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The Ascent of Money: A Financial History of the World

November 1st, 2010

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Book Overview:

A richly original look at the origins of money and how it makes the world go 'roundNiall Ferguson follows the money to tell the human story behind the evolution of our financial system, from its genesis in ancient Mesopotamia to the latest upheavals on what he calls Planet Finance. What's more, Ferguson reveals financial history as the essential backstory behind all history, arguing that the evolution of credit and debt was as important as any technological innovation in the rise of civilization. As Ferguson traces the crisis from ancient Egypt's Memphis to today's Chongqing, he offers bold and compelling new insights into the rise- and fall-of not just money but Western power as well.

Book Review

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out of 5 based on 0 ratings. 12796 user reviews
History Books A richly original look at the origins of money and how it makes the world go 'roundNiall Ferguson follows the money to tell the human story behind the evolution of our financial system, from its genesis in ancient Mesopotamia to the latest upheavals on what he calls Planet Finance. What's more, Ferguson reveals financial history as the essential backstory behind all history, arguing that the evolution of credit and debt was as important as any technological innovation in the rise of civilization. As Ferguson traces the crisis from ancient Egypt's Memphis to today's Chongqing, he offers bold and compelling new insights into the rise- and fall-of not just money but Western power as well.

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  1. Sirin
    November 2nd, 2010 at 08:13 | #1


    Angry about the bankers going bust? Ferguson starts from this premise to educate the reader into the history behind how international finance got to its current position. Beginning with loan tablets in ancient Mesopotamia, Ferguson traces the origins of government lending, the stock market, the bond market, the mysteries of quants, and a fascinating final chapter on how China and America have up to now been in a symbiotic relationsip with Chinese goods funding American avarice, but this may not be for much longer.

    Ferguson’s books have been getting bigger and more ambitious the more famous as he has become. With this comes a necessary amount of reductive argument, lurching from Glasgow loan sharks, to Potosi silver mines, to the reckless Scotsman John Law who set up a French state bank in the 18th Century which ended up ruining its investors. This is probably because, like all Ferguson’s recent books, it is a TV tie in.

    Ferguson is also very much in favour of globalisation and international finance. He plugs the book in the introduction as a teaching tool for those who are sceptical or shaky of the systems that drive money around the world. Wise up, or be a loser is his essential message. This book was finished just before the great bank collapse, and as a result doesn’t have much to say on the current crisis.

    This kind of chest thumping history is clearly very lucrative for Ferguson, but after his brilliant early books on the Rothschilds and the First World War, one can’t help thinking with his mid career media don posing, he has acted a bit like the hedge fund managers such as Ken Griffin he idolises in this book who gained great wealth at the expense of something more solid, decent and lasting.

  2. Brian Brockmeyer
    November 3rd, 2010 at 10:18 | #2


    Niall Ferguson’s THE ASCENT OF MONEY, as its subtitle promises, is a broad overview of financial history, from the dawn of the first form of currency in Ancient Mesopotamia to the proliferation of complex residential asset-backed securities early in the twenty-first century. In six chapters, Ferguson traces the genesis and evolution of the pillars of modern finance: currency, bonds, corporate stock, insurance, and real estate. A final chapter focuses on the US and China’s symbiotic debtor-creditor relationship, and an afterword discusses the current global recession and includes a somewhat strained evolutionary analogy comparing financial development to natural selection.

    The objective here is to illuminate the modern economic system by surveying its historical origins, and to a large extent, Ferguson succeeds. The book is targeted to a lay audience and such readers are certain to walk away from a reading with an enhanced understanding of modern economics. The author generally takes the time to explain even elementary concepts in an effective manner, but there are also several maddening instances throughout where he casually references somewhat arcane metrics and complex ideas (e.g., VaR) without any explanation as to their meaning and significance. In this respect, Ferguson can be at times simultaneously too basic for the advanced reader and too complex for the novice.

