Also known as the tulip effect (individual capital), it originated from the historical events in Holland in17th century. As the earliest recorded speculation in human history, Dutch tulip bubble shows all the elements and links in human society, especially in financial speculation: the fanatical pursuit of wealth, herding effect, the complete loss of rationality, the final bursting of the bubble and the destruction of millions of people. Tulip bubble is the first recorded financial bubble in human history. Tulip was introduced into western Europe from Turkey in the middle of16th century, and people soon became enthusiastic about this plant. At the beginning of the17th century, some treasures were sold at unusually high prices, and the rich competed to show the latest and rarest varieties in their gardens. By the early 1930s of 17, this fashion had led to a classic speculative frenzy. People no longer buy tulips for their intrinsic value or ornamental purposes, but expect their prices to rise indefinitely and make profits (this idea of always expecting someone to bid higher has long been called the greater fool theory of investment). 1635, a tulip variety named Childer was sold to Frohring (Goolden, Florins, Netherlands) at the price of 16 15. If you want to know the value of such a sum of money in the Dutch economy in the early 7th century, you only need to know that four bulls (equivalent to a trailer) cost 480 Frohring, while 1000 pounds (about 454 kilograms) of cheese only costs 120 Frohring. However, the price of tulips continues to rise. The following year, a rare tulip (there were only two in Holland at that time) was sold to 4600 Frohring. In addition, the buyer must pay for a brand-new carriage, two gray horses and a complete harness. However, all financial bubbles are as fragile as their names in the real world. When people realize that this kind of speculation does not create wealth, but only transfers wealth, someone will wake up. At this time, tulip bubble should be shattered. At some point, when a nobody sells tulips-or, more boldly, sells tulips short, others will follow suit, and soon, the enthusiasm for selling will be the same as that for buying them before. As a result, the price collapsed and thousands of people went bankrupt in this eternal collapse. The first recorded case of bubble economy in history, 1636, is the earliest case of bubble economy in human history. Every spring, people can see beautiful tulips in the garden. But few people thought that tulips actually brought an uproar to the European economy more than 300 years ago. According to research, the origin of tulip is China. It is said that a long time ago, merchants riding camels brought tulips to Turkey through the Silk Road. According to documents, tulips were introduced into Austria from Turkey in the middle of16th century, and then gradually spread to western Europe from here. At that time, the Netherlands was one of the few powerful countries in the world. With its unique climate and soil conditions, the Netherlands soon became one of the major tulip growing countries. Around 1630, the Dutch cultivated some novel tulip varieties, and their colors and patterns were very popular with people. Elegant and noble new tulip varieties quickly swept the upper class in Europe. Pin a tulip on your clothes and become the most fashionable clothes. Your wife wears tulip treasures in her evening dress as a symbol of status and status. Royal aristocrats and rich people rushed to buy the rarest tulip varieties. Especially the luxury goods prevailing in France have gradually raised the price of tulips. 1635 autumn, the price of rare tulips rose steadily. The price of the best tulip stems in Paris is equivalent to 1 10 ounce of gold. After 1634, the market demand of tulips increased gradually. 1636 10 months later, not only the price of precious varieties was raised, but the price of almost all tulips soared. Table A- 1 gives the tulip prices of 1637, 1.2 and February 5th and 1.739 in the Dutch market. As can be seen from the data in the table, in just over a month, the price of tulips has been raised by more than ten times or even dozens of times. Tulips have achieved unprecedented brilliance. The good times didn't last long. Tulip bubble only lasted one winter. Before spring came, tulip bubble was shattered. The tulip market is in chaos and the price has dropped sharply. 