Tulip mania: the classic story of a Dutch financial bubble is mostly wrong

File 20180209 51700 kamjgb.jpg?ixlib=rb 1.1

Floraes Mallewagen (Flora’s wagon of fools): Hendrik Gerritsz Pot, c1640 (photo: Laura Blanchard), CC BY-SA

Anne Goldgar, King’s College London

Right now, it’s Bitcoin. But in the past we’ve had dotcom stocks, the 1929 crash, 19th-century railways and the South Sea Bubble of 1720. All these were compared by contemporaries to “tulip mania”, the Dutch financial craze for tulip bulbs in the 1630s. Bitcoin, according some sceptics, is “tulip mania 2.0”.

Why this lasting fixation on tulip mania? It certainly makes an exciting story, one that has become a byword for insanity in the markets. The same aspects of it are constantly repeated, whether by casual tweeters or in widely read economics textbooks by luminaries such as John Kenneth Galbraith.

Tulip mania was irrational, the story goes. Tulip mania was a frenzy. Everyone in the Netherlands was involved, from chimney-sweeps to aristocrats. The same tulip bulb, or rather tulip future, was traded sometimes 10 times a day. No one wanted the bulbs, only the profits – it was a phenomenon of pure greed. Tulips were sold for crazy prices – the price of houses – and fortunes were won and lost. It was the foolishness of newcomers to the market that set off the crash in February 1637. Desperate bankrupts threw themselves in canals. The government finally stepped in and ceased the trade, but not before the economy of Holland was ruined.

Yes, it makes an exciting story. The trouble is, most of it is untrue.

My years of research in Dutch archives while working on a book, Tulipmania: Money, Honor and Knowledge in the Dutch Golden Age, told me a different story. It was just as illuminating, but it was different.

Gordon Gekko talks tulips.
Wall Street: Money Never Sleeps / scottab140

Tulip mania wasn’t irrational. Tulips were a newish luxury product in a country rapidly expanding its wealth and trade networks. Many more people could afford luxuries – and tulips were seen as beautiful, exotic, and redolent of the good taste and learning displayed by well-educated members of the merchant class. Many of those who bought tulips also bought paintings or collected rarities like shells.

Prices rose, because tulips were hard to cultivate in a way that brought out the popular striped or speckled petals, and they were still rare. But it wasn’t irrational to pay a high price for something that was generally considered valuable, and for which the next person might pay even more.

A sign of good taste?
Michiel Jansz van Mierevelt, ‘Double portrait with tulip, bulb, and shell’, 1606, Author provided

Tulip mania wasn’t a frenzy, either. In fact, for much of the period trading was relatively calm, located in taverns and neighbourhoods rather than on the stock exchange. It also became increasingly organised, with companies set up in various towns to grow, buy, and sell, and committees of experts emerged to oversee the trade. Far from bulbs being traded hundreds of times, I never found a chain of buyers longer than five, and most were far shorter.

And what of the much-vaunted effect of the plague on tulip mania, supposedly making people with nothing to lose gamble their all? Again, this seems not to have existed. Despite an epidemic going on during 1636, the biggest price rises occurred in January 1637, when plague (mainly a summer disease) was on the wane. Perhaps some people inheriting money had a bit more in their pockets to spend on bulbs.

Prices could be high, but mostly they weren’t. Although it’s true that the most expensive tulips of all cost around 5,000 guilders (the price of a well-appointed house), I was able to identify only 37 people who spent more than 300 guilders on bulbs, around the yearly wage of a master craftsman. Many tulips were far cheaper. With one or two exceptions, these top buyers came from the wealthy merchant class and were well able to afford the bulbs. Far from every chimneysweep or weaver being involved in the trade, the numbers were relatively small, mainly from the merchant and skilled artisan class – and many of the buyers and sellers were connected to each other by family, religion, or neighbourhood. Sellers mainly sold to people they knew.

Patterned petals were very valuable.
Hans Bollongier, ‘Floral still life’, 1639 (Rijksmuseum)

When the crash came, it was not because of naive and uninformed people entering the market, but probably through fears of oversupply and the unsustainability of the great price rise in the first five weeks of 1637. None of the bulbs were actually available – they were all planted in the ground – and no money would be exchanged until the bulbs could be handed over in May or June. So those who lost money in the February crash did so only notionally: they might not get paid later. Anyone who had both bought and sold a tulip on paper since the summer of 1636 had lost nothing. Only those waiting for payment were in trouble, and they were people able to bear the loss.

No one drowned themselves in canals. I found not a single bankrupt in these years who could be identified as someone dealt the fatal financial blow by tulip mania. If tulip buyers and sellers appear in the bankruptcy records, it’s because they were buying houses and goods of other people who had gone bankrupt for some reason – they still had plenty of money to spend. The Dutch economy was left completely unaffected. The “government” (not a very useful term for the federal Dutch Republic) did not shut down the trade, and indeed reacted slowly and hesitantly to demands from some traders and city councils to resolve disputes. The provincial court of Holland suggested that people talk it out among themselves and try to stay out of the courts: no government regulation here.

