Memoirs of Extraordinary Popular Delusions.

London: Richard Bentley, Publisher in Ordinary to Her Majesty, 1841.

First edition, Sir Robert Peel’s copy, bound in the very rare original publisher’s cloth, of Charles MacKay’s classic study of the behaviour of crowds and popular folly. Generally considered the most important book on market psychology, it can be regarded as the foundation work of behavioural finance and economics. Its vast influence extends to such diverse disciplines as stock market analysis and religious studies, and it remains in print even today. The preface reveals the overall purpose of the work as being an effort to “collect the most remarkable instances” which illustrate “how easily the masses have been led astray, and how imitative and gregarious men are, even in their infatuations and crimes.” Mackay writes with an impassioned journalistic voice and offers scathing critiques on a range of subjects including the crusades, the Mississippi Scheme, frauds, false prophets, thieves, and a potpourri of past and contemporary scoundrels. The chapters on economic bubbles and financial mania has proven especially influential and are now considered a key text in the field of economics. The first volume begins with a discussion of three such bubbles: the South Sea Company bubble of 1711-20, the Mississippi Company bubble of 1719-20, and the Dutch tulip mania of the early seventeenth century. According to Mackay, during this last bubble, speculators from all walks of life bought and sold tulip bulbs and had even declared futures contracts on them. Mackay's accounts are enlivened by colourful, 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. In the second volume, Mackay describes the history of the Crusades as a kind of mania of the Middle Ages, precipitated by the pilgrimages of Europeans to the Holy Land. Mackay is generally unsympathetic to the Crusaders, whom he compares unfavourably to the superior civilisation of Asia: “Europe expended millions of her treasures, and the blood of two millions of her children; and a handful of quarrelsome knights retained possession of Palestine for about one hundred years!” This volume also gives an account of ‘Witch mania’ in the 16th and 17th centuries. Mackay notes that many of these cases were initiated as a way of settling scores among neighbours or associates, and that extremely low standards of evidence were applied to most of these trials. Mackay claims that “thousands upon thousands” of people were executed as witches over two and a half centuries, with the largest numbers killed in Germany. Volume three has a section on alchemists which focuses primarily on efforts to turn base metals into gold. Mackay notes that many of these practitioners were themselves deluded, convinced that these feats could be performed if they discovered the correct old recipe or stumbled upon the right combination of ingredients. Although alchemists gained money from their sponsors, mainly noblemen, he notes that the belief in alchemy by sponsors could be hazardous to its practitioners, as it wasn't rare for an unscrupulous noble to imprison a supposed alchemist until he could produce gold.

Provenance: Sir Robert Peel (1788-1850), 2nd Baronet, FRS, British Prime Minister 1834-35 and 1841-46 (Drayton Manor bookplate to front paste-downs).

“Charles Mackay’s book, Extraordinary Popular Delusions and the Madness of Crowds, first published in 1841, is famous for its depictions of irrational mass behavior. The popular press cites it extensively whenever there is concern about a potential new financial bubble. It is on the recommended reading list of the prominent investment bank Goldman Sachs, and a recent book used it as the basis for a collection of investment principles. Bernard Baruch praised it highly, and apparently credited it with helping him sense market peaks. Michael Lewis, known best for his colourful descriptions of Wall Street, included the chapters on financial manias from Mackay’s book among his ‘Six Classics of Economics,’ thereby ranking Mackay with Adam Smith, Thomas Malthus, David Ricardo, Thorstein Veblen, and John Maynard Keynes” (Odlyzko).

“Famously detailing both Holland’s tulip bubble, as well as the bubble’s underpinnings in human economic and socio-psychological behavior, eighteenth century author Charles Mackay penned the legendary book, Extraordinary Popular Delusions and the Madness of Crowds. The tome not only discussed hundreds of government-authorized economic bubbles that involved massive fraud, but also described the delusional behavior of human economic actors in the midst of economic bubbles. While financial instruments, markets, business structures, and regulatory regimes have changed materially since Mackay’s work in the 1840s, sadly, the irrational behavior of economic actors transacting on imperfect information has
seemingly remained static” (Groshoff, pp. 493-494).

