Appendix 1
The Tulipmania in the Popular and Economics Literature
Chroniclers of the tulip speculation, and modern writers who cite it, take for granted that it was a mania, selecting and organizing the evidence to emphasize the irrationality of the market outcome. In the twentieth century, a strong intellectual influence on participants and observers of the financial markets has been exerted by Mackay’s version of the tulipmania, although he devoted only seven pages of text to it. Bernard Baruch wrote an introduction to Mackay’s book, whose reprinting he had encouraged, emphasizing the importance of crowd psychology in all economic movements. Dreman (1977), who also stresses psychological forces in asset price determination, uses the tulipmania as a prototype of market mania. Relating the same anecdotes as Mackay, Dreman employs the tulipmania as a constant metaphor in discussions of succeeding major speculative collapses. He states (52): If, for example, my neighbor tried to sell me a tulip bulb for $5,000, I’d simply laugh at him. . . . The tulip craze, like the
