Red-Blooded Risk: The Secret History of Wall Street

Tulip Propaganda

Mackay's account, and popular conception since, has confused two phenomena. The first is the aforementioned high prices paid for single bulbs and the second is the sudden crash in tulip prices in February 1637. My favorite example of the first is from Zbigniew Herbert, a great poet and human being but a mediocre economist. He tells of “a poor, unknown shoemaker from the Hague . . . growing an unusual variety of tulip called ‘Black Tulip,’” who was visited by five men from Haarlem:

Five gentlemen dressed in black entered the dark cubbyhole of the shoemaker. They began commercial negotiations—very strange negotiations, because the gentlemen from Haarlem were playing the role of benefactors. Supposedly they had come there out of pure philanthropy to help the poor artisan, but at the same time they were unable to conceal how much they cared to possess the “Black Tulip.”

The master of last and leather took in the situation, and tried to get the highest price. After much haggling a transaction finally took place: 1,500 florins, not a trifling sum. A moment of happiness for the poor shoemaker.

But the five men in black proceed to smash the bulb, and abuse the poor shoemaker for his stupidity. They tell him they would have paid far more for the bulb because they own the only other black tulip in existence and wish to protect its value.

They left. The shoemaker staggered, dragged himself to his attic, lay down on his bed and, covering himself with his coat, breathed his ...