Monkeys dealing in tulips. When the bubble bursts, at the far right, one urinates on the now worthless flowers.
Jan Brueghel the Younger, ‘Satire on Tulip Mania’, c1640, CC BY-SA

Why have these myths persisted? We can blame a few authors and the fact they were bestsellers. In 1637, after the crash, the Dutch tradition of satirical songs kicked in, and pamphlets were sold making fun of traders. These were picked up by writers later in the 17th century, and then by a late 18th-century German writer of a history of inventions, which had huge success and was translated into English. This book was in turn plundered by Charles Mackay, whose Extraordinary Popular Delusions and the Madness of Crowds of 1841 has had huge and undeserved success. Much of what Mackay says about tulip mania comes straight from the satirical songs of 1637 – and it is repeated endlessly on financial websites, in blogs, on Twitter, and in popular finance books like A Random Walk down Wall Street. But what we are hearing are the fears of 17th-century people about a 17th-century situation.

The ConversationIt was not actually the case that newcomers to the market caused the crash, or that foolishness and greed overtook those who traded in tulips. But this, and the possible social and cultural changes stemming from massive shifts in the distribution of wealth, were fears then and are fears now. Tulip mania gets brought up again and again, as a warning to investors not to be stupid, or to stay away from what some might call a good thing. But tulip mania was a historical event in a historical context, and whatever it is, Bitcoin is not tulip mania 2.0.

Anne Goldgar, Professor of Early Modern History, King’s College London

This article was originally published on The Conversation. Read the original article.

Mangroves protect coastlines, store carbon – and are expanding with climate change

File 20180208 180833 wnm7dn.jpg?ixlib=rb 1.1
Mangroves in the Florida Everglades.
Alan Sandercock, CC BY

Samantha Chapman, Villanova University

With the help of technology, humans can traverse virtually every part of our planet’s surface. But animals and plants are less mobile. Most species can only live in zones where temperature and rain fall within specific ranges.

As regions become warmer due to climate change, plants and animals in those areas will either move to more appropriate climates or be replaced by newcomers who are well-suited to the new conditions. These changes are already occurring. For example, many plants, animals and birds in the Northern Hemisphere have shifted their ranges northward.

My research team studies mangroves – salt-tolerant trees with branches that intertwine like dense jungle gyms. Mangroves line the world’s coastlines and prefer warm temperatures, so they have traditionally been restricted to subtropical and tropical environments. But they have many features that have enabled them to survive major climate shifts in the past. Now, in a harbinger of climate change, mangroves are expanding from tropical zones into temperate areas. Scientists are finding them at higher and higher latitudes in North America, South America, Asia, Africa, Australia and Latin America.

Working with other ecologists in the shadow of the huge launch complex at Florida’s Kennedy Space Center, we have found that mangroves have increased in abundance by 70 percent in just seven years over an area of 220 square miles (567 square kilometers). This is a dramatic change in the plant community along this stretch of the Atlantic coast. Unlike many other impacts of climate change, we expect these shifting ranges to produce some benefits, including increased carbon storage and storm surge protection.

The world’s mangrove forests in 2000.
Giri et al., Journal of Biogeography (2008)., CC BY-SA

Traveling by water

Plants have less ability to move than animals, but some – particularly mangroves – can disperse via water over thousands of miles. Mangroves release reproductive structures called propagules, similar to seeds, which can produce new plants. They float and are distributed by ocean currents and, sometimes, big storms. As mangrove propagules drift north along the Atlantic coast, they are reaching areas where winter freeze events that could kill them are becoming less common due to climate change. Similar movements are occurring in other locations around the world.

In the Gulf of Mexico and Florida, mangroves are increasingly found in areas recently dominated by salt marshes, which typically occur in cooler zones. Using satellite images and land-based field studies in our ongoing study of mangroves, we can see this spread of mangroves occurring faster than we could have expected based on climate data alone.

Though these shifts also likely happened in the past due to hurricanes and freeze events, the recent changes in mangrove range are still dramatic. One study from Florida shows that mangroves from northern populations may be reproducing earlier than normal and producing bigger propagules, which could help them take over salt marshes.

Mangrove propagules drifting near Australia’s Great Barrier Reef.
Brian Gratwicke, CC BY

Stabilizing coastlines

In a recent modeling effort, we examined how mangroves protect NASA facilities at the Kennedy Space Center. We found that a 2-meter-wide strip of mangroves along the shore can reduce wave height by 90 percent. In contrast, it takes 20 meters of salt marsh habitat to reduce waves by the same amount. Other studies have found that mangrove forests helped reduce shoreline damage during the catastrophic 2004 Indian Ocean tsunami and Tropical Storm Wilma in Belize in 2005.

