royalty.

Their autonomy cities and provinces were governed by councils of citizens and gentry.

The key to understanding the netherlands early in the seventeenth century is that it was a very special sort of country.

It was the first country in europe to develop a modern economy and it was also the wealthiest country in europe and it based that wealth on trade.

It was the first country which was able to establish direct trading links in a major way with the far east and this is where most the luxury goods came from and his period of and by taking all of those little slices.

A profit and keeping to themselves.

Dutch merchants became extraordinarily wealthy.

Although capital remained concentrated in the hands of a few the general public also enjoyed a higher standard of living than in the rest of europe.

This was the case for craftsman as well as for the domestics like anna.

The problem that the dutch motions had in this period was that they'd gone through the reformation.

The previous century and holland was in fact in the grip of a rather extreme form of calvin isn't this frown greatly on any sort of ostentatious displays of well.

The only thing that these dutch much as arabia allowed socially to do with their wealth was to displays in the form of.

Things that glorified god and this really explains a large part of the dutch obsession with gardens.

A coveted decorative elements of dutch gardens was the to lip and exotic plants native to central asia.

In the coal steps and mountain regions of kazakhstan.

The wild ancestors of dutch chewed it breeds a still found today.

They're somewhat smaller than our gotten varieties and display many beautiful shoes from red to orange and gold.

From central asia tulips with has taken to turkey where they enjoyed special appreciation has harbinger of spring.

In the second half of the sixteenth century the first tulips arrived in europe to adorn the palace grounds of emperor rudolph.

The second in vienna and prague.

From their button is charles de la cruz bro tulips to the netherlands.

At the university of lighten the clues founded a garden name tortoise.

Academic us were the first shoot a variety he bread can still be admired today.

Very soon is exquisite.

Pont would cast a spell on the entire nation.

Including a ha the miller.

Adrian was engaged in the game of trick track when he noticed some hustle and bustle.

The taverns background.

These people seem to be training something.

Something of great value.

Lots of flour bulbs and lots of money were changing hands.

And any one was welcome to join in.

Adrian so he's lucky charms.

If you grew up in the parliamentary miller and you try to predict and the basis of what you know about that market and the fundamentals of driver try to predict what the future price will bring.

You may be wrong.

Then a speculative investment is driven by the desire to make higher returns and the tulip mania was no different from that.

The only unusual aspect was where and how the deals were laid.

What do you actually have was a sort of imitation of the real life economy which emerges amongst our designs and peasants who really don't really know exactly how this is done.

They would form their own little stock exchanges or trading groups which normally met in pubs.

So a large part of the cheated trade also took part in this of haze of intoxication which made people more willing to site with on things are actually less trustworthy.

First each bow was weighed.

The seller wrote the price he wanted on a slate which he handed to the channel.

Then the would be buyers wrote down their office.

The chairman fixed price somewhere between the sellers expectation and the highest offer.

Adrian made his mouth.

For tiny brown belt he spent his last guild apple.

There is maybe some leader that invests in a project but everyone else in the her just follows on the basis of that person's doing the investment and they just throw their money into the project without understand and perhaps what is going on.

Adrian had no experience with tulips.

He never possessed any.

All he knew was the demand for tulips was coming up.

The deals in harlem shady backrooms heralded the growth of a huge industry.

Today.

Eighty percent of all the tulips sold worldwide a produced in the netherlands.

Each spring brightly colored flower feels spread from horizon.

Two are rising.

Well.

But most of these blossoms will never leave the netherlands.

These are just crop fields.

And the harvest his bones.

Once the blossoms of with it the bulbs are on earth like potatoes clean and sorted.

At this time mother and daughter bulbs are separated.

This form of a sexual propagation provides new bulbs for breeding.

Back in the seventeen hundreds dutch gardeners also on earth the bulbs after flowering.

This was to prevent vols and other pests from eating the juicy bows of these luxury pounds.

But another reason even back then was to get the daughter bulbs in order to raise identical flowers of each breed.

Handling these tiny daughter bulbs correctly requires green fingers.

Something and dropped in front of on his feet.

And no one noticed.

Now she held her own little bow.

Those.