    Never dry reading, the narrative flows freely over its 358 pages, with perhaps the most interesting and edifying chapters being those on the bond, equity, and real estate markets. I especially enjoyed Ferguson’s exploration of the five stages of “bubble” (displacement, euphoria, mania, distress, and revulsion).

    Ultimately, though, the book will be of most benefit to those with a casual interest in economics, as it is entirely descriptive and not prescriptive. Ferguson never really offers anything resembling a thesis, nor does he reveal his own views except for the most fleeting of moments when singing the virtues of late-19th/early-20th century imperialism. He is focused exclusively on reporting, not analyzing. As such, THE ASCENT OF MONEY, though well-written, does not transcend its status as a historical chronicle and will be of trivial value to those seeking a sophisticated economic treatise.

  3. James S. Henry
    November 3rd, 2010 at 14:11 | #3


    In these hard times, we really could use an up-to-date, thoughtful reappraisal of the history of finance and the role it has played in advancing and periodically severely retarding economic and political development around the world.

    Unfortunately this is not it.

    Prof. Ferguson, who divides his time between Harvard and Oxford, has become the “James Michener” of world history. He writes effusively on everything from “Britain’s contributions to civilization” and “warfare in the 20th century” to “the Rothschilds.” Having dipped into several of his long-winded tomes, I can honestly say that the game has seldom been worth the candle.

    And now this. Here a documentary project for Channel 13 evidently drove this “Ascent” book project, with predictable consequences — jump cuts from subject to subject that leave readers almost sea-sick; topic choices that seem to have been made for video potential and notoriety, not objective importance; “mile wide, inch deep” scholarship that yields a very large pile of half-truths and incomplete thoughts.

    I did like his chapter on housing finance, though it raised many more questions than it answered, and seemed to suggest that ignorant residential borrowers had more to do with the current debacle than, say, trillions in derivatives issued by Wall Street banks and insured by outfits like AIG.

    Clearly the faults are not for want of ability. Where Prof. Ferguson actually gets up out of the armchair and does some first-hand research, as in his treatment of the Rothschilds, we get a few moments of serious, original scholarship.

    Beyond that, and a few colorful tales, the book amounts to coffee table nostrums for readers who want to be reassured that the “wall is not coming down” on our Capitalist Empire.

    Among Prof. Ferguson’s comforting conclusions: (1) finance capitalism really is the best of all possible worlds, at least in the long run; (2) hedge funds and global banks really are wonderful new instruments for “guarding against risk”; (3) “financial innovation” really is “indispensable” — despite all the innovation in REGULATION that this wizardry seems to constantly requires; and (4) “poverty” is NEVER “caused by” financial innovation — a conclusion that Ferguson repeats over and over, never with any evidence. (This one may come as a surprise to the 2 billion citizens of low-income countries outside China and India whose incomes utterly failed to grow from the late 1970s to 2000 because of “Third World sub-prime loans.”

    The book also contains any number of factual errors. The dollar has strengthened, not declined, during current financial crisis. China and other Asian countries have hardly “decoupled;” quite the reverse. Chile’s 17-year flirtation with fascism under the corrupt, bloodthirsty Pinochet regime was a horribly costly mistake, not some interesting little experiment with privatized pension funds. China’s economic backwardness in the 19th was not due to a shortage of financial institutions (which are not an “uncaused cause” of anything) but to — as Ferguson, contra ipsum, seems to acknowledge — the impact of Western imperialism on China’s weak state; Ken Griffin’s Citadel hedge fund is hardly a work of genius, but a monumental failure; etc. etc. etc.

    In short, this is a dumbed down, pollyanish, made-for-TV “hasty pudding” of a book. Its success – like the mortgage debacle itself – is based largely on hype and the “impeccable reputation” of its principle “securitizer.”

    We need to remember two golden rules of book selection — (1) always be suspicious whenever a film project leads to a book, rather than the reverse; and (2) always be suspicious of any book whose title is printed in a smaller font than that of the author’s own name.