“There are fewer than a dozen books written more than a century ago that could be called classics of the social sciences. Charles Mackay’s Extraordinary Popular Delusions and the Madness of Crowds is one of them, and it is probably the oldest. First published in 1841, Mackay’s work … has probably never been long out of print in the past one hundred fifty years. The book includes quite a cast of characters: ghost hunters, alchemists, prophets, economic speculators, witches, crusaders, and faith healers, among others, all hold center stage in what amounts to a catalogue of beliefs gone awry and mass behaviors turned goofy (if not dangerous) … The range of topics Mackay covers is wide and in some cases deep. One reason Extraordinary Popular Delusions and the Madness of Crowds has become such a classic is that irrational behavior has never been in short supply, and modern examples of crazes, speculative bubbles, and mass hysteria continue to amuse, frustrate, and provoke us today.

“Charles Mackay was born in 1814 in Perth, Scotland. His father was a military officer who was often away from home, and because Mackay’s mother died when he was young, he was raised by foster parents. At age 16, Mackay began to earn his living as a private secretary to an industrialist based in Belgium, and he also wrote articles for newspapers in his spare time. Moving to London in 1832, Mackay embarked on a journalism career that resulted in major editorial positions at a succession of papers in Scotland and London, where his colleagues included Charles Dickens. As a journalist he did investigative reporting on the condition of the laboring classes in Great Britain, and he also served as a special correspondent for The Times reporting on the Civil War in America. While Extraordinary Popular Delusions was well received and is the work that has kept Mackay’s name alive today, its authorship does not seem to have been a major part of his reputation while he was alive. During his lifetime, Mackay was best known for his poetry. His collected verse, Voices from the Crowd (1846), was popular and some of his poems were set to music and became hits of the day. He died on Christmas Eve 1889.

“The material covered in Extraordinary Popular Delusions provides ample support for the truth of the cliché that the more things change, the more they stay the same. For example, the first three chapters of the book describe financial schemes that escalated well beyond rational bounds and ultimately lead to economic meltdown. Perhaps the most famous of those, and arguably the most widely read chapter in the book, concerns the tulip mania in the Netherlands during the 17th century. Tulips were introduced into Europe about 1550, and through hybridisation and accidental variation a wide range of colors and shapes soon became available. Initially a garden of these plants was considered the mark of a discriminating gentleman, but by the 1630s the Dutch began to collect bulbs less for their blooms than for purposes of economic speculation. Tulip bulbs were bought and sold for what today might be tens of thousands of dollars; in some cases large mansions were given in payment for a single bulb. For a brief period, tulip mania drove the entire Dutch economy and, when the inevitable crash occurred, nearly crippled it. One suspects that modern readers do not need to be reminded that in the 1990s silly high-tech solutions to trivial problems and Internet ventures of dubious value were financed out of all proportion to their economic viability. And, as happened during the tulip craze of 350 years ago, intelligent people realised that the Internet boom could not last but continued to play the odds in hopes of getting rich fast. Some actually did, though most did not.

“The longest chapters in Extraordinary Popular Delusions described alchemists who believed that they could turn base metals into ones of value, and who in some cases believed they could discover the secret of eternal (or at least long) life … While we no longer have alchemists among us today, we do have considerable interest in freezing dead people for a distant awakening, and herbs, drugs, and medical treatments of no value are bought by people because of claims that they promote health and prolong life. Get-rich schemes based only loosely on existing technologies and what can only be described as science crazes (remember cold fusion) are no less a part of today’s world than they were in the time of alchemists.

