Absurdly Priced Things Throughout History
Economic bubbles aren't unique to the 21st century, nor are they related solely to real estate. The phenomenon, in which the price of a commodity skyrockets then crashes, have been recorded since 17th century Holland, when tulips became more valuable than tons of foodstuffs or fabric. Talk about overpriced.Â
Later on, shares of speculative trading or rail companies became priceless, then worthless. Japanese real estate was once so valuable golf courses were worth more than whole companies. Various metals have boomed and busted, sometimes for random reasons. And let's not forget the strange Thai amulet bubble of the late 2000s, an inexplicable phenomenon.
Here are some of the weirdest economic bubbles that drove random commodities sky high in value.In 1630s Holland, Tulips Sold for Ten Times a Craftsman's Income
The Tulip mania that gripped Holland in 1636 and 1637 was an asset bubble the likes of which had never been seen. Tulips were introduced to Europe in the 1550s, and their bright colors and hearty build made them the most prized flower on the continent.
In early 1636, the Dutch created a futures market for the tulip bulb, and prices exploded. Within weeks, tulips were being sold and bought by virtually the entire country, with bulbs changing hands a dozen times a day. By late 1636, individual bulbs were worth ludicrous sums of money.
One record has a single tulip root being traded for "Two lasts of wheat, four lasts of rye, four fat oxen, eight fat swine, twelve fat sheep, two hogsheads of wine, four tons of beer, two tons of butter, one thousand lbs. of cheese, a complete bed, a suit of clothes, a silver drinking cup."
But by February 1637, speculators couldn't find buyers for their inflated wares, and tulip mania cooled off. The tulip market crashed by 99% overnight, speculators were wiped out, and Holland's economy took decades to recover.In the 1980s, Japan's Imperial Palace Was Worth More Than California
The Japanese yen surged by 50% in the early '80s, an inflationary boom that triggered a recession in 1986. To counter it, the government pumped so much cash into the country that unbridled speculation followed. As a result, Japanese stocks and urban land values tripled from 1985 to 1989, up 70 times from their 1955 value.
Trading became the national pastime of the country, and at the peak of the bubble, the value of the Imperial Palace grounds in Tokyo was greater than all the real estate in California. With the government and business working hand-in-hand, values kept rising, so much so that companies used inflated stock prices to buy American conglomerates. To stem corruption and deal with peaking property values, the Japanese government raised interest rates. The Japanese stock market immediately dipped, property values plummeted, billions of dollars were lost, and the stage was set for Japan's lost decade.In 1720, Shares of the South Sea Company Were Worth Almost $200k Adjusted for Inflation
Britain's South Sea Company was formed in 1711, and was promised a monopoly on all trade with the Spanish colonies of South America. Expecting a repeat of the incredible success of the East India Company, investors snapped up shares, and they surged more than eight-fold in the first half of 1720, reaching a price of £1,000, or £134,000 adjusted for inflation. A slew of copycat companies started, and England went IPO crazy.
But the South Sea Company was a mess - poorly run and unprofitable, with shipments being misdirected. Company directors realized the Company couldn't possibly deliver on its lofty promises, and sold their shares just as shareholder payments were due. Panic set in, and the Company collapsed in subsequent months. Only direct intervention by the British government saved the UK's economy from going under, and Britain banned the trade of stock certificates until 1825.In 2008, Rhodium Was Worth Ten Times More Than Gold
While the world was scrambling to keep pace with the 2008 financial crisis, another bubble inflated and popped - rhodium. A rare metal used in catalytic converters and jewelry plating, rhodium traded for just $500 per ounce in late 2006, a price that mysteriously exploded and reached a staggering $9,500 per ounce in summer 2008. By contrast, gold was trading for $870 per ounce, making rhodium more than ten times more valuable.
Just as strangely as it started, the rhodium bubble popped. By January 2009, it was back to $1,000 per ounce.In the 1840s, British Railroads Suddenly Doubled in Value
Having retained nothing from the South Sea Bubble, 1840s Britain was gripped by "Railway Mania", a frenzied, speculative railroad building market. In 1830, the first modern city-to-city railroad opened and was immediately successful. Combined with the 1825 repeal of the Bubble Act, an interest rate cut, and a flood of new money from the Industrial Revolution, railways became the hot investment.
Railroad stock prices doubled from 1842 to 1845, and hundreds of new railroad charters were passed by Parliament. But by 1845, it became clear that most of these railroads would be money-losers. Others proved impossible to build, and some were simply scams. A Bank of England interest rate hike finished off Railway Mania, and thousands of people lost their life savings. Of the railroads that did get built, many are still around today, and the boom led to a major increase in the interconnectivity of English cities.In 2006, Cheap Thai Amulet Sold for Tens of Thousands of Dollars
One of the strangest bubbles in history began with the death of an octogenarian Thai general in 2006. Longtime head of the Thai police, Phantarak Rajadej was renowned for solving a difficult murder case with the help of an amulet bearing the image of the Thai god Jatukam Rammathep. Overnight, demand for the amulets exploded.
Thailand went amulet crazy. Wearers slung multiple Jatukam amulets, all blessed by monks and bearing names like "Super Rich to the Heavens," around their necks. The amulets, which normally sold for $1.20, became the sole commodity in a huge bubble, with some selling for as much as $75,000. The amulet market swelled to a value of more than $600 million. Then, suddenly, Thais began to wonder how so many amulets could actually blessed by monks; were most of them fake? Also, they weren't getting rich or gaining immortality.
The amulet industry went bust almost as quickly as it went boom, leaving thousands of buyers out large deposits, and others stuck with worthless knockoffs. Also, it was found that the Thai god the amulets supposedly paid tribute to wasn't a real god in Thai culture.
