Book Review: Tulipmania by Mike Dash
Mike Dash’s “Tulipmania” was a short and pleasant read. I was inspired to pick up this book because in recent years I’ve been interested in learning more about the boom and bust cycles of economics. Here and there a tiny reference to the tulipmania of the Duch Republic in the 1600s would emerge in the context of something else. But I really didn’t understand the reference that well.
“Tulipmania” served to answer all of my questions and then some. For example the more I read the more I came to understand how little I knew about how life in the Dutch Republic was different than some other European countries in the same era. They had early versions of social welfare programs for the orphans and the elderly. They had early incarnations of a stock market and (perhaps more impressively) a futures market. The nation at the time had few nobles and was mostly run by a wealthy middle class.
This non-fiction piece starts with a somewhat lengthy history of the Tulip. From its origins in Asia to how it became the closest flower to heaven in the eyes of the Turkish people and the Ottoman Empire. This backstory was somewhat long, but it did provide some useful context.
When the book finally transitions to the Dutch Republic and the events of the mania surrounding buying and selling tulip bulbs, I really was hooked. The book provided some very useful context as to why the Dutch people saw Tulips as having value. It took the time to explain how this started with a few wealthy merchants overflowing with money and looking for places to spend. It took the time to explain that tulips were a rare import, and that the rarest and most beautiful and prized varieties of Tulips were where the Tulip trade really got started.
From there the cycle of boom and bust is a fascinating read. You can pick out the similarities between this and say the stock market run up in the 1920s fairly easily. Or if you aren’t that experienced with economic history at all, that’s ok. What happened in “Tulipmania” was truly a grandfather to anything resembling modern economies. So the book takes the time to explain how a “Futures Contract” worked in those days. You also don’t need to understand what FOMO is, or what buying on leverage means. These concepts are explained with next to no jargon. Furthermore the Dutch did things differently back then and so even people with decades of experience in investing, trading or the financial world might find the Dutch style commodity market an interesting view into how such things were handled back then.
What “Tulipmania” really portrays well is the human element in the boom and bust cycle. The run up in prices is explained and analyzed. So is the attitude of the being involved in it. Understanding the role of promissory notes and how it turned Tulip Trading from a commodity trading to form of futures trading is really fascinating. You really can’t understand “Tulipmania” until you understand how it all went from physically trading tulip bulbs to trading a piece of paper that represented ownership of a tulip bulb.
I think this is a good read for anyone interested in economics. Anyone interested in understanding the human ingredient to boom and bust cycles, or price bubbles. Even if you aren’t that into history or flowers, it is still a fascinating glimpse into the core tenants of human behavior that still drive financial and commodity market behavior to this day.
If I have anything negative to say about “Tulipmania” it is that the time spent talking about the Ottoman Empire makes it a little split-focused. The book’s time on the subject early on is interesting and does provide some useful context. But after reading about the boom and bust, the book returns to the Ottoman Empire. This time it feels like the author was including all this post-bust Ottoman Empire historical context more for completeness sake. It didn’t add to the Dutch Republic story or history much. I found myself skimming the last few pages in a semi-interested fashion.