It happened today - February 3, 2016

On this day in history the tulip was just a nice flower. Which might not strike you as being quite on a par with “On this day in history Rome fell” or “Germany invaded the Soviet Union” or “I was born”. But considering what had gone before, February 3 of 1637 was quite a day.

Specifically what had gone before was a speculative mania in tulips in the Netherlands. Tulips were of course very pretty, with an intense colour. And thanks to what we know now was a tulip-specific species of the mosaic virus, they also had spectacular patterns.

OK, OK, nice flower. But there was more to it.

The Netherlands, due to an unusual degree of freedom, had become a great trading nation and significant power. And its newly rich merchants, despite a certain dour Protestant strain, liked to show off including by surrounding their estates with brilliant flower beds.

What then happened is that as people were prepared to pay more and more for bulbs, prices rose. And rose. And rose. And nobody noticed, or not enough people, that enthusiasm had overwhelmed judgement.

To be fair, the main and best-known account of the whole business comes from journalist Charles Mackay’s 1841 Extraordinary Popular Delusions and the Madness of Crowds which is on that list of books everyone should read but no one should believe uncritically. So perhaps it wasn’t as bad as all that. But it was bad, and instructively so.

The big problem was that the value of tulips came to be determined not by what use someone could put them to, reasonable or otherwise, but by the price they thought they could sell it for. Normally the two are related, but if they somehow tear loose from one another, prices skyrocket then collapse and leave everybody going um duh are humans fools generally or was it just us?

So by all means plant tulips. Not as the main item in your retirement portfolio, but rather to warn you against get-rich-quick schemes and the herd instinct.

Also they’re nice to look at. As long as you didn’t mortgage your house to get them.