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 TEST 8
READING PASSAGE 2

When The Tulip Bubble Burst

Tulips are spring-blooming perennials that grow from bulbs. Depending on the species,
tulip plants can grow as short as 4 inches (10 cm) or as high as 28 inches (71 cm). The
tulip's large flowers usually bloom on scapes or sub-scapose stems that lack bracts. Most
tulips produce only one flower per stem, but a few species bear multiple flowers on their
scapes (e.g. Tulipa turkestanica). The showy, generally cup or star-shaped tulip flower has
three petals and three sepals, which are often termed tepals because they are nearly
identical. These six tepals are often marked on the interior surface near the bases with
darker colorings. Tulip flowers come in a wide variety of colors, except pure blue (several
tulips with "blue" in the name have a faint violet hue)

A. Long before anyone ever heard of Qualcomm, CMGI, Cisco Systems, or the other
high-tech stocks that have soared during the current bull market, there was Semper
Augustus. Both more prosaic and more sublime than any stock or bond, it was a tulip of
extraordinary beauty, its midnight-blue petals topped by a band of pure white and accented
with crimson flares. To denizens of 17th century Holland, little was as desirable.

B. Around 1624, the Amsterdam man who owned the only dozen specimens was offered
3,000 guilders for one bulb. While there's no accurate way to render that in today's
greenbacks, the sum was roughly equal to the annual income of a wealthy merchant. (A
few years later, Rembrandt received about half that amount for painting The Night Watch.)
Yet the bulb's owner, whose name is now lost to history, nixed the offer.

C. Who was crazier, the tulip lover who refused to sell for a small fortune or the one who
was willing to splurge. That's a question that springs to mind after reading Tulip mania:
The Story of the World's Most Coveted Flower and the Extraordinary Passions It Aroused
by British journalist Mike Dash. In recent years, as investors have intentionally forgotten
everything they learned in Investing 101 in order to load up on unproved, unprofitable
dot- com issues, tulip mania has been invoked frequently. In this concise, artfully written
account, Dash tells the real history behind the buzzword and in doing so, offers a
cautionary tale for our times.

D. The Dutch were not the first to go gaga over the tulip. Long before the first tulip
bloomed in Europe-in Bavaria, it turns out, in 1559-the flower had enchanted the Persians
and bewitched the rulers of the Ottoman Empire. It was in Holland, however, that the
passion for tulips found its most fertile ground, for reasons that had little to do with
horticulture.

E. Holland in the early 17th century was embarking on its Golden Age. Resources that
had just a few years earlier gone toward fighting for independence from Spain now flowed
into commerce. Amsterdam merchants were at the center of the lucrative East Indies trade,
where a single voyage could yield profits of 400%. They displayed their success by
erecting grand estates surrounded by flower gardens. The Dutch population seemed tom
by two contradictory impulses: a horror of living beyond one's means and the love of a
long shot.

F. Enter the tulip. "It is impossible to comprehend the tulip mania without understanding
just how different tulips were from every other flower known to horticulturists in the 17th
century," says Dash. "The colors they exhibited were more intense and more concentrated
than those of ordinary plants." Despite the outlandish prices commanded by rare bulbs,
ordinary tulips were sold by the pound. Around 1630, however, a new type of tulip fancier
appeared, lured by tales of fat profits. These "florists," or professional tulip traders, sought
out flower lovers and speculators alike. But if the supply of tulip buyers grew quickly, the
supply of bulbs did not. The tulip was a conspirator in the supply squeeze: It takes seven
years to grow one from seed. And while bulbs can produce two or three clones, or
"offsets," annually, the mother bulb only lasts a few years.

G. Bulb prices rose steadily throughout the 1630s, as ever more speculators into the
market. Weavers and farmers mortgaged whatever they could to raise cash to begin
trading. In 1633, a farmhouse in Hoorn changed hands for three rare bulbs. By 1636 any
tulip - even bulbs recently considered garbage, could be sold off, often for hundreds of
guilders. A futures market for bulbs existed, and tulip traders could be found conducting
their business in hundreds of Dutch taverns. Tulip mania reached its peak during the
winter of 1636-37, when some bulbs were changing hands ten times in a day. The zenith
came early that winter, at an auction to benefit seven orphans whose only asset was 70
fine tulips left by then father. One, a rare Violetten Admirael van Enkhuizen bulb that was
about to split in two, sold for 5,200 guilders, the all-time record. All told, the flowers
brought in nearly 53,000 guilders.

H. Soon after, the tulip market crashed utterly, spectacularly. It began in Haarlem, at a
routine bulb auction when, for the first time, the greater fool refused to show up and pay.
Within days, the panic had spread across the country. Despite the efforts of traders to prop
up demand, the market for tulips evaporated. Flowers that had commanded 5,000 guilders
a few weeks before now fetched one-hundredth that amount. Tulip mania is not without
flaws. Dash dwells too long on the tulip's migration from Asia to Holland. But he does a
service with this illuminating, accessible account of incredible financial folly.

I. Tulip mania differed in one crucial aspect from the dot-com craze that grips our
attention today: Even at its height, the Amsterdam Stock Exchange, well-established in
1630, wouldn't touch tulips. "The speculation in tulip bulbs always existed at the margins
of Dutch economic life," Dash writes. After the market crashed, a compromise was
brokered that let most traders settle then debts for a fraction of the liability. The overall
fallout on the Dutch economy was negligible. Will we say the same when Wall Street's
current obsession finally runs its course?

QUESTIONS 14-18

The reading Passage has seven paragraphs A-I. Which paragraph contains the following
information?

Write the correct letter A-I, in boxes 14-18 on your answer sheet.

14. Difference between bubble burst impacts by tulip and by high-tech shares
15. Spread of tulip before 17th century

16. Indication of money offered for rare bulb in 17th century

17. Tulip was treated as money in Holland

18. Comparison made between tulip and other plants

QUESTIONS 19-23

Do the following statements agree with the information given in Reading Passage 2? In
boxes 19-23 on your answer sheet, write

TRUE - if the statement is true

FALSE - if the statement is false

NOT GIVEN - if the information is not given in the passage

19. In 1624, all the tulip collections belonged to a man in Amsterdam.

20. Tulip was first planted in Holland according to this passage.

21. Popularity of Tulip in Holland was much higher than any other countries in 17th
century.

22. Holland was the most wealthy country in the world in 17th century.

23. From 1630, Amsterdam Stock Exchange started to regulate Tulips exchange market.

QUESTIONS 24-27

Complete the following summary of the paragraphs of Reading Passage, using no more
than two words from the Reading Passage for each answer. Write your answers in boxes
24-27 on your answer sheet.

Dutch concentrated on gaining independence by 24 _____________ against Spain in the