My Car Quest

April 17, 2024

Extraordinary Popular Delusions and the Madness of Crowds

by Mike –

As we enter the 2017 collector car auction season with the Arizona auctions going on now I thought it would be a good time to republish this interesting observation of human behavior (published here on February 10, 2014 and originally in 1841).

The lesson is don’t buy the tulips unless you really like tulips.


The fascinating book, “Extraordinary Popular Delusions and the Madness of Crowds”, was written by the Scottish journalist Charles Mackay in 1841. It is still highly regarded by scholars today and is a mesmerizing tale of human behavior worth reading.

Here are some interesting passages that I have edited for brevity. The bold emphasis are all mine.

Text by Charles Mackay

Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.


The tulip was introduced into western Europe about the middle of the sixteenth century. The bulbs came from Constantinople, where the flower had long been a favourite. In the course of ten or eleven years after this period, tulips were much sought after by the wealthy.

Rich people sent for the bulbs direct to Constantinople, and paid the most extravagant prices for them. Until the year 1634 the tulip annually increased in reputation, until it was deemed a proof of bad taste in any man of fortune to be without a collection of them.

Many learned men were passionately fond of tulips. The rage for possessing them soon caught the middle classes of society, and merchants and shopkeepers, even of moderate means, began to vie with each other in the rarity of these flowers and the preposterous prices they paid for them.

A trader was known to pay one-half of his fortune for a single root, not with the design of selling it again at a profit, but to keep in his own conservatory for the admiration of his acquaintance.

The demand for tulips of a rare species increased so much in the year 1636, that regular marts for their sale were established on the Stock Exchanges. Symptoms of gambling now became, for the first time, apparent.

The stock-jobbers, ever on the alert for a new speculation, dealt largely in tulips, making use of all the means they so well knew how to employ, to cause fluctuations in prices.

At first, as in all these gambling mania, confidence was at its height, and every body gained. The tulip-jobbers speculated in the rise and fall of the tulip stocks, and made large profits by buying when prices fell, and selling out when they rose. Many individuals grew suddenly rich.

A golden bait hung temptingly out before the people, and, one after the other, they rushed to the tulip marts, like flies around a honey-pot. Every one imagined that the passion for tulips would last for ever, and that the wealthy from every part of the world would pay whatever prices were asked for them.

We find that whole communities suddenly fix their minds upon one object, and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first.

Nobles, citizens, farmers, mechanics … dabbled in tulips. People of all grades converted their property into cash, and invested it in flowers. Houses and lands were offered for sale at ruinously low prices, or assigned in payment of bargains made at the tulip-mart.

The prices of the necessaries of life rose again by degrees: houses and lands, horses and carriages, and luxuries of every sort, rose in value with them. The operations of the trade became so extensive and so intricate, that it was found necessary to draw up a code of laws for the guidance of the dealers. Notaries and clerks were also appointed, who devoted themselves exclusively to the interests of the trade.

Of all the offspring of Time, Error is the most ancient, and is so old and familiar an acquaintance, that Truth, when discovered, comes upon most of us like an intruder, and meets the intruder’s welcome.

At last, however, the more prudent began to see that this folly could not last for ever. Rich people no longer bought the flowers to keep them in their gardens, but to sell them again at cent per cent profit. It was seen that somebody must lose fearfully in the end.

As this conviction spread, prices fell, and never rose again. Confidence was destroyed, and a universal panic seized upon the dealers.

Defaulters were announced day after day in all the towns. Hundreds who, a few months previously, had begun to doubt that there was such a thing as poverty in the land, suddenly found themselves the possessors of a few bulbs, which nobody would buy, even though they offered them at one quarter of the sums they had paid for them.

Many who, for a brief season, had emerged from the humbler walks of life, were cast back into their original obscurity. Substantial merchants were reduced almost to beggary, and many a representative of a noble line saw the fortunes of his house ruined beyond redemption.


The book is in the public domain and is available here Extraordinary Popular Delusions.

Let us know what you think in the Comments.




Extraordinary Popular Delusions and the Madness of Crowds
Article Name
Extraordinary Popular Delusions and the Madness of Crowds
Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.


