To many people, black pepper might seem to be an everyday seasoning. It can be found practically anywhere table salt can be found, so it must have always been inexpensive, right?
Wrong. Since pepper plants are native to southern India, the spice was nearly unattainable to average Europeans as recently as 500 years ago.
Because of Europe’s growing wealth in the early 17th century, the spice trade was booming, and every country wanted a portion of the market. In 1600, the English East India Company was established in order to create a monopoly in the spice market, and to make copious profits as a result.
Two years later, on March 20, 1602, the Netherlands followed suit with the creation of the Dutch East India Company. Soon, the Dutch company eclipsed its English predecessor. In 1795, the Dutch East India Company carried five times as much as the English East India Company.
Thirty years after its founding, the Dutch East India Company profited from another exotic plant. In the late 1500s, it was discovered that the tulip, native to Turkey, thrived in the low countries.
Tulip blooms captivated citizens throughout Europe. Few had seen such a plant with such colorful petals, especially one that could be grown on one’s own property.
As a result of the tulip’s widespread appeal, as well as its substantial maturation period (a tulip raised from a seed will take at least seven years to flower, and it will only bloom for a few years), prices skyrocketed. At one point, the most coveted bulbs would sell for at least 3,000 guilders apiece — 10 times the annual income of a skilled craftsman.
All the while, the Dutch East India Company made massive profits from the ever-increasing prices. In 1637, the Dutch East India Company was worth 78 million Dutch guilders. This is the equivalent of a single American company being worth $7.4 trillion today, making it the most valuable company of all time.
But like any fad, tulip mania had to come to an end. By its zenith during the winter of 1636–37, some bulbs went through the hands of 10 different speculators in one day. Suddenly, buyers stopped showing up to the bulb auctions.
Though tulip mania might seem like a joke today, its implications are obvious when the flowers become websites or houses.
It’s no different than the housing bubble that wrecked our economy, leaving wealthy speculators penniless overnight.
As tempting as exclusively investing in one product might be, it’s foolish to do so. One look at tulips — or houses — proves this.
Moriah Krawec is a freshman studying journalism at Ohio University and a columnist for The Post. How much would you pay for a tulip? Email Moriah at mk141811@ohiou.edu.
