T U L I P O M A N I A!

According to legend, tulips (based on a Turkish word for turban), arrived in Western Europe about mid-16th century from Constantinople. They were brought into the Dutch Royal Gardens in 1593. By 1600, tulip stock was being planted in England, and, until 1634, tulips became more highly prized each year, until, according to Charles Mackay, in his authoritative book of 1852, Extraordinary Popular Delusions & the Madness of Crowds, by the mid-1630s, ``it was deemed a proof of bad taste in any man of fortune to be without a collection of them. Many learned men, including Pompeius de Angelis, and the celebrated Lipsius of Leyden, the author of the treatise, ``De Constantia,'' were passionately fond of tulips. Soon, the exotic plants were all the rage among Dutch aristocrats, who not only purchased them for their beauty, but began to speculate on them.

The craze for tulips, was however, not limited to the upper classes; rather, like today's stock market madness, it soon overtook the middle class, and ``merchants and shopkeepers, even of modest means, began to vie with each other in the rarity of these flowers and the preposterous prices they paid for them,'' Mackay tells us, adding that, ``In 1634, the rage among the Dutch to possess them was so great, that the ordinary industry of the country was so neglected, and the population, even to its lowest dregs, embarked in the tulip trade.''

Historian Nicolaes à Wassenaer wrote in 1623: ``Among the many percious examples of these flowers, one that for its beauty is named Semper Augustus, is the foremost of this year....'' When Wassenaer wrote, a single Semper Augustus bulb was selling for $525 (the average Dutch annual income at the time was $79); by 1633, it had nearly doubled to $2,900; by 1637, a trio of Semper Augustus bulbs sold for $16,000, more than three times the value of the most expensive estate in Amsterdam.

These bulbs were never planted. In fact, they were never seen by the purchasers. (It boggles the mind to imagine what this would have looked like had the Internet been available then.) Sales took place by contract, and eventually, the number of middlemen between the grower and speculator rose to more than a dozen.

Prices reached staggering heights in late 1636, and early 1637. But by February of 1637, the collapse was on. Thousands of investors were bankrupted, many of them members of the middle class, who lost their life savings.

Like all bubbles will, the Tulip Bubble burst, and perhaps, not until our time, with the euphoria over the Nasdaq, have its excesses been repeated.