Surely a flower of exquisite beauty would grow from it expressing.

But no one was to know.

Anna carefully wrapped her unspectacular jam and hid it in her room.

Her treasure was to be kept safe and secret.

Adrian for his part also appreciated to their belts.

But for different motive.

Over the summer to low prices had been steadily climbing.

The more people joined the speculation game.

The foster prices rose.

Adrian through his little bump on the market.

In just a short while he made a handsome profit.

But a good profit depended on which variety of chewed up pure bought and sold.

When we live today chewed up you might think that they beautiful but they are not the tulips that the dutchman of this empty century.

So they were even more vivid and colorful and the value of a cheat.

It was extremely closely tied up to the colors on it and the fine of those colors were the more highly esteemed the ball was.

To this day there a tulips with extravagant color combinations.

An extraordinary patents.

And still many of the threats to these delicate plans remained.

The greatest threat to tulip bulbs is not the appetite of our little neighbors.

The most insidious enemy is hidden deep inside the very cells of the plot.

A virus.

Today these germs a well researched that in the seventeenth century they brought surprises to the breeders.

Because of virus can radically alter the appearance of a pond.

Divya think the a virus cannot live by itself and needs.

Another organism.

Viruses can only multiply within the cells of a host for me.

Maggie lima to come on.

I'm a cada is a plant virus expert.

He vm didn't actually tennessean implants and tell him to walk on the i'm on top of viruses.

Specialists in reprogramming plan sales causing havoc in a plants normal development by reinforcing some jeans and the activating others and again him up excited.

When see this it's ft fall when the pigment production and some cells a super activated.

The result can be dark.

Red stripes fobbed off seen it on the colbert.

Three them gets to incredible dished.

I've ordered the big men production is stifled.

A bright white stripe will appear or dots creating special patterns.

Maybe this is this only most.

I was my home.

Plants and v on plan viruses are being spread in various ways.

This particular to the break and virus is being spread by a fits.

In a fit second ad and and affected planned can then in fact a healthy one.

It's easy to imagine how quickly and entire field can be infecting when so so many plans are so close together.

Eventually the virus is lethal for the plant lunches.

Helps is this a real infinity on meet outside a military.

Tuesday this virus poses a massive problem for to breeders.

You can only fight it manually.

The breeders patrol their field so they can immediately remove suspicious plants and stop the spread of the disease.

But then again.

It was precisely this viral infection that produce the most extravagant seventeenth century tulips.

Flame flowers with stripes and cutting edges.

To produce a beautiful flower you have to have the boat do it the more unique the barber's the more you turned around and why would a particularly new a unique.

A new variety of bob have a high value very high value search so high that are my equal of price of have a substantial house as it did in the netherlands well that's because that board reproduces.

The expectation of increasing pounds value by one or two hundred percent fire.

The imagination of investors.

Back then little was known about the biology behind the tulips reproduction.

But catalogues listing tool it breeds existed.

Due to the nature of it's bow the tulip isn't ideal trade commodity.

Bulbs can survive without soil for many months.

They also easy to transport store and handle.

You need to see we will change but you know bob is a storage oregon which enables the planned to survive periods of drought or along and very cold winter convey order to sign on as can any faculty well along a being up any or this time.

A certain period of low temperatures is even needed to trigger new growth.

As soon as the spring weather offers the right combination of light warm and moisture.

The ball begins to sprout.

Within a short time a large part to grow from a comparatively little bow.

During the second half of sixty and thirty seven.

Lips with a rare flaming patna fetched a hundred guilders puck out.

The equivalent of full fat pigs or thousand pounds of cheese.

To encourage extravagant patterns bizarre methods were applied.

Some even try to manipulate flower colors by storing pounds in red wine.

Although today's methods make more sense the results are still far from certain.

In spite of elaborate computer modeling breeders cannot always predict what will happen when they cross breed.

Various tulips.

The solution is to try several cross breeds and then select the prettiest and toughest ones and that requires patience.

It takes years until a new breed will blossom for the first time.

Sometimes an entire decade passes after the first pollination until breeders can really judge the qualities of a new breed.

Thanks to the uncomplicated bulbs.

Tulips are an ideal tried commodity.