“In subsequent chapters, Mackay deals with those who issue prophecies, fortune-telling, magnetizers (a form of medical quackery), fashions in hairstyles and beards, the crusades, witch-hunts, murderers who used slow acting poisons, haunted houses and ghosts, fads in slang, admiration of criminals, duels and ordeals, and the appeal of relics … Superstition casts a long dark shadow on history and each generation has to discover independently the consequences of its failures to benefit fully from advances in human knowledge. Even today, despite the fact that the world is awash in education and we have the highest levels of intellectual sophistication in history, we cannot seem to escape the perils of a certain kind of irrationality … Indeed, viewed through a certain lens, history is a continuing struggle between the rational and irrational …

Extraordinary Popular Delusions is a social science classic, but not because it was social science as we understand that term today … Mackay was a journalist and not a social scientist, not even an embryonic one. In many respects the tone of Mackay’s book is close to Alexis de Tocqueville’s Democracy in America (1862), in which his observations on the United States in 1831-32 have the same sort of attention to telling detail, perspicacity, and objectivity mingled with some bemusement, that we find in Extraordinary Popular Delusions. Mackay’s descriptions are clear and supply enough detail to provide a real flavor for the phenomena he describes. But rarely does he make an attempt at explanation, and the explanations he does provide (e.g., for the crusades) are standard confluences of historical and economic forces, the kind that have been used freely (and usually not very carefully) for the past several centuries. One looks in vain for the influence of social class, social strain, anxiety, alienation (to name but four major categories of explanation used today) on the behavior he describes. Despite the fact that Mackay is dealing with phenomena of great psychological interest, he rarely goes beyond standard descriptions of emotions and feelings. Of course we ought to remember that Extraordinary Popular Delusions was written well before any reasonable date for the birth of modern psychology …

“Mackay’s purpose was to warn rather than explain, and at the beginning of an era in Great Britain that celebrated the importance of rational and scientific approaches to solving problems and a belief in the power of education to create rationality, this book was caution indeed. Its main value in both Mackay’s time and ours may lie in its documentation of a wide range of material which seems eternally modern, making only slight allowances for differences between the witch hunts of yore and the communist investigations of the 1950s in the United States or the hysteria over sexual abuse in daycare centers in the 1980s. While each of the topics Mackay discusses had been described and even analyzed before, it does not seem to be the case that anyone had previously brought such a wide range of material together under a common roof. Extraordinary Popular Delusions not only provides a readily accessible archive of human silliness for subsequent scholars to mine, but it also prompts thoughtful readers to wonder about the connections between the various phenomena Mackay describes. What do witch hunts, crusades, and economic panics have in common? To some extent we are still trying to figure out the answer to that question, but modern readers can, at a minimum, thank Charles Mackay for broadening the ‘database’ and implicitly raising questions of comparison.

“More important than situating Extraordinary Popular Delusions in a historical context is the question of whether this curious book is worth reading today. It surely is. The material is fascinating, the writing engaging, and the phenomena are in their own way as modern as can be” (Schneider, Introduction to Mackay 2004).

Mackay’s book has had, and in various reprints, continues to have, several variant titles. The original publication took place in October 1841, and was of a two-volume work entitled Memoirs of Extraordinary Popular Delusions. In the Preface, Mackay wrote that should those two volumes ‘be favourably received,’ he would produce another one to cover some additional delusions. Apparently reception was sufficiently favorable to convince the author and publisher to rush the third volume into print, as it appeared around the end of 1841 … In 1852, a substantially revised two-volume version was published in a series of inexpensive books under the title Memoirs of Extraordinary Popular Delusions and the Madness of Crowds” (Odlyzko).

Groshoff, ‘Kickstarter My Heart: Extraordinary Popular Delusions and the
Madness of Crowdfunding Constraints and Bitcoin Bubbles,’ William and Mary Business Review 5 (2014), pp. 489-557. Mackay, Extraordinary Popular Delusions and the Madness of Crowds. New York: Barnes & Noble, 2004. Odlyzko, ‘Charles Mackay’s own extraordinary popular delusions and the Railway Mania,’ SSRN Electronic Journal, February 2011 (

Three vols., 8vo (228 x 140 mm), pp. vi, [2], 400; [vi], 406; [vi], 404, including half-titles in vols. II and III (only, as called for), with engraved portrait frontispiece in each volume, and two engraved portrait plates in third volume. Original publisher’s cloth, covers decorated in blind, spines lettered in gilt (a little worn at extremities, spine and board edges sunned). An excellent set, completely unrestored.

Item #5680

Price: $32,500.00

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