1739 data shows that the price of some tulips plummeted to 0.005% of the highest price. There are many kinds of flowers popular in the west, such as roses and chrysanthemums. Why can only tulips cause such a big financial storm? Table A- 1 Price fluctuation table of tulips [unit: guilder (guilder)] Variety 1637 65438+ 10/0/5 February 1739 A Milla El De Man/KLOC-. .2 Ghee Lee Ende Root Van Layden17.5136.5 0.2 Switsers10.030 0.05 Semper Augustus 2 000 6 2900 0.1Source: Garber, Tulip Mania, IMT Press, P. It is true that the demand for tulips in the European market rose rapidly in the17th century, which is one of the necessary conditions for tulip bubble. However, many commodities were in short supply for a period of time, but there was no bubble economy. The formation of tulip bubble must have its own special reasons. Tulips can be roughly divided into two categories: common varieties and special varieties. Switsers, Gheele Croonen and White Croonen are common varieties, while Semper Augustus and Gouda are rare varieties. Ordinary varieties are priced by weight (pounds), and rare varieties are priced by head. As can be seen from Table A- 1, the price difference between common varieties and rare varieties is sometimes thousands of times. Tulips can be propagated in two ways. One is through seed propagation, and the other is through the rhizome of tulip. Tulips have roots like garlic. When planted in the ground, they will bloom in April and May every year. The flowering period is only about ten days. In September, new bulbs will grow on the roots. The new light bulb can only weigh about twice as much as the original one. If it is propagated by seeds, it will take 7 ~ 12 years to get the ideal bulbs. What is traded in tulip market is not flowers, but bulbs. Horticulturists found in the process of tulip cultivation that some naturally cracked bulbs can often be used to cultivate special new varieties and produce very bright flowers. This is actually the variation of those cracked bulbs infected by some mosaic virus. This variation can only be transmitted through bulb propagation, not through seeds. If the bulb of Curcuma aromatica can't crack naturally, it may not be guaranteed to be infected with this virus. Because the technology at that time was difficult to control the probability of bulb cracking, and mosaic virus would reduce bulb production by 10% ~ 15%, which made it difficult to increase the supply of tulip bulbs in a short time, and rare tulip bulbs were even rarer. The scarcity of tulips makes it worth a hundred times. The first important reason for the emergence of tulip bubble is that the supply of tulip bulbs is almost constant in a short period of time, and will not change because of the increase in demand. Even if the price of tulips rises, producers can't increase the supply quickly. From the perspective of supply and demand, the supply curve of tulips is very steep. A special trading method-the embryonic form of futures trading, if the commodity market is in short supply, it is inevitable that some profiteers will hoard goods and raise prices. For example, there are different degrees of speculation in commodity markets such as cotton, copper and tin. However, the fluctuation of these commodity markets is not as great as that of tulip bubble, and one of the reasons is related to the operation mode of tulip market. Before 1634, tulips, like other flowers, were planted by flower farmers and delivered directly, with little price fluctuation. At the end of 1634, Dutch tulip merchants formed an organization similar to the industrial guild (college), which basically controlled the tulip trading market. The guild stipulates that any tulip business must pay fees to the guild. Each Dutch guilder contract is handed over to the guild at 1/40. The cost of each contract shall not exceed 3 guilders at most. Because these guilds usually trade tulips in pubs, the fees they charge are usually called "drinks". Due to the rising demand for tulips, people are generally optimistic about the trading prospects of tulips and have invested in tulip contracts. The harvest period of tulip bulbs is September every year. At the end of 1636, the Dutch tulip market not only bought and sold tulip bulbs that had been harvested, but also bought and sold bulbs that would be harvested in advance of 1637. After the tulip transaction is relatively concentrated, the information of buyers and sellers circulates rapidly, and the transaction cost is greatly reduced. There are no clear rules in this futures market, and there are no specific constraints on buyers and sellers. Tulip contracts are easy to buy and sell, and they have changed hands several times in a short time. This makes it possible for businessmen to make love and short in the futures market. In the process of changing hands many times, the price of tulips has been rising. The formation of tulip bubble was controlled and manipulated by guilds, and the price of tulips was rapidly raised. Buying and selling tulips has made some people make huge profits. The soaring price of tulips attracted many people from all over Europe to Holland, and they brought a lot of money. A large amount of foreign capital flowed into the Netherlands, which encouraged the tulip trade. During the period from1636,65438+February to1637,65438+1October, the prices of tulip varieties rose across the board. Take a rare variety, Haoda, as an example. Its price was only 1.5 guilders/ounce at the end of 1634, and it only rose to 2 guilders/ounce at the end of 1636. With the formation of tulip speculative market, the price of Gundam fluctuates greatly. 