Finance
by Edward Chancellor
Why do manias keep coming back?
The title comes from an old saying, 'every man for himself, and the devil take the hindmost'. Edward Chancellor follows speculators from ancient Rome to 1990s Wall Street, asking why each generation of buyers is sure it will get out before the fall.
Hear a sample · read by Laura
Chancellor finds speculators in the Roman Republic, trading shares in the companies that collected Rome's taxes. Then come Dutch tulip dealers in the 1630s and London's stockjobbers in the 1690s. The things traded change from age to age. The way crowds behave around them hardly does.
Most manias arrive with a story about why the old rules no longer apply. In the 1840s, railways were going to transform Britain. In 1920s America, people spoke of a New Era of radio and mass production. The technology was often real. The prices paid for it were the problem.
Chancellor puts borrowed money near the centre of most manias. John Law printed paper money that fed the rush for his Mississippi shares in Paris. Brokers lent freely against shares in 1920s New York. Japanese banks lent against soaring land in the 1980s. While borrowing is easy, prices keep climbing.
Busts bring a hunt for villains. After 1720, Parliament investigated the South Sea directors and seized much of their wealth. After 1929 came hearings and new laws for Wall Street. Then memories fade, and a new generation speculates again.
Old as markets
Speculation is as old as markets. The same greed and fear drove Dutch tulip buyers in the 1630s.
South Sea
In 1720 South Sea Company shares soared on promises of trade, then crashed and ruined many investors.
Railways
Exciting new technology, like Britain's railways in the 1840s, often sets off a buying frenzy.
Easy money
Bubbles grow fastest when borrowing is cheap and easy.
Japan
In Japan's 1980s bubble, land and share prices soared to absurd heights, then fell for years.
A story from the book
In 1720 the South Sea Company swapped its own shares for a large slice of Britain's national debt. Its directors handed stock to ministers and lent investors money to buy more. The shares soared through spring and early summer, then crashed in the autumn.
One thing to try
Pick something your friends are excited to own right now. Write down why it's supposedly different this time, and where the money to buy it is coming from. In Chancellor's history, a new-era story and easy credit turn up in mania after mania.
Knotd has the key ideas from 250+ non-fiction books, each in a few minutes, in plain words. Devil Take the Hindmost comes with a Spot the Trap case to make it stick.
Get the whole book on KnotdOpen in the appWhy do manias keep coming back? The title comes from an old saying, 'every man for himself, and the devil take the hindmost'. Edward Chancellor follows speculators from ancient Rome to 1990s Wall Street, asking why each generation of buyers is sure it will get out before the fall.
Older than the stock exchange; This time is different; Easy money feeds the fire; After the crash, the backlash.
Pick something your friends are excited to own right now. Write down why it's supposedly different this time, and where the money to buy it is coming from. In Chancellor's history, a new-era story and easy credit turn up in mania after mania.
Yes. Knotd has the key ideas from Devil Take the Hindmost in a few minutes, in plain words, plus a Spot the Trap case to test them. It's one of 250+ non-fiction books in the app.
A Random Walk Down Wall StreetBurton G. MalkielIn a mania, people buy to sell on, and value stops mattering.