Some 1840s Insight into the Housing Bubble and Credit Economy

posted by Curt, on February 18, 2008 10:28 am

When I've had a spare moment lately, I've been reading a book on the history of financial speculation titled The Devil Take the Hindmost. It starts with the Tulip Mania in seventeenth century Holland, and talks about all the major speculative events up to the dot com bubble of the 1990s. I just finished reading about the railway speculation in 1840s England. I found some quotes from newspapers of the time that I thought pretty accurately described the economic attitudes of the last few years. Here are some of them:

There is not a single dabbler in scrip who does not steadfastly believe--first, that a crash sooner or later is inevitable; and secondly, that he himself will escape it. When the luck turns, and the crack play is sauve qui peut, or devil take the hindmost, no one fancies that the last mail train from Panic station will leave him behind. In this, as in other respects, "Men deem all men mortal but themselves."

And another:

It is only the play of children, trying to lift one another in the air at the same time . . . It is the simpler part of the public which is deceived.

One of the other things that was interesting about the chapter on railway speculation was that the author noted that it took "nearly two years for the full impact of the

And finally, ending with a quotation from none other than Bill Gates:

Gold rushes tend to encourage impetuous investments. A few will pay off, but when the frenzy is behind us, we will look back increduously at the weckage of failed ventures and wonder, "Who funded those companies? What was going on in their minds? Was that just mania at work?"

That seems to be just what people are saying right now.

Anyway, for anyone interested, I recommend Devil Take the Hindmost. If you have the inclination, buy it from Amazon. As always, if you use the link below, I get a referral fee

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