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. An inclination to divine the future is another deeply ingrained trait. Together they comprise the act of financial speculation. Keene, "the spirit of speculation is born with men. The idea of credit had also developed, along with a primitive form of insurance for ships and other forms of property.
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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.
An inclination to divine the future is another deeply ingrained trait. Together they comprise the act of financial speculation. Keene, "the spirit of speculation is born with men. 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.
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. The Roman state contracted out many of its functions, from tax collecting to temple building, to societies of capitalists, known as publicani. Like modern joint-stock companies, the publicani were legal bodies independent of their members whose ownership was divided into partes, or shares.
They had executive managements, produced public accounts tabulae , and held occasional meetings of shareholders. Many were considerable concerns, employing tens of thousands of slaves.
Shares came in two sorts: larger executive shareholdings of the great capitalists, known as socii, and smaller shares, called particulae. The manner of dealing in unregistered particulae shares was informal, resembling the modern over-the-counter stock markets. The publicani maintained a system of couriers throughout the Roman territories in order to gather information, enabling them to calculate how much to bid for contracts at auction and how much shares in going concerns were worth.
No evidence remains of the prices for which partes sold, and there are no descriptions of stock market behaviour. We do know, however, that shares fluctuated in value. When the Roman consul Vatinius was accused of corruption he was asked: "Did you extort shares, which were at their dearest at the time Shares in the publicani did not attract only politicians and large capitalists. Polybius, the Greek chronicler, describes a widespread popular interest in share ownership: "All over Italy," he writes, "an immense number of contracts, far too numerous to specify, are awarded by the censors for the construction and repair of public buildings, and besides for the collection of revenues from navigable rivers, harbours, gardens, mines, lands—in a word every transaction which comes under the control of the Roman government is farmed out to contractors.
All these activities are carried on by the people, and there is scarcely a soul, one might say, who does not have some interest in these contracts and the profits which are derived from them" my italics.
Describing the last years of the Republic, Petronius Arbiter wrote that "filthy usury and the handling of money had caught the common people in a double whirlpool, and destroyed them The Roman publicani withered under the Empire, but speculation in property, commodities, and currencies continued. After fiduciary money—i. The city council of Mylasa in Caria in modern-day Turkey complained that as a result of the speculative hoarding of specie, "the very security of the city is shaken by the malice and villainy of a few people, who assail and rob the community.
Through them speculation in exchange has entered our marketplace and prevents the city from securing a supply of the necessities of life, so that many of the citizens and indeed the community as a whole, suffer from scarcity.
The feudal system dispensed with many financial transactions of the Roman world, replacing cash dealings with payments in kind. Medieval schoolmen revived the Aristotelian notion of a "just price," following the teaching of St.
Thomas Aquinas, who declared that it was unjust and unlawful to "sell dearer or buy cheaper than a thing is worth. The pursuit of profit was viewed as both morally corrupting and dangerous to the commonwealth. Augustine considered the unlimited lust for gain, appetitus divitarum infinitus, as one of the three principal sins, alongside the craving for power and sexual lasciviousness. In his City of God, there was no place for the speculator.
When famine threatened, the medieval state intervened to supply food, and speculative hoarding was made illegal. These strictures against profiteering and speculation continue to resonate down the ages.
When contemporary politicians rise to condemn the pernicious actions of speculators, they perpetuate unconsciously the Scholastic prejudices of medieval monks.
In the later Middle Ages, several Italian city-states began issuing marketable government securities. In Venice, government securities were traded from the middle of the thirteenth century at the Rialto. Speculation seems to have taken its normal course: In , a law was introduced against rumours intended to sink the price of government funds; in , , and , there were repeated attempts to prevent the sale of government obligations on deferred terms i.
The Italian city-states farmed out the collection of taxes to monti, companies whose capital was divided into tradable shares luoghi. These early joint-stock companies appear strikingly similar to the Roman publicani. The great fairs of Northern Europe, which had their origins in the fora and Bacchanalia of ancient Rome, enjoyed exemption from many of the medieval restrictions on trade and finance.