  4. Collin Olson
    November 4th, 2010 at 09:01 | #4


    Like many other reviewers, I purchased this book after hearing an interview (OnPoint). I was expecting a book that was much more concise and consistent. Instead, _The Ascent of Money_ is rambling and all over the place. It seems rather obvious, especially in the chapter on bonds and the Rothschilds, that Ferguson was simply recycling material. Nevertheless, the first 3/4 of the book was still interesting and helpful, and Ferguson’s digressions often help to add spice to a topic that might otherwise be dry. I would still recommend reading this book, especially if your knowledge of economic history is minimal (I’d first suggest reading _Naked Economics_ by Charles Wheelan).

  5. Ronald Davis
    November 4th, 2010 at 20:19 | #5


    The author is a professional historian. However, he seems to have decided it is more profitable to be a pundit. As others have remarked, the historical presentation is more anecdotal than comprehensive. Sadly, the author has elected to cherry pick his history to make his points rather than tailoring his notions to fit history.

    Ferguson seems to think the Chicago school thinking on economics is, in some sense, definitive. One would expect a historian to actually look at the history of outcomes where Chicago school theories have been applied. Applications range across South America and to Russia, across the 1970s into the 1990s. One might reasonably expect, were the theories sound, all successes or at least mostly successes. Instead, the failure rate is 100%. Interestingly enough, Anna Schwartz spoke in public recently. (The Chicago school is, allegedly, founded on the Schwartz-Friedman tome “Monetary History of the United States.”) She very circumspectly implied disagreement with the theories of that school other than the very narrow area of the book itself. It was almost if one were speaking with a constitutional conservative now sitting on the Supreme Court. Yes, at 93 she is still alive, well, working at the NBER and still sharp as a tack.

    Then Ferguson misanalyzes both the LTCM implosion and the sub-prime mortgage disaster. Evidently the author knows little about the Black-Scholes-Merton theory, its reliance on the Central Limit Theorem and the limitations of the CLT in the real world. The short version of that is, when you most need protections provided by the CLT is the precise time when the precursor conditions break down, making the CLT no longer applicable. Add ever shrinking profit per trade, resulting from other players analyzing the nature of what LTCM was doing, followed up by the desire to keep making very high rates of return which implied ever increasing leverage and you have the witches brew that was the LTCM situation before the Baht collapsed. The collapse of the Baht triggered a domino effect which meant the CLT no longer applied. Vastly excessive leverage meant LTCM had less than no chance to weather the storm. This critical truth is left out of the author’s analysis.

    In the banking and financial sector, certain key facts were also notable by their absence. Imagine writing an insurance policy in which the following are true: 1. you have no idea how often the event which will trigger payment will occur; 2. you have agreed to pay out 100% of the face value of this policy even if the losses are less than 1% (but greater than zero); 3. you decide to write such policies for more than the total net worth of your company. Can you say, “AIG?”

    Bankers saw AIG make huge profits, so decided to sell their own wholly opaque, unregulated derivatives, CDOs, CDSs and all the rest. Were it not of such disastrous proportions, the situation might have been amusing in its irony. A bunch of supposedly prudent bankers engaged in trading instruments the value of which was intentionally made indeterminate and, arguably, indeterminable, to one another on a scale far beyond the national debt and the GDP combined.

    The irony occurred when these same bankers then appeared before congress and claimed that rocket science was required to value said derivatives which they themselves had intentionally made to have uncertain value.

    All this and much, much more was swept under the rug by Ferguson. I expected a far better book of considerably more accuracy and analytic care than this.

  6. Nathaniel Ritchison
    November 7th, 2010 at 03:34 | #6


    Ferguson has written a “must-read” book for anyone who enjoys history, finance, or who would like to put our current financial situation into the larger context of history. The genius of this book is that he focuses on the broad topics of the history of money. He doesn’t lose the reader in details when describing the evolution of money and the world’s financial systems. One of the things I most enjoyed was his use of the different components of our financial system to describe its evolution. All along the way Ferguson shares with the reader why certain nations were/ are more evolved than others, and shares a glance into the future.

    Overall, a well written book that I highly recommend!

