(FORTUNE Magazine) – Devil Take the Hindmost by Edward Chancellor Farrar Straus & Giroux, 368 pages

Times of financial nuttiness are good to publishers of books about financial nuttiness past. All it takes is a stock market boom or bust to bring out reprints of Charles Mackay's Extraordinary Popular Delusions and the Madness of Crowds, John Kenneth Galbraith's The Great Crash, 1929, and Charles Kindleberger's Manias, Panics, and Crashes--to name three oft-republished titles.

The problem for a reader curious about how the current mania compares with past episodes is that none of these books entirely satisfies. Mackay's Popular Delusions is brilliant, but it's also more than 150 years old and deals with financial matters in only the first three of its 16 chapters. Galbraith's Great Crash is readable and witty, but it recounts just one episode of financial madness and doesn't add much to the understanding of it. Former MIT economist Kindleberger's book comes closest to filling the bill, but it can be a tough, confusing slog.

With that in mind, Edward Chancellor's Devil Take the Hindmost: A History of Financial Speculation is a welcome addition. Chancellor, a financial journalist and former Lazard Freres banker, takes the reader by the hand through the great financial frenzies of the past, from the 17th-century Dutch tulipomania through the 19th-century railway boom to the 1980s Japanese "bubaru economy." It's the greatest hits of financial silliness, recounted coherently and at times even gracefully. It's not anything more than that, but we'll take what we can get.

Chancellor's description of England's South Sea bubble, which burst in 1720, may be the best short history available of that strange episode. A mundane scheme to privatize government debt was transformed via financial engineering, political corruption, and credulity into the first great stock market boom (and bust). Chancellor does a fine job of capturing the atmosphere of the times--relying on contemporary accounts by the likes of journalist-novelist Daniel Defoe and poet-speculator Alexander Pope--while making sure storytelling doesn't get in the way of the truth. He debunks the greatest of the South Sea-era legends, that a company was floated "for carrying on an undertaking of great advantage but no one to know what it is," as the work of an 18th-century satirist.

The book's title is from the South Sea days; it's an expression of the idea later called the "greater fool" theory, or in the 1990s, "momentum investing"--that whatever the intrinsic value of a security or other asset, it's a good buy because some fool will take it off your hands for a higher price. Such thinking always brings trouble, and Chancellor's accounts of past booms and their demises lead one to view the market boom of the past few years with new (or renewed) skepticism. Occasionally Chancellor seems on the verge of saying something more, as when he differentiates between the speculative nuttiness of tulipomania and the more reality-based fervors for railroad or radio or Internet stocks, but his attempts at broader analysis in the end add up to little more than: Sometimes speculation is good; sometimes speculation is bad. You knew that. But you probably didn't know about Sir Gregor Macgregor, who set himself up in 1821 as the Cacique of Poyais, an imaginary nation bordering Nicaragua, and sold [pound]600,000 in Poyaisian bonds on the London markets during the first emerging-markets boom. If he and his ilk interest you, Chancellor's book is worth picking up.

--Justin Fox