Confusion of Confusions (1688)

The last time I found a book explaining the workings of a stock exchange was literally called The Work of the Stock Exchange, describing the New York Stock Exchange in 1922. Confusion of Confusions is a bit older. 234 years older. Published in 1688, describing the Amsterdam Stock Exchange.

One might assume that the first-ever stock exchange back in the 17th Century would be lacking most of the tools of the world’s largest stock exchange at the start of the 20th Century. That would be an incorrect assumption.

Confusion of Confusions is written as a series of dialogs between a stock trader and a philosopher. That seems an odd choice for an economics history, but many of Plato’s writings are in the form of dialogs too. That was not an extraordinary literary form. It also might seem odd that the book was written in Spanish, not Dutch, but the Spanish and Portuguese Inquisitions caused a mass migration to the Netherlands, including quite a lot of merchants. I read an English translation.

What was most striking of the stories as told by this fictitious stock trader is how sophisticated the stock exchange already was in 1688. There were already “bulls” and “bears” (terms used in the English translation, but from the original los amantes (the lovers) and los de la liga (those in the league/conspiracy). The bears were trading short and using techniques still used today to try and drive down prices, while the bulls were already trying to squeeze the shorts to drive prices higher. Most surprisingly, there were already call and put options along with forwards. And there was some form of fractional trading too, although those details seem to be lost to history.

If too you have a love of stock exchanges, it’s worth the $0.99 price for a quick Kindle read. If you’d prefer a first edition, Southey’s auctioned a copy in 2018 for $375,000.

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