  7. Izaak VanGaalen
    November 7th, 2010 at 18:28 | #7


    Niall Ferguson has written an easily accessible and very entertaining history of finance, ranging from the clay tokens of Mesopotamia 5,000 years ago to the hedge funds of today. The title of this book has apparently been modelled on Jacob Bronowski’s “The Ascent of Man,” and like that book it will be made into a television series. Being a television celebrity is not something that wins the admiration of one’s peers in the history profession, to say the least. But those little rebukes are relatively mild compared to the scorn he received for his political views in Empire: The Rise and Demise of the British World Order and the Lessons for Global Power and Colossus: The Rise and Fall of the American Empire. In those works he argued that empire was beneficial not only to the mother country but the dominated countries as well. In this work he chronicles not only the history of money but also makes a case for liberalized finance.

    Ferguson examines the financial subplot behind some of the major historical powers such as the role of money in ancient Mesopotamia, the denarius in Roman society, and gold and silver in the civilization of the Incas. He is very good in his descriptions of financial families like the Medicis and the Rothchilds, and how they became banking dynasties. Another memorable episode was the rise of Amsterdam as the world’s financial center and the center’s subsequent shift to London.

    History is also filled with financial disasters of which we are well aware today. Ferguson tells the story of John Law and how he became France’s head of finance. He engineered a financial bubble that took them several generations to overcome. Making matters worse, it occurred at the same time as the British South Sea Bubble.

    Also instructive is the history of the first great globalization (1870-1914). (For this period also read Jeffrey Frieden’s Global Capitalism: Its Fall and Rise in the Twentieth Century.) The world had become so economically interdependent that the pundits believed the possibility of war between great powers had been eliminated. This sentiment was famously expressed in “The Great Illusion” by Norman Angell.

    Although this book was written before the current economic crisis, the last chapter is very prescient. “From Empire to Chimerica” tells of the symbiotic relationship between China and America. The combined country “accounts for just over a 10th of the world’s land surface, a quarter of its population, and a third of its economic output, and more than half of the global economic growth of the last eight years”. This relationship, in which China saves and America spends, and in which China’s savings is used to enable America to spend even more, is clearly unsustainable. Ferguson sees this savings glut as the cause of the current subprime crisis. That, in my humble opinion, was one of the causes; there were many bad actors involved in this catastrophe, citizen-borrowers included.

    Although it is not obvious to everyone in the midst of a crisis, Ferguson correctly points out that financial engineering is one of the great forces behind human progress. The history of finance is a process of creative destruction. Financial risk-taking is necessary for economic expansion and human development, and Ferguson does a good job in making the case. Too bad it reads like a script made for the History Channel.

  8. G. Murray
    November 7th, 2010 at 20:06 | #8


    When I was given this book, my heart leapt because I know Niall Ferguson is a robustly contrarian, sharp, articulate and well-informed historian, but it sank immediately that I saw that the book, like many of his recent works, was again based on a television series. Ferguson is a man of genuine talent; it is a shame he chosen to prostitute that talent. No doubt “The Ascent of Money” made for a TV show of far more than average quality, but the book is necessarily scrappy and somewhat shallow. It seems to evolve according to the picturesqueness of certain locations (the televisual imperative), rather than the logic of the argument. I would like to see the television link flagged much more prominently on the cover so one is made aware in advance that this is not a serious work of history, but a potboiler designed to raise funds so that Ferguson can boost his earning power to the levels of equally (or less) brainy college contemporaries who went into finance or the law. Frankly, I was disappointed. I hope Ferguson will get back to being a proper historian soon.

  9. Robert Busko
    November 9th, 2010 at 01:43 | #9


    The Ascent of Money: A Financial History of the World by Niall Ferguson in one of the most timely books of the year. Appearing as it does in one of the largest and far reaching financial debacles of the modern world, one has to wonder if the timing is just coincidence or whether the financial gods are just having a quiet laugh.