But bulbs have one major disadvantage.

The appearance of about tells you nothing about the looks of it's flower.

So the patches of tulip bulbs has always been a matter of trust.

And trust.

Has often been abused.

The shooter trade did have to involve a certain amount of trust.

It's very hard for us to no records or rather scammed exactly how much people believed in what they were being told.

Each bulb carries it's and secret until next spring.

And that turns any business deal into a gamble.

Somebody this try to limit the risk of evil surprises by careful sorting and cataloguing.

If by coincidence well suited stocks were mixed up.

The results could be a nightmare.

Even with perfect organization a sudden risk remains.

The most valuable specimens would be the ones infected by the virus.

But traders had no way of recognizing infected bulbs.

The found that the flowers are infected means it's very hard to predict what's gonna happen.

The next time the bulb flowers it may or may not produce one of these broken shoot apps which are fantastic valuable.

Sometimes a dutchman goodbye on audrey to live and it would become infected and it next it would flower into something incredibly valuable so huge and them to chance is also introduced into the trade which for certain sort of trader makes it even more attractive.

More.

To gain the buyers confidence traders used the study skills of dutch painters.

Me away.

One of the extraordinary things that and developed in the netherlands in the sixteenth thirties was the development of what's known as tool it books and these were books produced often on commissioned by very wealthy to traders who had a artist to actually illustrate the types of shoot of they had it in a inventory.

These to let books or best source of information about historic flowers or at least have an artist's flowering imagination.

These pictures of of a beautiful they show cheaters of the most exotic find this but you're still trusting that the person who show you this picture does actually own the bulb and there's still lots of scope therefore also says she came to me and mistrust.

These gorgeous images were further enhance with glorious names such as admiral van dyke.

A route than light.

No.

I think it would be fair to suggest that the it books were in fact a of formerly advertising and there was a very definite commercial element.

To this.

The books were undoubtedly use as an advertising medium.

A sort of it as a trade catalog effectively to to try to persuade people.

Many traders and never seen alive to live in full bloom.

Adrian to was impressed by masterful illustrations.

Three centuries later the tulip trade has changed.

No other market on the globe can to greater turnover tulips and ausmus flower market.

Trading takes place in a hole the size of several football fields.

Each year billions of pounds pass through this whole.

The shipping area is a perfectly synchronize logistics machine.

Cut flowers extreme perishable commodity.

Tulips only flower for a few weeks in spring.

To extend the harvesting period cut flowers are bread in greenhouses.

Here they are brought to flower and successive periods under controlled conditions.

To accelerate sales flower exchanges like the one and us man operate in a so called dutch auction mode.

This means counting downward from an announced maximum price.

A good deal depends on the right moment of placing a bit.

If you bit too early the price may be too high.

If you wait too long and other trade and they snatched away the commodity.

Money merchandise change hands immediately which is known as a spot market.

This is the key difference from what went on and sixteen thirty six.

And this is to do with the tulips growth cycle.

Bulbs must be planted in autumn so they can flower in spring.

Special attention was paid to the arrangement of varieties and colors.

That depended on careful sorting at the time of harvest and on well organized storage.

Banners secret power to the time had come to be counted.

A tool it can also flour and apart.

If conditions emulate those outdoors.

The keys a cold period during winter.

No problem in anna's unheated chamber.

The nature of the tulip bulbs is that they flower in the spring.

Flowers last for a week or two and then the bulbs can be dug up and traded as physical items.

For a few months.

For the winter.

They must go back into the ground.

Otherwise they will die so any trading of bulbs in the autumn or in the winter by.

It's very nature was a forward market.

They would be delivered when they came out of the ground in june.

In other words the traders were houses were empty and winter.

Tulsa make good use of that period.

They invented a new method of training.

When you're dealing with people who are attempting to make money by trading bulbs only be able to make money for a few weeks of the asian.

A very adequate onset and the natural extension of this was to trade the possession of the bulb.

The way in which the dutch adapted this is quite fascinating because essentially what they did was to invent what we would not considered to be the futures trade.

Prices of the physical bulbs did not move that much it was the forward markets that moved a lot and that they diverge dramatically from the value of the spot price.

