Extraordinary Popular Delusions and the Madness of Crowds
Extraordinary Popular Delusions and the Madness of Crowds is an early study of crowd psychology by Scottish journalist Charles Mackay, first published in 1841 under the title Memoirs of Extraordinary Popular Delusions.[1] The book was published in three volumes: "National Delusions", "Peculiar Follies", and "Philosophical Delusions".[2] Mackay was an accomplished teller of stories, though he wrote in a journalistic and somewhat sensational style.
Author
United Kingdom
English
Crowd psychology, economic bubbles, history
Richard Bentley, London
1841
The subjects of Mackay's debunking include alchemy, crusades, duels, economic bubbles, fortune-telling, haunted houses, the Drummer of Tedworth, the influence of politics and religion on the shapes of beards and hair, magnetisers (influence of imagination in curing disease), murder through poisoning, prophecies, popular admiration of great thieves, popular follies of great cities, and relics. Present-day writers on economics, such as Michael Lewis and Andrew Tobias, laud the three chapters on economic bubbles.[3]
In later editions, Mackay added a footnote referencing the Railway Mania of the 1840s as another "popular delusion" which was at least as important as the South Sea Bubble. In the 21st century, the mathematician Andrew Odlyzko pointed out, in a published lecture, that Mackay himself played a role in this economic bubble; as a leader writer in The Glasgow Argus, Mackay wrote on 2 October 1845: "There is no reason whatever to fear a crash".[4][5]
Volume I: National Delusions[edit]
Economic bubbles[edit]
The first volume begins with a discussion of three economic bubbles, or financial manias: the South Sea Company bubble of 1711–1720, the Mississippi Company bubble of 1719–1720, and the Dutch tulip mania of the early seventeenth century. According to Mackay, during this bubble, speculators from all walks of life bought and sold tulip bulbs and had even declared futures contracts on them. Allegedly, some tulip bulb varieties briefly became the most expensive objects in the world during 1637.[6] Mackay's accounts are enlivened by colorful, comedic anecdotes, such as the Parisian hunchback who supposedly profited by renting out his hump as a writing desk during the height of the mania surrounding the Mississippi Company.
Two modern researchers, Peter Garber and Anne Goldgar, independently conclude that Mackay greatly exaggerated the scale and effects of the Tulip bubble,[7] and Mike Dash, in his modern popular history of the alleged bubble, notes that he believes the importance and extent of the tulip mania were overstated.[8]
The book remains in print, and writers continue to discuss its influence, particularly the section on financial bubbles. (See Goldsmith and Lewis, below.)
public domain audiobook at LibriVox
Memoirs of Extraordinary Popular Delusions and the Madness of Crowds
The book is in the public domain and is available online from a number of sources: