T U L I P M A N I A
by Sven Sauer
TULIP CRISIS
I - An Aspiring Desire
Sven Sauers' artworks look down on the world from far above. The chosen ¾ ('three quaters view') perspective creates a strange effect: undistorted and unemotional, providing an overview.
At the same time, one is never quite sure what actually predominates: Criticism of the financial economy or sheer admiration of its beauty.
The installation "Tulipmania" by Sven Sauer is based on the first documented speculative bubble of mankind. How did it come about, that, especially in enlightened Holland, the tulip crisis took on such frightening proportions?
At the beginning of the 17th century, the Netherlands stood on the threshold of a golden age. Merchants from Amsterdam dominated the highly lucrative East India trade.
In 1602, the first modern joint-stock company is founded - The East India Company.
In this period, Holland rises to become the most important economic power in the world.
The amount of money in the population grows. A class of wealthy Dutch emerges who increasingly demand prestigious consumer goods.
[During this period], an exotic plant from Central Asia appears that quickly becomes a status object in rich homes: The name comes from Persian and means turban: the tulip.
Tulips become an object of admiration.
The tulips' susceptibility to disease makes them an exceptional rarity and so demand grows faster than supply.
Left: Plate 10 from the Florilegium by the florist and breeder Emanuel Sweerts. The Tulip Book, published in 1612, was based on his sales or mail order catalog for bulb plants. (Image: Wikimedia, public domain) Right: Brochure on tulip mania in the Netherlands, printed in 1637 (Image: Wikimedia, public domain)
II - The Lure
The trade begins. While initially only wealthy merchants trade in tulips, the tulip bulbs soon turn up in inns and are exchanged for wheat, oxen and cheese. Because of the prospects of quick wealth, soon, farmers, fishermen and sailors also enter the business and encumber their houses, workshops and farms. As a result, the prices for the onions continue to rise.
Complex tables are created on which the individual varieties are listed according to their changing market price, similar to securities and exchange rates.
In 1634, a change in trade takes place that is to set the subsequent crisis in motion: As florists cannot keep up with the laborious task of re-growing, traders announce the mere intention of selling a bulb.
Flyer of the price list of the 99 lots of tulip bulbs auctioned at the Weeskamer auction 1637 in Alkmaar.
The tulip bulbs remain in the ground, but the rights to their offspring are sold.
Warrants on tulip bulbs are resold up to ten times in one day!
This trade is possible even if the buyers have no money at all and bet everything on the resale. 'Speculating on credit' arrives in the tulip market. Money starts to flow, prices rise, which gives the business additional credibility. A positive feedback effect is created. In 1636, prices explode by a factor of ten. Money seems to be free. At this peak of speculative fever, a rare tulip bulb like the Semper Augustus is traded for the price of a lavish house in the middle of Amsterdam.
© Norton Simon Art Foundation
III - The Destruction
It is often an inconspicuous event that bursts the bubble: an auction in Haarlem on the third of February in 1637 marks the turning point: A pound of tulip bulbs of the "White Crown" variety is offered at 1250 gulden. Usually, several interested parties would have come forward, but even after price reductions, bids fail to materialize.
News of the collapsed deal spread quickly. Distress sales begin. Auctions are canceled. Then, the avalanche is unstoppable. In just a few days, the market collapses completely. No traders want to buy, but everyone sells. Options become worthless, buyers cannot meet their payment obligations. The first loans fall due, prices plummet. Onions, which recently changed hands for thousands of guilders, are now traded for only 1%.
A few days later, the tulip trade in the Netherlands is banned by the king.
The dramatic thing about this situation was that ordinary people were drawn into the speculative bubble and allowed it to develop.
The tulips disappeared completely from the Dutch scene. For decades, even images in family crests were considered ominous.
Today, 80% of all tulips worldwide come from Holland again. The country is the main hub for this flower, which is now also traded on the stock exchange market again.