In 1841, the journalist Charles Mackay published his smash bestseller Memoirs of Extraordinary Popular Delusions and the Madness of Crowds (the long title was a disappointment to the publisher, who had wanted to call it Sex Explosion: A Johnny Punchfist Mystery). In an influential chapter, Mackay wrote that the nation of Holland had once been overwhelmed by a craze for tulips, so that the “ordinary industry of the country was neglected, and the population … embarked in the tulip trade.”
Tulipmania grew to the point that rich men would spend half their fortune on a single flower and the whole country took to buying and selling tulip bulbs in the belief that the price would continue to rise forever. When the price dipped, everyone panicked and tried to sell their flower stockpile, causing the tulip market to collapse and tank the Dutch economy. “Men,” Mackay concluded, “think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”
via Wiki Commons
Of course, Mackay was a wild exaggerator and historians now agree that Tulipmania amounted to a passing craze for the flowers and a fairly ordinary dip in prices once the craze ended. There was no national hysteria and there’s no evidence anybody went bankrupt. The very idea of people sinking their entire fortunes on something as trivial as tulips seems downright silly once you think about it! Which brings us pretty neatly to Beanie Babies, the adorable stuffed toys that briefly drove everyone in the 1990s to madness.
The Birth Of The Beanie Baby Boom
The year was 1997, and McDonald’s was under siege from hordes of crazed fans (plus ça change, we guess). Weeping employees begged for a break as enraged crowds pressed against the counters, demanding 100 Happy Meals each, which we assume is roughly double the average order. In Ohio, one desperate store manager took to answering the phone with “McDonald’s, we only have the moose or the lamb.” No, it wasn’t the world’s worst beef shortage, it was just a special promotion offering a mini Beanie Baby as a Happy Meal toy. The company had foolishly blundered straight into Beanie Baby madness.
Beanie Babies had been invented less than a decade earlier by a guy called Ty Warner, who had become a successful toy salesman by the simple ruse of turning up to meetings in a purple Rolls-Royce, wearing a fur coat and holding a gold-topped cane. The toy store owners he was pitching were so surprised to be confronted by some kind of plushie pimp that they inevitably agreed to carry his products. However, the toy company eventually fired Warner after discovering he was secretly making his own stuffed animals and selling them on the side. Warner responded to this setback in the healthiest way possible (flying to Italy and spending three years drinking on a beach) before returning to launch Beanie Babies from the kitchen table of his condo.
Warner had two strokes of genius. The first was stuffing his toys with a small amount of plastic pellets. At the time, most stuffed animals were so crammed full of foam that you could club an orca unconscious with them. So kids went nuts for Ty Inc.’s Beanies, which were considered soft and huggable in contrast (orca attacks presumably skyrocketed). By 1992, Beanies had become a decent success, turning over a few million in sales a year. And that’s when Warner found his second big idea. While attending an industry trade show, Warner heard about a garden gnome maker who occasionally “retired” certain designs in order to drive up demand from gnome-maniacs. Or is “gnome enthusiasts” preferred? Sorry, we’re not familiar with the gnomenclature.
Warner decided to try this strategy in the toy market, creating artificial scarcity by “retiring” certain Beanie lines whenever he felt like it. Parents quickly proved willing to pay $10 or $15 for a retired $5 Beanie that their child just had to have. In the mid-’90s, a couple of retired Chicago school teachers launched a small business buying and selling rare Beanies. And then things went crazy.