Personal Development Ideas

Extraordinary Popular Delusions and the Madness of Crowds September 25, 2023

Posted by Dennis Mellersh in Uncategorized.
Tags: Book Reviews, Charles MacKay, culture, Extraordinary Popular Delusions and the Madness of Crowds, history, life, money, philosophy; liife, psychology, South-Sea Bubble, writing
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THE EMOTIONAL PSYCHOLOGY THAT DRIVES POPULAR DELUSIONS

… such as the Dot Com craze of the early 2000s and the recent high interest in all things pertaining to artificial intelligence (AI) is not a new phenomenon.

Charles MacKay, in his remarkable book Extraordinary Popular Delusions and the Madness of Crowds, takes us on a journey looking back from 1859 and spanning centuries on the results that collective human credulity, greed, and fear can generate.

The results range from the horrific and injurious to the amusing and relatively harmless.

The book is like a detailed history of the time periods and topics under discussion, and like all good history writing, it is not boring. Mackay was a journalist and had a flair for interesting storytelling. He writes with a contemporary tone and turns the topics he writes about into adventures of discovery.

“You can’t make this stuff up,” the author might have said if writing today.

THE CENTRAL THEME OF THE BOOK

In his preface to the 1841 and 1859 editions, Mackay wrote:
”The object of the author in the following pages has been to collect the most remarkable instances of those moral epidemics which have been excited, sometimes by one cause and sometimes by another, and to show how easily the masses have been led astray and how imitative and gregarious men are, even in their infatuations and crimes.”

”In reading the history of nations, we find that, like individuals, they have their whims and their peculiarities, their seasons of excitement and recklessness, when they care not what they do. We find that whole communities suddenly fix their minds on 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.”

“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.”

Andrew Tobias (1) wrote the foreword to the 1980 edition of Extraordinary Popular Delusions…(2) THE EDITION I’m working from and likened the popular delusions concept to group thinking, for example, in the stock market world:

“In the late 1960s, stock prices again began to spiral dizzily. Market mania. Synergy was the new magic word., and what it meant, in essence, as various corporate presidents and stock promoters explained over and over, was that two and two could, under astute management, equal five…It was alchemy of a sort…and enough to drive at least one stock, in two years, from $6 a share to $140. The talk of the town. Not much later, it sold for $1,” Tobias wrote.

The book, now in the public domain, was originally published in three volumes. The 1980 edition combined all three volumes into one 724-page book.

EXAMPLES OF POPULAR DELUSIONS’… CONTENT

Extraordinary Popular Delusions… is broken down into chapters, each exploring a different topic. Here are some examples from the 16 chapters.

Three chapters, comprising the first 97 pages, on financial and economic delusions, or Money Mania
1) The Mississippi Scheme
2) The South-Sea Bubble
3) The Tulipomania

The Alchymists (Alchemists) (58 pages)

Fortune-Telling

The Crusades (107 Pages

The Witch Mania (102 pages)

Popular Follies of Great Cities

Popular Admiration of Great Thieves

Modern Prophesies (as of 1859)

And More…

The money mania schemes

In writing about the Money Mania of the Mississippi Scheme, Mackay writes: “The personal character and career of one man are so intimately connected with the great shame of the years 1719 and 1720, that a history of the Mississippi madness can have no fitter introduction than a sketch of the life of its great author, John Law….”

“John Law was neither knave nor madman, but one more deceived than deceiving, more sinned against than sinning. He was thoroughly acquainted with the philosophy and true principles of credit. He understood the monetary question better than any man of his day, and if his system fell with a crash so tremendous, it was not so much his fault as that of the people amongst whom he had erected it.

“He did not count upon the avaricious frenzy of a whole nation; he did not see that confidence, like mistrust, could be increased almost ad infinitum and that hope was as extravagant as fear.”

A Partial Bubble List

Some of the bubble schemes that were financed by share-purchase, and that were eventually declared illegal include and abolished accordingly.”:

• For supplying London With sea-coal. Capital, three millions.
• For the improvement of lands in Great Britain. Capital, four millions
• For building and rebuilding houses throughout all England. Capital, three millions.
• For buying and selling lands and lending money at interest. Capital, five millions.
• For important walnut trees from Virginia. Capital, two millions
• For a grand dispensary. Capital, three millions
• For erecting loan-offices for the assistance and the encouragement of the industrious. Capital, two millions.
• For importing beaver fur. Capital, two millions.
• For improving malt liquors. Capital, four millions

Mackay writes: “Besides these (86) bubbles, many others sprang up daily, in spite of the condemnation of the government and the ridicule of the still sane portion of the public. The print shops teemed with caricatures, and the newspapers with epigrams and satires upon the prevalent folly.”

Mackay does point out that “Some schemes were plausible enough, and had they been undertaken at a time when the public mind was unexcited, might have been pursued with advantage to all concerned. But they were established merely with the view of raising the shares in the market. The projectors took the first opportunity of a rise to sell out, and next morning the scheme was at an end.”

And, in the preface to the 1852 edition, Mackay concluded, “Popular delusions began so early and became so widespread, and have lasted so long, that instead of two or three volumes, fifty would scarcely suffice to detail their history. The present may be considered more of a miscellany of delusions than a history — a chapter only in the great and awful book of human folly which yet remains to be written.”

I’m planning to write about The Alchymists and The Witch Mania in future Issues of The Ecelctic Curator., so if this topic interests you, stay tuned.

Notes:

(1) Andrew Tobias writes about business and economics.

(2) Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay, 720pages, Harmony Books, New York, 1980

(i) The book has an index of almost 20 pages, which is useful.

(ii) What would have also been useful, considering that this is actually a specific topic history book, is a list of works that the author consulted.

_____ Dennis Mellersh

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