Economic Histories (tulips and other bubbles)

by racemize

I'm a big fan of reading various economic histories, particularly those related to bubbles that have occurred over time. However, recently, I've read many reports that the reports of the tulip bubble were quite over exaggerated. One of the books I read is Mackay's "Memoirs of Extraordinary Popular Delusions and the Madness of Crowds". So I have a few questions:

  1. is Mackay's reporting generally suspect (e.g., is it across all subjects or just tulips or)?

  2. Assuming 1) above is suspect, if anyone cares to comment on its inaccuracies, that would be nice.

  3. Are there any suggested books (ideally going over multiple periods, not just one) that are viewed as fairly accurate that I could read?

deVerence

Good questions. Unfortunately I don't have time to write an exhaustive answer right now, so I'll have to limit myself to some general observations and pointers.

Charles Mackay's book was originally published in 1841, and the current popular perception of the Dutch tulip mania stems largely from that one work. Its enduring popularity is largely due to Mackay's elegant prose and the sensationalist nature of the narrative.

Some degree of tulip mania certainly happened, although we don't really know enough about it to be able to conclude that it was indeed a full blown financial crash. The price and market data from 17th century Netherlands available to modern researchers is too lacking.

For his part Mackay based his account on those of earlier writers, which in turn based their analysis on suspect sources, most of whom can be traced back to 17th century anti-speculation texts. This in turn led Mackay (and the earlier writers) to overstate the scale and severity of the phenomenon. Mackay also added something of his own dramatic spin on the interpretation of these sources, further exacerbating the problem.

Anne Goldgar's Tulipmania : money, honor, and knowledge in the Dutch golden age from 2007 offers probably the best general overview of the historiography and current understanding of the Dutch tulip mania. It is eminently readable, and includes a thorough deconstruction of Mackay's arguments and sources. I highly recommend you pick it up if you have the chance.

For a more general overview of the history financial crises and bubbles you could take a look at Charles Kindleberger and Robert Aliber's Manias, Panics and Crashes: A History of Financial Crises. It doesn't discuss tulip mania in great detail, but is a commonly used introductory text in financial history.

edit: The most up to date version of the Kindleberger book is the 7th edition, first published in 2015.