History of International Relations Textbook

The Muslim caliphates


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In the beginning of 1637 a madness seems to have overcome the Dutch. Everyone was buying tulips and prices were skyrocketing. For a while one single tulip bulb was selling for more than ten times the annual income of an ordinary laborer. In the rising market extraordinary wealth could be accumulated in a matter of days and everyone wanted a piece of the action. Soon what was bought and sold was not only tulips, but the right to buy or sell tulips at a certain price at a future date. Everyone was keeping their eyes on the tulip market, and most everyday conversations contained references to the current prices for various strains, hybrids and colors. The Netherlands was seized by “tulipmania.”

Today we all associate tulips with Holland, but originally the flower grew wild in Anatolia, in today’s Turkey. In 1554 the first tulip bulbs were sent from the Ottoman Empire to Vienna and from here the flower soon spread to Germany and the United Dutch Republic. The first experiments with tulip plantations took place in Leiden in 1593 and it turned out that the flower survived well in the harsher climate of northern Europe. Soon tulips became a status symbol of members of the commercial middle-classes. The flower was not only beautiful and unusual, but, given the Ottoman connection, it was also very exotic. When commercial cultivators entered the market, prices began rising. This was where the speculation in the tulip market began.

The Tulip Period is the name commonly given to the short era, 1718 to 1730 CE, when the Ottoman Empire began orienting itself towards Europe. It was a time of commercial and industrial expansion and when the first printing presses were established. Here too there was a tulip craze. In Ottoman court society, it was suddenly very fashionable to grow the flower, to display it in one’s home and to wear it on one’s body. The tulip became a common motif in architecture and fabrics. Here too prices of bulbs rose quickly and fortunes were made and lost. This was the first commercialized fad to sweep over the Ottoman Empire and the beginnings of modern consumer culture.

Today “tulipmania” is a term often referred to in discussions of rapid price rises which seem irrational and “mad.” Prices are inflated to the point of creating a “bubble.” That is, a price which is dramatically out of line with the price which a certain good ordinarily sells for. Bubbles, as we know, can suddenly pop, markets can crash, and this is exactly what happened in the case of the Dutch tulip craze. Already by March, 1637, prices were back at ordinary levels. Economists are interested in cases such as the tulipmania since they help us understand how economic markets operate. To some economists they prove that markets are prone to bouts of irrationality, but other economists point out that it is perfectly rational to buy something even at a ridiculously inflated price as long as prices can be expected to continue to rise.