SPECULATION

A mostly chronological history of a slippery financial concept combined with something akin to a lengthy law review article.

Banner (Law/UCLA; The Baseball Trust: A History of Baseball's Antitrust Exemption, 2013, etc.) exhibits his fascination with “a dilemma that has troubled the legal system for a long time”—the idea of speculation, which “lies somewhere between investment and gambling,” possessing “attributes of both.” From the opening of the book, the author cites common sense, conventional business wisdom, Congressional legislation, and court rulings in an effort to distinguish “the good risky transactions from the bad.” Although the narrative involves sometimes-dense financial and legal concepts, Banner negotiates the jargon with clear prose and compelling anecdotes. He opens with a controversy dating to the American Civil War, when the buying power of the paper currency issued by the Union began to slip, perhaps because of the unpatriotic, greedy speculators blamed by President Abraham Lincoln, Secretary of the Treasury Salmon Chase, and other officials. As stock markets developed increasingly complicated products, debates about the boundary between good speculation and harmful gambling increasingly focused on the New York Stock Exchange and the Chicago Board of Trade. The market crash of 1929, which precipitated the Great Depression, led to sweeping legislation but could not alter human behavior. As a result, the line between positive and risky investment remains blurred. Unfortunately, this blurring gives Banner's treatise an unfortunate on-the-one-hand/on-the-other-hand cast. The author brings the history up to date by discussing the roles of financial speculation in the 2008 financial crisis; he proposes that although the vast level of speculation did not cause the meltdown, it did contribute to its size.

A somewhat narrowly focused book that will not likely appeal to a broad swath of readers but will repay those who invest their undivided attention.