    As an aside, if you remember anything from your Money and Banking course you may have taken in college, then some of this material will be familiar. What is new, and certainly worth the cost of the book, are the interesting historical connections that Ferguson manages to create between the topic of money and events that have played out throughout much of recorded history. To call these connections interesting or eye-opening is a gross understatement. For the historian, regardless of whether you are a professional or amateur, the information provided by Ferguson is nothing more than astounding.

    The word credit has its root in the Latin word “credo” or “belief”. The very act of taking money in payment for some delivered product or service is an act of faith. The faith part comes in believing that the “money” received can, in- turn, be used to buy some other product or service. It doesn’t matter what we use for money. Money could be anything we place value on from colored stones, sea shells, precious metals, gems, or simply financial credits. It helps if the “money” is easily carried which makes precious metals (gold and silver) such a convenient commodity and why we don’t carry around bales of cotton or kegs of wine (but they have worked in ages past). Of course, financial credits, little electronic binary 1′s and 0′s, are best of all, but, as with all other forms of money, require faith. All of this is truly astounding when you look at commerce world-wide and realize the underpinnings are so simple.

    Ferguson’s The Ascent of Money reminds me so much of Fernand Braudel’s Civilization and Capitalism: 15th – 18th Century, especially volumes 1 (Structures of Everyday Life) and 2 (Wheels of Commerce). Like Braudel, Ferguson’s words are enlightening and surprisingly useful in today’s world. Simply understanding how the world functions is worthwhile knowledge and Ferguson helps provide that knowledge. Lets face it, trading stock today isn’t all that different than trading stock in 17th century London or Copenhagen at its most fundamental point. The Ascent of Money is written for the lay reader. You don’t need to be a financial genius to enjoy this book. Well researched with terrific notes.

    I highly recommend The Ascent of Money by Niall Ferguson even if you don’t have much more than the cost of the book. It’ll be money well spent.

  10. Luc REYNAERT
    November 11th, 2010 at 20:30 | #10


    N. Ferguson treats shortly but fairly such well known events in the financial history of mankind as, among others, the rise of the houses of the Medicis and the Rotschilds, the stock market crashes of 1914, 1929 and 1987, the German hyperinflation after WW I, the Bretton Woods agreements, Argentina’s economic downfall, the Enron hyper manipulation (of gas prices) or John law’s disastrous experiments with paper money.

    His monetary history is divided in five parts: the ascent of money and banking, the invention of public bonds, the creation of joint-stock companies with limited liabilities, the protection against risk (insurance, derivatives, the welfare State) and the all importance of real estate (as a collateral for public and private loans).

    One of his heroes is Milton Friedman and his theory of monetarism. But, as James K. Galbraith explains clearly in his book, `The Predator State’, monetarism is not an option as an economic policy, because interest rates, not the money stock, drive the economy.

    The author praises highly the late Chilean dictator Augusto Pinochet for choosing MF as his main economic adviser, but his treatment of the coup d’├ętat against the democratically elected Chilean President, Salvador Allende, is blatantly false and unacceptable.

    Another of his heroes is G. Soros. As Business Week journalist, Gene C. Marcial, wrote in his book `Secrets of the Street’, G. Soros had a mole in the highest echelons of the Bank of England, who apparently informed him of the decision that the value of the pound would not be defended anymore. Nobody talks about the second party (the buyer of the pounds) involved in this apparently rigged transaction.

    One of his main targets is Nobel Prize winner, Joseph Stiglitz. The latter is insidiously attacked on one aspect (the risk of inflation through money printing) of his criticism of the IMF policies imposed on its members (the `shock doctrine’). From the disastrous impact on the economies and the populations of those IMF members, not one word (see, N. Klein’s `The Shock Doctrine’ and J. Stiglitz’s `Globalization and its Discontents’).

    The book ends with a short discussion on the global shift of economic power from the West to the East. A mighty important item indeed.

    I recommend this book only as an introduction, as a first global view, on the history of money and its derivatives on our planet.

  11. Jim Hughes
    November 11th, 2010 at 23:38 | #11


    I am not an expert in finance but I am an avid reader of history. In that context, I do agree with many of the 1 and 2 star reviewers about this book.