Mangroves around the world have been severely reduced by human activities, particularly clearance for aquaculture. Scientists estimate that at least 35 percent of global mangrove habitat was lost between 1980 and 2000. One recent estimate suggests that mangrove deforestation rates in recent decades have been three to five times faster than other forests around the globe.

All types of coastal wetlands help to prevent millions of dollars in damage from flooding and save hundreds of hours of labor to repair storm damage. Mangrove restoration efforts are ongoing in many parts of the world, including the Tampa Bay estuary and southern China, but some projects have been major failures. To succeed, these initiatives need to consider mangrove habitat needs, particularly hydrology.

Though mangroves may protect coastlines even more effectively than salt marshes, it is important to note that marsh plants provide important habitats for numerous species of birds and fish. We don’t yet know how these animals will fare as mangroves replace marshes, nor do we yet understand other downsides of plant range shifts due to climate change.

Mangroves provide essential habitat and coastline protection but are under threat.

Storing carbon in flooded soils

Continued mangrove expansion could increase carbon storage along coastlines. Mangroves have an enormous capacity for sucking up carbon dioxide and other greenhouse gases and trapping them in flooded soils for millennia. They are among the most carbon-rich tropical forests and can store twice as much carbon on a per-area basis as salt marshes. During normal growth, mangroves rapidly convert carbon dioxide into biomass. The saturated soils in which they grow contain low levels of oxygen, which bacteria and fungi need as fuel to break down dead plant matter. Instead, this dead material is stored in the soil.

We estimated in one study that mangrove carbon storage at the Kennedy Space Center increased by 25 percent in only seven years as mangrove forests spread. We concluded that if mangrove expansion continued unchecked by freezes into other southeastern U.S. wetlands, wetland carbon storage could result in the uptake of 26 million metric tons of carbon by 2080. This is equivalent to just over 95 million metric tons of carbon dioxide, which is about 28 percent of Florida’s total greenhouse gas emissions from human activities in 2010.

Preserving coastal mangroves improves climate resilience in several ways. First, if the carbon stored in these soils were released as carbon dioxide and methane, this would likely cause an increase in climatic warming. Second, the same processes that store carbon in wetland soils also allow these wetlands to accrete sediment and keep pace with rising sea levels.

Can mangroves keep delivering these services?

Plants and animals perform many ecosystem services for humans, from pollinating crops to filtering drinking water supplies. As species are shifted around the globe, it is critical to understand whether these services will lessen or increase, and how we can maximize them in a less stable future.

The ConversationMangroves are providing extremely valuable services and may become even more important as they expand toward the poles. But according to one recent study, many mangrove ecosystems are not building enough new elevation to keep pace with sea level rise. In a new project, my research group is analyzing how variable climate and mangrove invasion will alter the coastal protection capacity of Florida wetland ecosystems. With a better understanding of this process, we can develop strategies for protecting and restoring these valuable resources.

Samantha Chapman, Associate Professor of Biology, Villanova University

This article was originally published on The Conversation. Read the original article.

The deepest-dwelling fish in the sea is small, pink and delicate

Deploying the fish trap in the Mariana Trench from the R/V Falkor. © Schmidt Ocean Institute.
Paul Yancey, Whitman College., CC BY-ND

 

Mackenzie Gerringer, University of Washington

Thanks to movies and nature videos, many people know that bizarre creatures live in the ocean’s deepest, darkest regions. They include viperfish with huge mouths and big teeth, and anglerfish, which have bioluminescent lures that make their own light in a dark world.

However, the world’s deepest-dwelling fish – known as a hadal snailfish – is small, pink and completely scaleless. Its skin is so transparent that you can see right through to its liver. Nonetheless, hadal snailfish are some of the most successful animals found in the ocean’s deepest places.

Our research team, which includes scientists from the United States, United Kingdom and New Zealand, found a new species of hadal snailfish in 2014 in the Mariana Trench. It has been seen living at depths of almost 27,000 feet (8,200 meters). We recently published its scientific description and officially christened it Pseudoliparis swirei. Studying its adaptations for living at such great depths has provided new insights about what kinds of life can survive in the deep ocean.

The Mariana snailfish, Pseudoliparis swirei, the deepest-living fish. Video by Alan Jamieson and Thomas Linley, University of Aberdeen. Schmidt Ocean Institute.

Exploring the hadal zone

We discovered this fish during a survey of the Mariana Trench in the western Pacific Ocean. Deep-sea trenches form at subduction zones, where one of the tectonic plates that form the Earth’s crust slides beneath another plate. They extend 20,000 to 36,000 feet deep below the ocean’s surface. The Mariana Trench is deeper than Mount Everest is tall.

