A History of the World (50 page)

By then, as we have seen, the Dutch Republic had established itself as the world’s premier sea-going power. A people who had fished and then traded across the North Sea and around Europe’s coasts had built up a seafaring tradition second to none – not even their near-neighbours and Protestant rivals, the English. Their merchants could be found in India, China and Japan. Without much in the way of natural wealth, either rich soil or mineral reserves, the Dutch were making themselves rich through a global network. But the same innovations that allowed them to out-finance their rivals carried a risk. Buying and selling shares introduced the thrill of competitive, high-stakes gambling to a once conservative society. The idea of ‘futures’ – selling not the commodities themselves but their future price, as pure speculation, became commonplace among a people who were already becoming notorious for their lotteries and their addiction to gambling.

Without the huge influx of wealth to the United Provinces brought about by the ‘rich trades’ and the fact that the most prominent citizens were growing richer still by trading bets, the tulip mania could never have happened. All that was needed now was a mindset change among the vast majority of artisans, inn-keepers, small-time manufacturers and farmers who would never normally have the capital to follow the example of the rich bourgeois. For the first time in history, the little guy could dream of a single, life-changing investment.

The Dutch have been mocked ever since because their speculative boom was focused on something so ridiculous and transient as flower bulbs. To the modern eye, the idea of a tulip being worth a house, or a painting by Rembrandt, is certainly absurd. Should it be? After all, we put apparently disproportionate values on objects whose rarity (real or manufactured) brings the owner status. A painting by Monet is (mostly) better than a masterpiece by one of his followers
done twenty years after the heyday of Impressionism. But is it a hundred or a thousand times better? A Chanel bag does the same job as a bag from a high-street store and to the untutored eye does not necessarily look a hundred times nicer. Is the price differential between Beluga caviar and lumpfish roe justified by the difference in the oily globules?

The same point could be made about wine, diamonds, sports cars or brand-label clothes. If anything, the Dutch obsession with tulips was more reasonable than these. Tulips, which had originally grown as wild flowers in the mountains between China and Persia, had been treasured there as being beautiful enough to represent love or even the perfection of God. They had been cultivated and prized by the Ottoman Turks, which is how they arrived in Europe. Difficult to breed to obtain different colours and shapes, they had entranced early botanists and been gifted and swapped by gardeners looking for something especially vivid. Is it any wonder they elicited particular delight under the grey skies of northern France, Holland and Germany?

The mania had begun among learned and specialist connoisseurs who were particularly keen on a small number of bulbs, those that produced flowers with delicate patterns on their petals, complex swirls and dribbles of rich red, yellow or purple on white. In fact, these were tulips suffering from a virus spread by aphids. They were sick. Today they have virtually died out. But in the 1630s, given grand names like ‘Semper Augustus’ and ‘Admirael van der Eijck’, they were traded by the super-rich. A single bulb could reach six or seven times the annual wages of a carpenter. (Again, we should think in terms of the competitive frenzy between rich collectors over very rare stamps in today’s world.)

The network of growers, traders, publicists and companies that grew from the new commodity then transmitted its enthusiasm to wider Dutch society. Ordinary people could not afford these super-bulbs, but there were plenty of humbler varieties to trade in. Because tulips flower only once a year, for a few weeks in the spring, people found they were necessarily trading a commodity whose performance could be guessed at but not entirely guaranteed. This meant that the trade was carried out in latent tulips, or tulip futures, ahead of the flowering season. Tip-offs, double-dealing, bulb theft and simple ignorance – such as the oft-repeated story of a bulb of fabulous worth
being mistaken by a sailor for an onion, and eaten – fuelled the gold-rush atmosphere.

A system of buying and selling now sprang up in inns throughout the Dutch Republic, but particularly in Amsterdam and Haarlem. These mimicked the Amsterdam stock market, but in a beery, winey, smoky atmosphere of misrule. One of the historians of the mania has pointed out that for the people in the taverns, even if they had managed to put aside a little money, both the stock market and the new banks were still out of reach: ‘There were no building societies in the seventeenth century, no unit trusts, no personal equity plans, no penny shares, no tax breaks and no tax shelters.’
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The tavern system, involving bids being chalked on boards and then haggled over by ‘friends’ of the would-be buyer and seller, was fixed to encourage sales. There were financial penalties for a buyer who refused the finally offered price, and similar ones for sellers who pulled out. Celebratory drinks, rounds of food and singing, greeted deals.