  1. Beautiful.
    Simply, concisely and beautifully (understated) synopsis of the human condition.

  2. Alfred Loomis was an attorney, financier, broker, and amateur physicist. A brilliant man, though he had his feet of clay. Prior to the crash of 1929 he recognized a change in the attitudes of investors and was wise enough to withdraw much of his portfolio. So much so that many suspected him of somehow masterminding the crash to his benefit. His observation was simply – when people stopped asking IF there was going to be a crash, and started asking WHEN is there going to be a crash – he knew it would happen and pulled out.

    An excellent book about him (and not totally flattering) is called “Tuxedo Park”. Amazing man and visionary who had a huge impact on World War II, radar, and the roots of Silicon Valley.

  3. ~ I appreciate your having republished this, Mike. A strong favorite among your many excellent pieces!

  4. Thanks for this mindful piece Mike. When I began my career in the institutional trading business, this was the first book that my mentor gave me to read. I learned that the markets were really not so much about calculating value, but rather about the human feelings along a continuem of emotion. Interestingly, technology improves and graduates from generation to generation. Ie, our grandchildren will never have use for a tube TV or perhaps even a land line telephone. Yet human emotion for each newborn individual can not improved and those improvements passed to the next generation. Therefore, the actions of humans will always be driven, in the most excessive times, by the herd-like pursuit of fear and greed. So, the lessons we can learn from episodes in history like the great Tulip bubble, even though set in the mid 1600s, are just as valid today as they were in 1841 when this book was written.

  5. A great topic and a great book no doubt, but the context of the times must be considered and the technology around those times as well. I’ve owned a first edition of this book for years and have referenced it often as part of a class I teach on innovation. It is amazing for a number of reasons both in terms of markets and behaviors.

    However, contemporary collectible markets (past twenty years) has been radically altered by the use of digital tools. Rarity or perceived scarcity of objects has been diminished by the internet, which did some serious damage to nearly all “rare” collectibles about a decade ago by making multiple copies of a formerly perceived rare item of lesser value. In that time, the “average” collectible which might have been considered a “find” at $200, dropped to a mere $85.00 as supply outstripped demand. Most interestingly, at the same time, highly prized offerings of great provenance or unquestioned history and maintaining original finishes jumped even higher in value.

    No surprise to see this happening with cars.

    A Mustang, Camaro, or an average post war Packard has actually gone DOWN in value when adjusted for inflation against rates of sale a decade or more ago. A 390 Mustang GT in 2006 costing $35k is worth roughly $35k today. That same money invested in a 911, Ferrari, or Jaguar has more than doubled. Other highly prized cars (enhanced by an increasingly more complex series of detailed intellectual differentiations that elevate these cars to new levels of art) have become ten times the value. Patina, barn find, Original (but threadbare) interior or faded paint are just the latest in intellectualized aesthetic arrogance to increase the value of something that needs to be separated further from “common” cars. Even restorations (the pride of workmanship and painstaking research) is being diminished by elitists who hate the idea that restoration services can be purchased by “anyone with a checkbook”.

    The most important lesson of the Tulip hype resides not in the hysteria of crowds, rather the amazing power that wealthy majority elites have in manipulating markets to favor their interests and separate themselves and their bobbles of delight from the “commoners”. Desire is nothing new to humanity. What is new, however is how easily it can be manipulated with modern media, videos, and public exhibitions of high dollar sales.

  6. Great comments – thank you all.

  7. Wallace Wyss says

    I have a private theory that the sale of certain brand new 2017 muscle cars, particularly some Camaros and Dodges with over 600 hp., is a sort of get-it-before-they’re-banned reaction. With all this talk of autonomous cars taking over by 2021, enthusiasts fear such cars will no longer be offered hence the best od the last will b valuable,
    Much as sales of assault rifles boom when there’s talk of limiting their availability. I think this get-the-last-musclecar feeling has been pumping up sales for several years now but as The End Nears we will see offerings of 700 hp, 800 hp and finally, in an orgasm of horsepower , 1000 hp. (I think that’s already been offered in the Bugatti) Oh Glory be!

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