1636 1 1, the price soared to 7 kilde, then fell back to 1.5 kilde, 12, and the price rebounded strongly again, reaching 1 1 kilde. After the new year, it plummeted to 5.5 gilds. Due to the participation of new speculators, the price rose sharply again, and 10/4 Kilde mark was broken on October 29th. These three ups and downs, each oscillation amplitude exceeded 400%. Compared with the lowest point of 65438+February 9th (1.5 Kilde) and the highest point of 65438+February 2nd (1 1 Kilde), the price rose nearly 10 times in three days. Excess profits attracted speculators from all directions. Perhaps some people have long suspected that the price of tulips as a flower has completely deviated from the routine, but the huge profits made many speculators lose their minds. By June, 1637, 1, even the price of common tulips has increased by more than 25 times. For example, the price of Switsers was lower than 1 Kilde in the first ten days of 1637 1, but it was fired to 14 Kilde at the end of the month, and rose to 30 Kilde on February 5th, which was more than 29 times in 30 days. During this period, almost every speculator was immersed in the dream of making a sudden windfall. Tulip bubble's Disillusionment 1637 Around the New Year, tulip futures contracts in Dutch inns were heated up. In February of 1637, profiteers gradually realized that it was time to deliver tulips. Once the bulbs of tulips are planted in the ground, it is difficult to sell them again. People began to wonder how much tulip bulbs bought at such a high price could be worth just for flowering. Not long ago, the rare commodity tulip contract suddenly became a hot potato. People who hold tulip contracts would rather have less than throw them to others. After people's confidence was shaken, the price of tulips immediately began to fall. The falling price has led to further loss of confidence in the tulip market. People who hold tulip contracts can't wait to get rid of it, but it's hard to find a "fool" at this juncture. The result of the vicious circle is the collapse of the tulip market. The peak period in tulip bubble only lasted for more than a month. Because many tulip contracts have changed hands many times in a short period of time and have not been delivered so far, the last person holding tulip contracts began to recover the payment from the previous seller. The man asked the man in front for a debt again. The tulip market in the Netherlands has changed from a prosperous period in the past to a hell of bitterness and debt evasion. 1637 On February 24th, the flower shop held a meeting in Amsterdam, the capital of the Netherlands, and decided that the tulip contract signed before February 1636 must be delivered, and the buyer has the right to pay 10% less for the contract signed later. This decision not only did not solve the problem, but also aggravated the chaos in the tulip market. The relationship between buyers and sellers is very tangled. The Dutch government had to intervene and refused to approve the proposal. 1637 On April 27th, the Dutch government decided to terminate all contracts. A year later, the Dutch government passed a regulation allowing the final buyer of tulips to terminate the contract after paying 3.5% of the contract price. According to this regulation, if the ultimate holder of tulip has paid off the payment, his loss may exceed 96.5% of the original investment. If he hasn't paid the payment yet, and he is lucky enough to pay only 3.5% of the contract price, then the person who sold him this contract will suffer very serious losses. Under this blow, the Dutch tulip speculation market has collapsed. However, the once brilliant tulips inspired the enthusiasm of flower farmers, who constantly improved their planting techniques, increased their yield and developed new varieties. The cultivation techniques of tulips are gradually mastered by the general public, and the output is greatly increased, and the price is also stable within a reasonable range. The beautiful tulip finally returned to Baihua Garden from the speculative market full of copper smell and became the national flower of the Netherlands. [1] At the beginning of the 17th century, the industrial revolution in Britain had not yet happened. In the eyes of Europeans, Britain is not yet a rich country. At that time, there were some jokes circulating in Holland, saying that the tourists from England were too rustic to even know tulips. They peel tulip bulbs layer by layer like onions and garlic. Some English sailors are so barren that they even eat tulip bulbs for lunch. [2] Mackey was the first person to record tulip bubble in history. He studied this case which happened 200 years ago in an article published in 1852. Unfortunately, his article is only seven pages, which not only provides incomplete data, but also does not point out the source of the quoted data. After him, Beckman summarized the relevant data of 1637- 1643, and Mu Ning discussed the economic data of 1672- 1696. After 1950, because of the need to study the price change law of multi-dynamic and unstable assets, people once again noticed this very typical bubble economy phenomenon in the Netherlands. Tulip bubble became the earliest case of bubble economy in literature.