While it rains incessantly in Belgium during the winter, spring appears brilliantly with lots and lots of flowers, most notably tulips. Parks, gardens and outdoor markets burst with bright colors and flowers of every shape and pattern are sold for very affordable prices. (Think $5 for 10 roses or tulips!) That’s because neighboring Netherlands is the bulb and fresh-cut flower capital of the world.
Not only does this country currently lead the world in floriculture, it made history trading flower bulbs, namely tulips, in the 17th Century. Around 1630, such bulbs were considered a form of currency because of their high demand. They inspired the world’s first futures market and made the Dutch known as traders. (To this day, Amsterdam has a floating flower market that sells seeds and bulbs in a central canal.)
The Dutch Golden Age – which spanned from the founding of the Dutch Republic in 1588 to the “Disaster Year” of 1672 when the Franco-Dutch War broke out – Dutch trade, science, art and military were among the most advanced in the world. During this period, the Netherlands had unmatched prosperity, largely from trade (think Dutch East India Company). With the acquisition of exotic goods and money to spend, Dutch consumers became obsessed with rare, “broken” tulips that produced striped and speckled flowers.
Although tulips are associated with Holland – the flower-producing region in the Netherlands including Amsterdam, Rotterdam and The Hague, not the entire country as many erroneously believe – the flower nor its name came from there. Originally “laleh” in Persian, the tulip is indigenous to Iran, Afghanistan and parts of Central Asia. (“Narcissus,” aka daffodil, also comes from a Persian word: narges). Lalehs were introduced to Europe, where “tulip mania” and exports around the world ensued.
While it is undocumented who first brought the flower to Europe, most believe it was Oghier Ghislain de Busbecq, ambassador of Holy Roman Emporer Ferdinand I to Suleyman the Magnificent of the Ottoman Empire, because he sent tulip bulbs to Vienna in 1554. These flowers were a symbol of the empire’s success. In fact, its wealthiest era was known as the “tulip period.”
In Europe, botanist Carolus Clusius is credited with the tulip’s rise to fame and Dutch tulip breeding. In the 1590s, tulip bulbs were so coveted that thieves stole more than 100 from his private gardens. Now that was flower power!
In the next century in the economic and maritime powerhouse of the Netherlands, the tulip became a luxury item and status symbol. Some special varieties were even named after Dutch naval admirals. The most prized had vivid colors, stripes and flames on their petals – ironically created by a unique virus. These exotic varieties became the basis of the world’s first futures market. (There is a book about it called “Tulipomania.”)
During the Dutch Golden Age, contract prices for extraordinary bulbs were so high that they reportedly sold for more than the cost of a house. One in particular was traded for five hectares of land! By 1634, driven by French demand, bulb speculators entered the market and in 1636, the Dutch created a formal futures market for contracts to buy bulbs at the end of the growing season. Traders met in taverns and buyers were required to pay a 2.5 percent “wine money” fee per trade. The Dutch dubbed this activity windhandel meaning “wind trade” because no bulbs actually changed hands. At that time, tulip bulbs were the fourth leading export of the Netherlands after gin, herrings and cheese.
Tulip mania reached its peak during the winter of 1636-37, when some contracts supposedly changed hands 10 times a day. But no deliveries were ever made to fulfill them because in February 1637, contract prices abruptly collapsed, stopping trade. The collapse began in the city of Haarlem, where buyers refused to show up at a routine bulb auction due to an outbreak of bubonic plague. Ironically, this plague may have inspired both risk-taking that skyrocketed speculation and bubble-bursting. (The same rings true with COVID-19, stock market fluctuations and “burst” of unemployment.)
The bulb market collapse was arguably the first speculative bubble. (Today, “tulip mania” is used to refer to any large economic bubble when asset prices deviate from intrinsic values.) While it didn’t lead to a national economic crisis – the Dutch maintained the highest per capita income in the world until 1720 – some men lost fortunes overnight, sending the first futures shockwave that has since rippled throughout history.
A much less volatile and consistently enjoyable type of tulip mania exists today: Keukenhof. This is the world’s largest permanent display of tulips and other spring-flowering bulbs, featuring 7 million annually near Amsterdam. It’s also the best early example of experiential marketing when in 1949, a group of flower bulb growers and exporters banded together to exhibit their flowers on the old grounds of Keukenhof Castle. This park opened to the public the next year, attracting 236,000 visitors and branding the tulip with Holland. Today, there are 2.4 million visitors annually … “Keuken crazy!” (This year is a virtual display that’s “Keuken kooky.”)
No wonder the Netherlands is the world’s largest producer of tulips with 88 percent of all hectares. (It has also cornered the market for lily bulbs, accounting for 77 percent of global hectares.) It accounts for 35 percent of all flower and plant exports, worth €6.2 billion a year. That’s why these flowers are so affordable in neighboring countries.
I am one of the millions of beneficiaries. I buy fresh flowers every week I’m in Brussels – a tradition upon which I have doubled down during COVID-19 lockdowns here. Thankfully, outdoor food and flower markets are considered essential and buyers always show up. Hopefully, this tulip bubble won’t burst.