    Firstly, the subtitle is a bit presumptuous. This is not a financial history of the world. It is a financial history of the western world and other bits that affect the western world. The treatment of non western economy is given only a passing glance. The chapter on Chimerica is only detailed because of it’s impact on American finance.

    Secondly, there is an obvious bias that I have seen before with popular attempts at scholarship. There is an underlying thesis. In this book it seems to be that capitalism is good and so all of history is reinterpreted in fulfilment of this thesis. To seriously suggest that WWI was caused by a reaction against globalization simply ignores the nationalist political pressures that were building up in Europe for nearly half a century that only had an incidental connection to trade and finance. Statements like this merely made me wary of any other conclusions.

    Thirdly, and probably the biggest sin for a popular work, is that it was unnecessarily wordy and therefore dull. I agree with other reviewers who found that there were large jumps of logic, time and geography which made following the text difficult. Indeed some of the text is reproduced verbatim in the TV series narrative. Having said all that there were still excellent chapters such as the discussion of the Rothchilds.

    It would have been better to conclude with a chapter on the Global Financial Crisis as we now know it, but that will probably form another book a few years from now when it is all over.

    In brief: wordy mediocre history which is sometimes difficult to read.

  12. S. McGee
    November 14th, 2010 at 01:41 | #12


    I’m not sure when Niall Ferguson finds time to sleep…

    Fresh from a series of lively, accessible histories focusing on geopolitics — the concept of empires, warfare, etcetera — Ferguson, far from taking a well-earned rest, has tackled the toughest topic of all: the history of the global financial system. The author of other books on finance-related topics (The Cash Nexus: Money and Power in the Modern World, 1700-2000and The House of Rothschild, the World’s Banker 1849-1999), the author may seem to have returned to his roots. In fact, as his book makes clear, understanding how money and finance works can explain a lot about human nature and thus about our social and political institutions. Understand what money is, how it is made, invested and transfered, and you understand issues like equality, political instability and economic progress. After all, as he recounts, great fortunes were made by those willing to take risky financial bets on the eve of the battle of Waterloo. When final word of Napoleon’s defeat arrived, the seeds of the Rothschild’s vast fortune were sown, and the apparently nerveless Nathan Rothschild rode his stake in British government bonds higher and higher.

    Ferguson has a knack for making this material accessible, whether it’s the nature of what earliest civilizations considered to be “money” to the religious dilemmas that hovered around the concept of usury. (The popes in Rome denounced interest as usury.)

    Of course, in the current environment, the most compelling part of the book will be the chapters Ferguson devotes to financial bubbles and in particular to the ongoing mayhem in our global financial system. Today’s Rothschilds, those who have let their bets ride and rolled the dice over and over again, have finally lost out, and Ferguson gives what some are likely to view as an overly-simplistic analysis of the causes of this. (But this simplicity is likely to be very welcome to all those on Main Street who still view Wall Street as, in Ben Bernanke’s words, an “abstraction”.)

    The most solid part of this analysis is, not surprisingly, the historical component. Thankfully, Ferguson avoids falling into the trap of giving readers yet another look at the great tulip bubble. Instead, he launches into an analysis of what kinds of risks speculators have taken throughout history, and the various ways they have come to grief.

    The final part of Ferguson’s argument is perhaps the weakest, although perhaps that is only because of the book’s timing — smack in the midst of financial chaos that he couldn’t have imagined when he delivered the final manuscript. His look at behavioral finance is intriguing and welcome; his analysis of the behavior of today’s “money movers”, such as hedge funds is too simplistic. I’ll look forward to reading an updated edition at a later date.

    Most provocative of all are Ferguson’s final conclusions about the role of China in the global financial system. For now, at least, the concept of decoupling — much talked of before 2008 — seems to have fallen by the wayside; in the current bloodbath, everyone is suffering in some way. “What price a subprime superpower?” he enquires, in the context of emerging global rivals. This, too, is a story that may be better told in a few years’ time, since many of the most important issues can today be framed only as questions.

