Finance

Extraordinary Popular Delusions and the Madness of Crowds

by Charles Mackay

Why do crowds lose their heads?

In 1841 the Scottish journalist Charles Mackay gathered history's great crazes, from tulip bulbs and paper fortunes to alchemists' gold, witch hunts and doomsday prophecies. His question is how whole nations fix on one idea, chase it to ruin, and only then wake up.

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What you'll learn

  • Mad in herds
  • Tulipomania
  • Fear spreads the same way
  • The alchemists' promise

The key ideas in Extraordinary Popular Delusions and the Madness of Crowds

Mad in herds

In his stories a craze sweeps a whole city at once, while doubt spreads a single person at a time.

Tulipomania

Rare tulips became a craze in 1630s Holland. Mackay lists a cartload of goods, from oxen to a silver cup, paid for one bulb, and tells of a sailor who ate a precious bulb, thinking it was an onion. Then the buyers vanished. Historians now think he exaggerated the ruin.

Fear spreads the same way

Mackay turns from greed to fear. In the witch trials of the 1500s and 1600s, people confessed under torture and named others, so each trial fed the next. In England, Matthew Hopkins gave himself the title Witchfinder General and toured the eastern counties hunting witches.

The alchemists' promise

For centuries alchemists promised kings and patrons the secret of turning base metal into gold. Mackay tells many of their stories, from sincere seekers who spent their lives at the furnace to tricksters like Edward Kelly, who worked alongside the Elizabethan scholar John Dee.

Lines worth underlining

  1. Herds

    A whole crowd can catch a craze at once, yet each person has to find their own way out of it.

  2. Mississippi

    John Law's Mississippi scheme made paper fortunes in France until the shares collapsed in 1720.

  3. South Sea

    In the South Sea Bubble, Londoners even bought shares in companies whose purpose was kept secret.

  4. Tulips

    In 1630s Holland, people traded land and savings for a single rare tulip bulb.

  5. Witch hunts

    The same madness drove the witch hunts, when crowds believed wild claims because others did.

A story from the book

The hunchback's desk

In 1719 Paris went wild for shares in John Law's Mississippi Company. Crowds packed the rue Quincampoix, and Mackay tells of a hunchback who made good money renting out his hump as a writing desk. By the end of 1720 the paper wealth had gone and Law had fled France.

Hot take · true or myth?

In 1720 a promoter raised money for a company whose purpose he kept secret.

See the book's answer

True. People paid deposits anyway, and the promoter vanished with them.

One thing to try

Ask the question the crowd skips

Next time a craze grips your group chat, whether a new coin or a miracle diet, write down one plain question nobody is asking. For Mackay's tulip buyers, it would have been what a bulb is worth if nobody else wants it. Then ask it out loud.

There's more to Extraordinary Popular Delusions and the Madness of Crowds

Knotd has the key ideas from 250+ non-fiction books, each in a few minutes, in plain words. Extraordinary Popular Delusions and the Madness of Crowds comes with a Hot Take round to make it stick.

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Questions about Extraordinary Popular Delusions and the Madness of Crowds

What is Extraordinary Popular Delusions and the Madness of Crowds about?

Why do crowds lose their heads? In 1841 the Scottish journalist Charles Mackay gathered history's great crazes, from tulip bulbs and paper fortunes to alchemists' gold, witch hunts and doomsday prophecies. His question is how whole nations fix on one idea, chase it to ruin, and only then wake up.

What are the key ideas in Extraordinary Popular Delusions and the Madness of Crowds?

Mad in herds; Tulipomania; Fear spreads the same way; The alchemists' promise.

What's one thing to try from Extraordinary Popular Delusions and the Madness of Crowds?

Next time a craze grips your group chat, whether a new coin or a miracle diet, write down one plain question nobody is asking. For Mackay's tulip buyers, it would have been what a bulb is worth if nobody else wants it. Then ask it out loud.

Is Extraordinary Popular Delusions and the Madness of Crowds on Knotd?

Yes. Knotd has the key ideas from Extraordinary Popular Delusions and the Madness of Crowds in a few minutes, in plain words, plus a Hot Take round to test them. It's one of 250+ non-fiction books in the app.

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