It was the beginning of a new era.

Now it was possible to sell goods.

You did not yet.

He did not by actual bulbs.

He bought the right to purchase bulbs for a set price at a future time.

To give somebody something else to say you own this ball which is in this garden in this town own by such and such a person and if you take him this piece of paper he will hand over your property to you.

In the back rooms of their pubs with nothing more than pen and paper the dutch had invented virtual trading.

To make the absence of goods easier to bear fantastic paintings provided a visual impression of the goods.

While the real plant was still slumbering in the soil have some field.

Up until october these were strictly futures or forward prices that is the buyer of that contract took the downside risk as well as the upside yeah.

Many of these old trading contracts still exist.

These historical documents tell a story of how quickly the trade with people contracts became separated from the physical commodities.

The actual bulbs.

The bulbs i've had three coins into pieces of paper are factory banknotes.

For them.

They're not interested at all in growing plants and in fact going the plants and is is a danger to them.

Because the way in which the the trade work was that the the notes were you have you but you used to claim the ownership.

The flower they have to be settled when the plant is drawn out of the ground.

At that point you have to have a large amount of money is far better to to buy and sell and have the money and from somebody else and so the trade becomes increasingly accelerated and frantic.

It is me well that they were gambling on fantasy thick us.

But the temptation of raking in profits proved irresistible.

Called the wind handle which means that blowing in the breeze essentially and that conveys a certain amount of the uncertainty just the fact there's nothing really that but when eventually that this suggests that some dutch people were aware of what an uncertain trade the features trade will actually be.

In principle it's the same today.

Once prices begin to rise everyone starts buying.

This works best when there is little connection between the piece of paper one buys and any real commodity.

When that connection is not understood.

The general speculation craze was also fueled by the fact that access to the market was cheap compared to the prospect of high profits.

The people involved are usually very poor.

They would mortgage that trade goods the looms are.

They had and use that money to put down payments on tulips and the way in which they would do it.

When the bulbs when the grand would be to buy a promissory note from the person who it.

A weaver who had just mortgage is lame for twenty five guilders would buy twenty five guilds with the tulips.

Not two and a half guild is where the to it and save the that the balance of ninety percent knowing he would have to pay that in the future the prices are rising so high that seem to be completely unnecessary.

What would happen as you'd invest everything you could it as many bob he could and hope to actually.

Transfer your responsibility to settle and ninety percent to somebody else before the ball was lifted in.

In that way you could make more money.

That becomes a problem with the very moment when know by is willing to pay and even higher price.

At that moment panic selling sets in and prices plummet.

There is the objective definition of a bottle a situation where the prices of an asset rise very rapidly of and collapse.

Something similar happened with the us real estate bubble in two thousand and seven.

But between december sixteen thirty six and january sixteen thirty seven julie prices was still on the rise.

In some cases soaring to astronomical heights.

The chronicles document the swelling bubble.

The price of some varieties increased by one or even two thousand percent within just a few weeks.

This drove a new sort of demand among thieves.

The rich know how to protect their fields with alarm systems.

At night thieves would dig up the most valuable bulbs and throw them on the market.

Oh they stole a very plants.

They just sold on paper.

The most expensive variety was called semper augustus even before the tulip fever it's bulbs and fetched three thousand guilders.

Now the price breached the ceiling of ten thousand the equivalent of a grand hall and am the dams classiest district.

But no one had actually seen the flower simple august is the very interesting case.

It is the most famous wow that shoot at mania and yet it was apparently never actually traded.

We certainly can't say that any particular person saw the flower we done and name and the person who spoke to be owned it.

We just know when follicle that eventually one of these flowers was supposedly eventually so.

As with other varieties all that the traders were able to show was an artist's impression of the ever joy fortunate.

Adrian to paid good money for a colorful promise on paper.

You can turn to a tulip of and see a picture of a simple augustus.

It is highly highly unlikely that the person who do this picture had ever seen this flower frankly.

If you look at this flower and you look at another superbly fine read to lip of that period.

You can't tell the difference but who cat the deal was about profit altitude tulip.

It is possible that simple gases was effectively an urban myth.

On the other hand even if semper augustus did exist it can only have been the result of a viral infection.