    This is not a book for hardcore Wall Street folks or even those with a reasonable knowledge of the way financial markets have evolved (securitization, credit derivatives, hedge funds, etc.), unless they also have a strong interest in history. There are many other, better and more detailed books to satisfy them. This work, in contrast, gives any reader a firm base of knowledge as to how and why financial systems evolved. Perhaps it may even give them comfort that as we have survived periods of extreme financial crisis, so we will — somehow — survive this one.

    For anyone interested into delving into one particular era touched on by Niall Ferguson, I’d highly recommend the following: Medici Money: Banking, Metaphysics, and Art in Fifteenth-Century Florence (Enterprise) (Enterprise)

  13. Sanford
    November 14th, 2010 at 08:07 | #13


    Niall Ferguson has published another sweeping book, this time in his purported field of expertise in financial history, not in political economic history, where he had most famously written ‘The War of the World.’ For that one must be grateful, since his neo-imperialistic views, sensational support of empires and subjugation, and controversial justifications of Nazism, were just too jarring.

    Here he makes an ambitious attempt to tell the whole story of finance. It begins in Mesopotamia and ends in the credit crisis of 2008. The title is a play off the title of Jacob Bronowski’s Ascent of Man. Overall it is a considerably worse book than Birth of Plenty by William Bernstein, and even more so when compared to Empire of Wealth, a recent book on economic history. It cannot replace Peter Bernstein’s trilogy, including Against the Gods, Gold and Capital Ideas. It lacks the details of Vincent Carruso’s Investment Banking in America or other detailed tales of financial history. Yet it lacks synthesis too, certainly when compared to Birth of Plenty or Bernstein’s trilogy.It is worth buying though, hence the 4 stars, but only for a quick jog through history, not for an understanding of it.

    The book does not delve deep into the details, which is its weakness. It does not give a bird’s eye view either, because the vignettes he chooses, the facts he emphasizes, and the stories he stresses are generally the unimportant ones. That flaw is not only true of ancient finance, about which he may not be an expert, but also so of medieval and modern financial history, an area in which he should have better selected the stories he chose to emphasize.

    What the author ends up doing is overemphasizing stories about the Rothschilds, who he covered in a bio years ago, or about current events, including ones about the current credit crisis, which seems oddly placed (and likely added at the last minute, once the markets collapsed and the book likely appeared too optimistic). There are at least two references to the compensation of Lloyd Blankfein, CEO of Goldman Sachs, anecdotes which would be out of place in any serious history of finance. Then there are the detailed discussions about some obtuse scandal in Britain but hardly the same space to Enron or Milken or other scandals which have plagued history.

    Not only is the selection of stories poorly done but the level of the narrative also fluctuates between sweeping statements unsupported by the facts (a habit of Niall Ferguson) or minute details about this or that, very often irrelevant to boot, leaving the book appear put together in a hurry (which too is a longstanding weakness of the author). There is the mathematical formula of the Black-Sholes, which seems out of place in a short history of finance, and especially so since the author claims he does not even understand what it means. The points made could surely have been driven home without the formula.

    Third and worst still is the decision of the author (or his research assistant) to summarize issues into five or six bullet points, a la a McKinsey presentation. This occurs in several places, with paragraph headings (!) and summaries, a style unsuitable for a history book, and truly not even used by newspapers. One does not buy a book to rush through issues in bullet points!

    Fourth, the author has tacked onto the end of the book a note about the Descent of Finance. Clearly he does so to tone down the story, to fit the current collapse of the markets, but there too he insists on playing on Charles Darwin’s Descent of Species, much as his title plays off Jacob Bronowski’s Ascent of Man. The only problem is that the title of the Epilogue must convey the current sad state of affairs, and it does, but to explain the title as having a double meaning, that it also refers to the organic evolution of finance, is too kitchy and clumsy. Such clever simplicities pervade the book.

