50 Things That Made The Modern Economy With Tim Harford

One frosty winter morning at the start of 1637, a sailor presented himself at the counting

house of a wealthy Dutch merchant and was offered a hearty breakfast of fine red herring.

The sailor noticed an onion, or so he thought, lying on the counter.

Here is what happened next, according to Charles McCuy, writing in Scotland two centuries

later.

He slightly seized an opportunity and slipped it into his pocket as a relish for his

hearing and proceeded to the key to eat his breakfast.

Hardly was his back turned when the merchant missed his valuable, sempere Augustus worth

3,000 florets, or about 280 pounds studdling.

Relative to the wages of the time, that is well over a million dollars today, seeking a zesty

accompaniment to his fish, the sailor had unwittingly pilfered, not an onion, but a rare

sempere Augustus tulip bulb.

And in early 1637, tulip bulbs were reaching some truly extraordinary prices.

Then very suddenly, it was over.

In February, bulb wholesalers gathered in Harlem, a days' walk west of Amsterdam, to find

that nobody wished to buy.

Within a few days, Dutch tulip prices had fallen tenfold.

Tulip Mania is often cited as the classic example of a financial bubble.

When the price of something goes up and up, not because of its intrinsic value, but because

people who buy it expect to be able to sell it again, at a profit.

It seems foolish to pay a million dollars for a tulip bulb, but if you hope to sell it

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