What the poet, playboy and prophet of bubbles can still teach us

One winter morning in early 1637, a sailor presented himself at the counting-house of a wealthy Dutch merchant and was offered a hearty breakfast of fine red herring. The sailor noticed an onion lying on the counter. “Thinking it, no doubt, very much out of its place among silks and velvets, he slily seized an opportunity and slipped it into his pocket, as a relish for his herring,” according to a Scottish writer telling the tale two centuries later. “He got clear off with his prize and proceeded to the quay to eat his breakfast.”

The Scottish writer was Charles Mackay and the story is recounted in his book, Extraordinary ­Popular Delusions and the Madness of Crowds. It’s one of very few works of economic history to have been an enduring bestseller, from its first publication in 1841 through to the 21st century, thanks, largely, to its vivid storytelling. Mackay debunked everything from alchemy and crusades to haunted houses and religious cults. But it was the three chapters on economic bubbles that made him the enduring guru of the phenomenon, cited to this day.