RECORDED BEFORE AN AUDIENCE AT THE BRISTOL FESTIVAL OF ECONOMICS (17 November 2022) The Dutch went so potty over tulip bulbs in the 1600s that many were ruined when the inflated prices they were paying for the plants collapsed – that’s the oft-repeated story later promoted by best-selling Scottish writer Charles Mackay. It’s actually a gross exaggeration.
Mackay’s writings about economic bubbles bursting entertained and informed his Victorian readers – and continue to influence us today – but how did Mackay fare when faced with a stock market mania right before his eyes? The railway-building boom of the 1840s showed he wasn’t so insightful after all.
The essential source on this story is the work of Andrew Odlyzko, particularly “Charles Mackay’s own extraordinary popular delusions and the railway mania“.
On the tulip mania, see Anne Goldgar Tulipmania: Money, Honor and Knowledge in the Dutch Golden Age and Mike Dash Tulipomania.
On the railway mania, see Odlyzko “Collective Hallucinations and inefficient markets” and William Quinn and John Turner’s Boom and Bust, supplemented by Christian Wolmar’s Fire and Steam and John Francis History of the English Railway.
Charlotte Bronte’s letter to Ellen Nussey is quoted in M. Hope Dodds “George Hudson and the Brontës” Brontë Studies Vol 38 No 4 Nov 2013