A comprehensive history of speculation would be a daunting task, whose final page would never be written, writes Edward Chancellor.
Instead, this lively book concentrates on speculation highlights, as it were, from the Dutch Republic in the 17th century to Japan in the 1980s.
Speculation goes back to Rome in the second century BC, when the financial system featured many of the characteristics of modern capitalism. But in medieval Europe the Aristotelian notion of a "just price" was revived, following St Thomas Aquinas who said it was unlawful to "sell dearer or buy cheaper than a thing is worth". When politicians condemn the activities of speculators, Chancellor writes, they perpetuate, unconsciously, the scholastic prejudices of medieval monks.
A Dutch engraving, published after the Tulip Mania of the 1630s ended, shows tulip dealers haggling inside a giant fool's coxcomb (jester's cap with bells). During the US bull market of the 1990s the most popular online investment forum was the Motley Fool - its young creators wore coxcombs in public as they proposed their "foolery" as a path to stock market riches instead of the "wisdom" of Wall Street.
Devil Takes The Hindmost weaves anecdote and legend with recent events such as hedge-fund mania and "kamikaze capitalism", succeeding in the difficult task of being both entertaining and informative.
Winston Churchill described traders in New York on Black Thursday in 1929 as "walking to and fro like a slow-motion picture of a disturbed ant-heap". On the following Monday the Dow Jones Industrial Average fell 38 points to 260, its largest recorded percentage fall. Black Tuesday, October 29th, 1929, was known as the "day of the millionaires' slaughter".
When John D. Rockefeller Senior announced he and his son were going to buy "sound stocks", a Broadway comedian, himself down $1 million, asked who else had any money left. Hotel clerks were reported to have asked new arrivals whether they had come to sleep or to jump.
Writer F. Scott Fitzgerald said the Jazz Age had leapt to a spectacular death.
The big question facing politicians and central bankers is how to achieve stability without impeding the flexibility needed for growth. Speculation demands restraints, Chancellor writes, but inevitably breaks its chains. The economic pendulum swings between liberty and constraint.
jmulqueen@irish-times.ie
