Here is a brief excerpt from the first chapter of a book, Devil Take the Hindmost: A History of Financial Speculation, that was published in 1999 by Farrar, Straus, and Giroux. Its author, Edward Chancellor, makes a valuable contribution to our understanding of the current global recession, depression, reset, etc.
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“And when dreams deceive our wandering eyes in the heavy slumber of night, and under the spade the earth yields gold to the light of day: our greedy hands finger the spoil and snatch at the treasure, sweat too runs down our face, and a deep fear grips our heart that maybe someone will shake out our laden bosom, where he knows the gold is hid: soon, when these pleasures flee from the brain they mocked, and the true shape of things comes back, our mind is eager for what is lost, and moves with all its force among the shadows of the past….”
Satyricon of Petronius Arbiter, circa A.D. 50
The propensity to barter and exchange is an innate human characteristic. An inclination to divine the future is another deeply ingrained trait. Together they comprise the act of financial speculation. “All life is speculation,” declared the celebrated nineteenth-century American trader James R. Keene, “the spirit of speculation is born with men.” For the earliest known historical cases of speculation we must turn to ancient Rome during the Republic of the second century B.C. By this date, the Roman financial system had developed many of the characteristics of modern capitalism: markets flourished because Roman law allowed the free transfer of property, money was lent out at interest, money changers dealt in foreign currencies, and payments across the Roman territories could be made by bankers’ draft. Capital concentrated in Rome, as it later did in Amsterdam, London, and New York. The idea of credit had also developed, along with a primitive form of insurance for ships and other forms of property. The people of Rome exhibited a passion for the accumulation of wealth, matched by an extravagance in its display and consumption. Gaming was common.
In Latin, the word speculator describes a sentry whose job it was to “look out” (speculare) for trouble. The financial speculator in ancient Rome, however, was called quaestor, which means a seeker. Collectively, speculators were sometimes referred to as Graeci or Greeks. Their meeting place was the Forum, near the Temple of Castor, where “crowds of men bought and sold shares and bonds of tax-farming companies, various goods for cash and on credit, farms and estates in Italy and in the provinces, houses and shops in Rome and elsewhere, ships and storehouses, slaves and cattle.” The Roman comic playwright Plautus describes the Forum as peopled with whores, shopkeepers, moneylenders, and wealthy men. He identifies specifically two unsavoury groups; the first lot he describes as “mere puffers” and the second as “impudent, talkative, and malevolent fellows, who boldly, without reason, utter calumnies about one another.” In this description, we find the originals of the bulls and bears of later stock markets.
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To read my review of Devil Take the Hindmost, please click here.
Edward Chancellor is a member of GMO’s asset allocation team and focuses on capital market research. (GMO is a global investment management firm, with offices in North America, Europe, and Asia.) Chancellor has worked as a financial commentator and consultant and has written for the Wall Street Journal, New York Times, Financial Times, and Institutional Investor, among others. He is the recipient of the 2007 George Polk Award for financial journalism. Mr. Chancellor is the author of several books including Crunch Time for Credit (2005) and Devil Take the Hindmost: A History of Financial Speculation (1999), a New York Times “Notable Book of the Year.” Prior to joining GMO, he worked as deputy U.S. editor for Breakingviews.com in New York and for Lazard Brothers. Mr. Chancellor earned his B.A. in history from Trinity College and his Masters of Philosophy in Modern History from Oxford University.