They became, in effect, prototype stock markets. At the Leipzig fairs, shares in German mines changed hands in the fifteenth century; at the St. Antwerp, with its two lengthy annual fairs in spring and autumn and yearlong permission of free trade, was described as a "continuous fair.
From the middle of the sixteenth century, there is more detailed evidence of speculative market conditions. The financial markets had developed a collective notion of credit the so-called ditta di borsa and bond prices reflected an anticipation of future events such as defaults.
Market manipulation appeared in the s, when a syndicate organised by the Florentine Gaspar Ducci led an attempt to suppress prices in the Lyons market what we would now call a "bear raid".
In the middle of the s there suddenly appeared in the markets of Antwerp and Lyons a speculative enthusiasm for royal loans, which came to an abrupt end when King Henry II of France suspended payments on his debts in On an individual level, we find an Antwerp commodity trader, Christoph Kurz, puzzling at the periodic tightness and ease strettezza and largezza of money in the market.
He believed that future prices were divinely ordained and discoverable through astrological observation. People bought when prices were at their highest, because "the upper influences so blind the natural reason with affections or desires.
The development of the capital markets in France and Flanders was interrupted in the second half of the sixteenth century by the Wars of Religion and the Revolt of the Netherlands and a succession of state bankruptcies.
After , Lyons went into decay as a financial centre. The sack of Antwerp by Spanish troops in led to the permanent decline of its bourse. Amsterdam benefited at the expense of Antwerp, as thousands of Protestant and Jewish refugees fled the Spanish, bringing capital and trading skills to the Netherlands.
The stimulus provided by these immigrants has led historians to refer to the Dutch "economic miracle" of the s. By the early seventeenth century, the Dutch Republic was the most advanced and thriving economy in Europe. Although the Dutch did not invent the institutions and practices of financial capitalism such as banking, double-entry bookkeeping, joint-stock companies, bills of exchange, and stock markets, they brought together and established them on a secure basis in a mercantile economy organised around a highly evolved profit motive.
In , the United East India Company, the first joint-stock company to receive an official government charter, was established with a monopoly on Eastern trade. Nineteen years later, the Dutch West India Company was founded to exploit commercial opportunities in the Americas. Highly conservative in its operations, the Wisselbank paid no interest on deposits, issued notes only against its gold holdings, and made no loans. Yet its existence allowed Dutch merchants across the globe to settle their accounts bills in a universally accepted currency.
The Dutch city authorities raised funds through bond issues and lotteries which attracted great popular interest. By the early seventeenth century, capital from across Europe was invested in a variety of Dutch financial assets, from property to annuities, municipal bonds, bills of exchange, and medium-term loans.
All manner of financial products and services were traded on the Amsterdam Exchange a New Exchange was founded in : "commodities, current exchange, shareholdings, maritime insurance Futures contracts—agreements to deliver or take delivery of a commodity at a fixed price some date in the future—were common.
Since the previous century, futures had been traded in a variety of commodities, including grain, herring, spices, whale oil, sugar, copper, saltpetre, and Italian silks. In the early seventeenth century, they became available in the actions shares of the East India Company. Speculators could also take out loans on shares at up to four-fifths of their market value what Americans later called "margin loans".
Stock options—which gave the buyer the right, but unlike the futures contract not the obligation, to buy or sell shares at a fixed price during the contract period—were also traded on the Exchange. Later in the century, ducaton shares in the East India Company were introduced; valued at a tenth of the highly priced ordinary shares, they enabled less wealthy speculators to play the market.
Futures, options, and ducaton shares are all examples of what we call derivatives, namely financial contracts which derive their value from an underlying asset, such as a share. Together with stock loans, they created the opportunity for financial leverage, so that small rises in share prices brought larger percentage gains to speculators with small price declines producing the opposite effect.
Devil Take the Hindmost: A History of Financial Speculation
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Devil Take the Hindmost
EDWARD CHANCELLOR DEVIL TAKE THE HINDMOST PDF