Ocean waters in these trenches are known as the hadal zone. Our team set out to explore the Mariana Trench from top to bottom in an effort to understand what lives in the hadal zone; how organisms there interact; how they survive under enormous pressure created by six to seven miles of water above them; and what role hadal trenches play in the global ocean ecosystem.

Mariana Trench location.
Dcfleck, CC BY

Getting to the bottom

Sending instruments to the ocean floor is pretty straightforward. Bringing them back up is not. Researchers studying the deep sea often use nets, cameras or robots connected to ships by cables. But a 7-mile-long cable, even if it is very strong, can break under its own weight.

We used free-falling landers – mechanical platforms that carry instruments and steel weights and are not connected to the ship. When we deploy landers, it takes about four hours for them to sink to the bottom. To call them back, we use an acoustic signal that causes them to release their ballast and float to the surface. Then we search for them in the water (each carries an orange flag), retrieve them and collect their data.

File 20180125 100902 h0oik.jpg?ixlib=rb 1.1
Image from video of Mariana snailfish.
SOI/HADES/University of Aberdeen (Dr. Alan Jamieson) , CC BY-ND

Life in the trenches

Hadal trenches are named after Hades, the Greek god of the underworld. To humans, they are harsh, extreme environments. Pressure is as high as 15,000 pounds per square inch – equivalent to a large elephant standing on your thumb, and 1,100 times greater than atmospheric pressure at sea level. Water temperatures are as low as 33 degrees Fahrenheit (1 degree Celsius). Yet, a host of animals thrive under these conditions.

Our team put down cameras baited with mackerel to attract mobile animals in the trench. At shallower depths, from approximately 16,000 to 21,000 feet (5,000-6,500 meters) on the abyssal plain, we saw large fish such as rattails, cusk eels and eel pouts. At the upper edges of the trench, below 21,000 feet, we found decapod shrimp, supergiant amphipods (swimming crustaceans), and small pink snailfish. This newly discovered species of snailfish that lives to near 27,000 feet (8,200 meters), is now the world’s deepest living fish.

Video footage captured from the University of Aberdeen’s Hadal-Lander in the Mariana Trench from 16,000 to 35,000 feet deep. Video by Alan Jamieson and Thomas Linley.

At the trench’s greatest depths, near 36,000 feet (11,000 meters), we saw only large swarms of small scavenging amphipods, which are somewhat similar to garden pill bugs. Amphipods live all over the ocean but are highly abundant in trenches. The Mariana snailfish that we filmed were eating these amphipods, which make up most of their diet.

The Mariana Trench houses the ocean’s deepest point, at Challenger Deep, named for the HMS Challenger expedition, which discovered the trench in 1875. Their deepest sounding, at nearly 27,000 feet (8,184 meters), was the greatest known ocean depth at that time. The site was named Swire Deep, after Herbert Swire, an officer on the voyage. We named the Mariana snailfish Pseudoliparis swirei in his honor, to acknowledge and thank crew members who have supported oceanographic research throughout history.

Life under pressure

Hadal snailfish have several adaptations to help them live under high pressure. Their bodies do not contain any air spaces, such as the swim bladders that bony fish use to ascend and descend in the water. Instead, hadal snailfish have a layer of gelatinous goo under their skins that aids buoyancy and also makes them more streamlined.

Hadal animals have also adapted to pressure on a molecular level. We’ve even found that some enzymes in the muscles of hadal fish are adapted to function better under high pressure.

Scientific drawing of Pseudoliparis swirei, the Mariana snailfish.
Thomas Linley/Zootaxa, CC BY-ND

Whitman College biologist Paul Yancey, a member of our team, has found that deep-sea fish use a molecule called trimethyl-amine oxide (TMAO) to help stabilize their proteins under pressure.

However, to survive at the highest water pressures in the ocean, fish would need so much TMAO in their systems that their cells would reach higher concentrations than seawater. At that high concentration, water would tend to flow into the cells due to a process called osmosis, in which water flows from areas of high concentration to low concentration to equalize. To keep these highly concentrated cells from rupturing, fish would have to continually pump water out of their cells to survive.

The evidence suggests that fish don’t actually live all the way to the deepest ocean depths because they are not able to keep enough TMAO in their cells to combat the high pressure at that depth. This means that around 27,000 feet (8,200 meters) may be a physiological depth limit for fish.

The ConversationThere may be fish that live at levels as deep, or even slightly deeper, than the Mariana snailfish. Different species of hadal snailfish are found in trenches worldwide, including the Kermadec Trench off New Zealand, the Japan and Kurile-Kamchatka trenches in the northwestern Pacific, and the Peru-Chile Trench. As a group, hadal snailfish seem to have found an unlikely haven in a place named for the proverbial hell.

Mackenzie Gerringer, Postdoctoral Researcher, University of Washington

This article was originally published on The Conversation. Read the original article.