The map product of coincidence.

Theoretically even the bulb awaiting spring and and as chile chamber might grow into a precious lee flames to live.

Perhaps are known to her.

She was the owner of a great treasure.

In a flowerpot if you want to have growth then you start putting your investable research.

The real resources into somewhat riskier speculative technologies.

If you do that and often you may lose you were eric a bad investment and that will have the and look like a bubble or you may win.

The danger of being caught in possession of some of these promissory note and not having the capital to meet you and ninety percent commitment became quite a significant central people.

This cause sort of flaring up in the amount of trades we know from some of the requisite the period that bulbs can be bought and sold.

It makes ten times and day one of these tavern colleges as i recall and were of is he trying to shift their liabilities under somebody else and this accounts for much of the frenzy of the tulip mania.

Some investors including adrian now took the speculation game a step further.

If a crash occurred how could a profit from that.

Perhaps adrian could make up for his imminent loss later on by buying even more bulbs cheaply after the crash and selling them when prices would rise one small.

The most buyers clung to the hope the prices which has continued to rise and eventually balance the debt that incurred when buying with money that did not have.

They knew that they could not afford to exit now even if they wanted to.

As long as all the others would not exit.

Everything would be fine our father.

The to of speculation and the taverns was just a a drinking game that reflect the demoralization of the society and was not serious.

It was done between people who.

Have very little wealth and therefore of and they were making very large bats with each other with no prospect of collecting on the beds.

Modern brokers still face the same key question is the seventeenth century to live traders.

Precisely when do you exit.

It's extremely fine line between maximum profits catastrophic losses.

The watershed is the moment when prices peak and just before the market nose dives into is selling frenzy a moment.

It's extremely hard to anticipate.

The speculation when it reached it's peak in fall and winter of sixteen thirty six sixteen thirty seven or is purely up abetting market and not not an actual real investment market.

The burst of the bubble took investors by surprise.

In early february sixteen thirty seven an option for it boasts took place in a tavern and for the first time nobody bid on one of the lots.

The auctioneers try to lead price and auction them again and for a second time nobody bit on the for this is unprecedented but the implications with very clear to the p people in that haven't they realize that something very bad was happening that demand for today suddenly been cut off.

In a moment thousands of dreams was shattered.

People were stunned and horrified tumbling between sudden realization denial and disbelief.

The moment of truth had hit like a bolt of lightning.

They rush out of tavern to tell their friends cell and the panic spread throughout harlem.

So within a day in harlem the value it was dropped pretty much nothing.

Panic turns into a stampede as we have seen with every speculation bubbles since.

Accelerated by modern a means of communication a bursting bubble can turn into a maelstrom which sucks in personal fortunes banks industries courage.

She's a national economies tearing at the social fabric of our civilization.

In contemporary publications the tulip traders were lampooned harshly criticized even like and to monkeys.

These images expressed frustration and anger of the masses who felt cheated.

Since then it seems nothing has changed.

The tulip.

Mania was a factory.

The first financial bubble has ever existed and to be fair to the dutch people of the early seventies entry.

They had no particular reason to know that the bubble could not continue to expand forever.

This it never happened before the idea that the bubble would inevitably implied was unknown to them.

After the burst to the to let bubble dutch authorities or need for trade regulations.

As is often happens since a debt cancellation was decreed.

After small investors are being fleeced leaving them feeling desperate and frustrated the authorities may have fared revolution.

Just ten percent of the liabilities the actual down payment had to be paid when the contracts became do.

And some contracts we even declared null and void.

The reason there was no economic distress was that there was no misallocation of invest real investment resources.

Today financial speculation is deeply rooted in general society.

The buying of a bursting bubble will reverberate across the globe and shake society as a whole.

We still see examples of exactly these sorts of bubbles building up an existing.

In our society today and yet still people continue to make exactly the same mistakes.

Adrian dream is down the drain for him.

It's back to million grain.

On on his window sill.

And extravagantly flame to lip reach the saudi.

A few weeks earlier semper augustus would have made her a which lady.

Now she and her flower or what they've always been.

Natural beauties.

Symbols of spring.

New.

The.