In the peak period of the mania, the four years from 1633, the nominal value of the tulip-bulb trade has been estimated at ten times the value of the mighty Dutch East India Company, on which so much of the real wealth of the Dutch rested. We know exactly when the bubble burst. On the first Tuesday of February 1637, in a Haarlem tavern, a pound of Switzers was offered at 1,250 guilders, and nobody bought them. The auctioneer kept cutting the price, yet still nobody bought them. It must have been a sickening few minutes. The panic took hold, and spread. Within three months, prices had fallen a hundredfold. On paper, at least, hundreds of thousands of people faced ruin, bankruptcy and even starvation. For they had not simply invested spare cash. As with later booms, they had borrowed very heavily against future profits. Others had mortgaged their homes, their land, the tools of their trade. And all for wrinkled, onion-like objects suddenly worth almost as much in a casserole as in a vase.

Yet the really interesting thing about the tulip boom is that it did not end in universal disaster, or even in the widespread bankruptcy of Dutch speculators. The Estates General which ran the republic refused to take special measures, and passed the problem back to the civic authorities. Many towns, in their turn, refused to process or hear any court actions involving the tulip trade, carrying on as if none of it had really happened and allowing the paper losses and the paper gains to
wipe each other out. If the dreams of sudden enrichment were snatched away, so were the nightmares of destitution.

The Dutch prided themselves, even then, on their common sense and their ability to talk things through. It was a very Dutch solution and the economy carried on regardless. Tulip-growers were badly hit and there were many individually sad cases, but the republic and its new financial system were hardly shaken.

Indeed, the Dutch went on to make tulips (which grow well in the sandy soil of the Netherlands, as in the sandy uplands of Asia) a normal export trade, just another modest luxury to put on a table in Bristol, Düsseldorf or Lille. Today the Dutch dominate the global flower business, and the system they devised in the early 1600s of stock markets, futures-trading and international dealing dominates the world economy. They provided a fitting answer to the simpler idea of wealth held by the Spanish of the age of Columbus and Pizarro – blocks of gold to be melted down to decorate churches and fight wars, and land to be squatted on for God and for glory. The Dutch way, which is to make the most of meagre land and to use money as a tool, became the modern way. We call it capitalism.

1609–1796: Enlightenment and Revolution, from India to the Caribbean

Capitalism worked. But it worked for a few lucky people in a few European towns. For the vast majority of people even in Europe, there was no sense of a revolution. Life went on, dominated by the traditional limitations on how much food could be grown and how much energy could be exploited by burning wood and some coal, by harnessing the muscular help of animals; by means of a little wind and water power, and above all, of the toil of humans themselves. There were some new luxuries, but life remained rural and bounded by old stories and old beliefs.

And for people in Australia, the Pacific Islands, Persia, the Ottoman Empire, Korea, Japan, most of Siberia, India, North America, Indonesia and China, there was no sense of change at all. Their traditions ranged from Stone Age hunting to sophisticated imperial management, but there can have been little sense of anything important having happened, still less of acceleration. Most people everywhere were peasant farmers whose world extended only to the next village or two and who heard little about wider events, except perhaps a year or more after they had happened. In Eastern Europe the farmers were often still serfs, legally tied to their land and treated as property by the landowners. In Gaelic Scotland, Ireland, much of Scandinavia and northern Russia, people lived in their clans or lineage groups, barely linked at all to the outside world. Most Europeans either did not speak the language of whatever nation claimed to rule them, or spoke dialects that would have been incomprehensible in their capital cities.