    Finally, the book inevitably also misses the mark on account of the messenger. Niall Ferguson is at his best a neo-imperialist who believes in the superiority of one dominant empire, versus today’s multipolar world. Such a stance cannot but weaken both his credibility and capability in explaining finance, which is at its core a diffused, democratic, even chaotic, system. In sum thus, this book is too quickly written, too carelessly put together and too clumsy in its conclusions to have a long shelf life.

  14. Balint Kacsoh
    November 14th, 2010 at 10:48 | #14


    When I saw the interview with Niall Ferguson on CNN, I thought that I would get an insightful book that would enable me to understand and navigate the current economic crisis. After all, Ferguson is a Harvard professor (thus he is superbly credentialed), and the interview suggested that he had the foresight of the coming events.

    Yet the book turned out to be an utter disappointment. On the surface, the book seems to have a good structure. The chapters logically follow a sequence: the history of money, credit, bonds, stocks, insurance, real estate, globalization, hedge funds, computer models of investing, and behavioral finance. The text is easy to read and crafty. However, the chapters fall short on several accounts. The chapters present selected events in the history of their respective subject rather than a broad overview. I did not expect a comprehensive history, but the selection was minimalist, often skewed, and the events were more often than not presented in a disjointed manner. There was some semblance of logic tying them together, but one had to know way more than the average reader to see the connection. If the reader had that kind of knowledge, the book did not offer much. Without the knowledge, the book’s logic was lacking and, indeed, contained gaps and jumps.

    Even before I reached the end of the book, I developed the feeling that the Author’s pretty shameless primary goal was to write a book that can sell many copies, and make money. It is a quickly assembled patchwork that, in spite of the polished writing, is mostly useless fluff. There are much better books on the subject that will explain the concept of money and the current economic crisis. (Just an example: Robert Prechter’s Conquer The Crash, published in 2002.) Since the interview on CNN, I heard additional interviews with Niall Ferguson (e.g., on NPR). The timing of the publication and the marketing efforts are way superior to the qualities of the book.

    If you can borrow this book from someone, you will only waste some time by reading it, but at least you will save your money. This book is certainly not worth having on your shelf – in the long run it will only collect dust, and you will not open it again. Probably you would be better off not reading it at all (there are better alternatives). The knowledge you will gain is most likely not proportionate with the time invested (wasted) in the reading. The two stars I gave might be a little too generous, especially considering that one expects a much better book from a Harvard professor. However, I have to give credit for the style and a modicum of usefulness.

  15. John Zxerce
    November 15th, 2010 at 15:37 | #15


    Historian Niall Ferguson teaches economic history at Harvard so he certainly has credentials for a book like this. While his historical knowledge is impressive his financial claims can seem a bit cavalier and broad-sweeping.

    Ferguson celebrates financiers as the source of modern wealth and prosperity. He backs up his claim by a historical examination of the last 500 years. This includes the Italians in the late Middle Ages, as well as the Dutch in the 17th century and Britain’s empire success which he partially attributes to the establishment of the Bank of England in 1694.

    After setting the historical context Ferguson becomes a pundit on the current global situation. Commenting on those who speculate in the financial markets today Ferguson writes, “When people have a run of luck, they very quickly impute this to their own brilliance. Once you start interpreting your good fortune as your skill, you’re very quickly a master of the universe who can never fall. That, of course, is precisely when you fall.” He likens financiers to gamblers, which may not be a completely fair connection. Of course there is risk involved in investing, but the primary concern in the financial world is how to limit that risk, react wisely, and be patient.

    As Ferguson considers the financial crises his assessment is neither overly positive nor calamitous. “Before this crisis,” Ferguson says, “there were people who thought there would never be another recession–that kind of crazy, myopic, unhistorical belief. That was followed in the last month or so by wild panic, as if it’s the end of the world.”

    Ferguson states the obvious when he declares we will all be affected by the current financial mess, and that it will take a while for the market to correct itself.

    In short, if you like history more than finance, this is going to be an enjoyable book for you. However, if it’s the other way around the details might be suffocating.

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