Just as they had in the Americas, the Spice Islands and a few limited parts of West Africa, a few Europeans were about to disturb and unsettle most of the rest of the world. Many indigenous people were already doomed. They did not have the immunity, the weapons or the level of organization to resist. But in 1600 there was no obvious reason
why other parts of the world might not soon catch up with the Britons, the Hollanders and the French. Indeed, the Mughals in India and the Qing dynasty in China seemed further ahead – richer, running vast territories efficiently, and relatively self-sufficient. The victory of Europeans hardly seemed inevitable. So what tilted the balance?

We have already seen how apparently small local changes can have global results. In this period the most important local changes would be in politics, and began in Britain, with no plan. Had the British not been ruled at the time with particular incompetence and pig-headedness by one of their worst dynasties, the Stuarts, they might have muddled through the 1700s still obeying monopolistic monarchs. But poor kingship, war and religious argument resulted in a two-stage revolution that gave Britain a new kind of government. First, their rebellious parliamentarians overthrew and killed a king. Next, when one of his successors proved both incompetent and religiously unreliable, they scared that king enough to make him run away and brought in a husband-and-wife monarchy that was clearly and overtly under the thumb of Parliament.

This was not democracy, but it was a radical spreading of power among wealthier men all over the country. It suggested that people did not necessarily have to put up with whoever ruled them, and posed the possibility of a new kind of nation in which people had rights, were not afraid of their rulers, and could think and act more freely. Something similar had already happened in Holland, but the British experiment had a more profound effect. It made Britain a magnet for persecuted minorities elsewhere in Europe, including the French Protestants, and showed there was one major country where people could publish more or less what they wanted to. It inspired thinkers in France, particularly.

But this experiment was picked up most dramatically by colonists in Britain’s thirteen seaboard settlements in North America, who drove the thinking of the British reformers to its logical conclusion by creating a state based on elections, rights and a written-down constitution. It was not simply a change of tack, but a dynamic change of the rules, whose consequences nobody really understood.

Indeed, it started an argument that is still going on between Beijing and Washington, Moscow and Brussels: what is the right balance between state authority and individual liberty? No successful state is a
steady state. All successful states experience a relentless tug-of-war between conservatism, the wisdom of the tribe, and radicalism, or new thinking. The wisdom of the tribe really matters: it is the accumulated lessons of history, the mistakes as well as the answers, that a polity has gathered up so far. But if this wisdom is not challenged it ossifies. The political revolutions of the British and then the Americans encouraged individuals to alter the balance of powers, without destroying their states. In France, where a conservative monarchy collapsed, revolutionaries tried to wipe out the past entirely and create a new present based only on radical questioning, or ‘reason’; it was a bold but bloody failure, copied again and again.

The British-American experiment encouraged new thinkers in natural science to express their ideas more freely than was possible in most of Europe; that in turn would allow experimenters and financial speculators to make the breakthrough in energy use and manufacture that we call ‘the industrial revolution’; and that, in turn, gave ‘the West’ an advantage over the rest of the world that it would keep almost until our own times. This all comes later. What matters in this period is that the British–American experience did not seem the only sensible, or even the most sensible, answer to the question of how to achieve the right balance between wisdom and challenge, between the old and the new. The other fashionable idea was absolutism, the notion that a wise, watchful and energetic leader can safely guide a country between the whirlpools of decline and chaos. In rather different guises, and stripped of its quaint trappings, this idea is still rampantly popular among unelected rulers across much of our world.

And Yet It Moves

A day in August 1609: in one of the most gorgeously decorated rooms in the world, the Hall of the College in the Doge’s Palace in Venice, a voluble, red-bearded man caused a sensation. He handed to the Doge, ruler of the Serene Republic, surrounded by his counsellors and naval commanders, a leather-covered tube. After a hubbub of questions and answers, all these men then rushed out of the palace and across the square to Venice’s great church, the Basilica of St Mark, and climbed
up to the top of the tower. The Doge squinted down the tube. One by one, in turn, so did the rest. On the mainland, miles away, shimmering buildings appeared before their eyes. On nearby islands, the Doge and his men saw people entering their churches; out at sea, galleys still more than two hours’ sailing time from Venice could be clearly observed. What they had here was a wonderful military and practical tool. The man who brought it would be richly rewarded.