Pulitzer Prize, History, 2010It is commonly believed that the Great Depression that began in 1929 resulted from a confluence of events beyond any one person's or government's control. In fact, as Liaquat Ahamed reveals, it was the decisions made by a small number of central bankers that were the primary cause of the economic meltdown, the effects of which set the stage for World War II and reverberated for decades.
In Lords of Finance, we meet the neurotic and enigmatic Montagu Norman of the Bank of England, the xenophobic and suspicious Émile Moreau of the Banque de France, the arrogant yet brilliant Hjalmar Schacht of the Reichsbank, and Benjamin Strong of the Federal Reserve Bank of New York, whose facade of energy and drive masked a deeply wounded and overburdened man.
After the First World War, these central bankers attempted to reconstruct the world of international finance. Despite their differences, they were united by a common fear - that the greatest threat to capitalism was inflation - and by a common vision that the solution was to turn back the clock and return the world to the gold standard. For a brief period in the mid-1920s, they appeared to have succeeded. The world's currencies were stabilized, and capital began flowing freely across the globe. But beneath the veneer of boomtown prosperity, cracks started to appear in the financial system. The gold standard that all had believed would provide an umbrella of stability proved to be a straitjacket, and the world economy began that terrible downward spiral known as the Great Depression.
As yet another period of economic turmoil makes headlines today, the Great Depression and the year 1929 remain the benchmark for true financial mayhem. Offering a new understanding of the global nature of financial crises, Lords of Finance is a reminder of the enormous impact that the decisions of central bankers can have, of their fallibility, and of the terrible human consequences that can result when they are wrong.
©2009 Liaquat Ahamed; (P)2009 Tantor
"Ahamed cannot have foreseen how timely his book would be.....Lords of Finance is highly readable - enlivened by vivid biographical detail but soundly based on the literature. That it should appear now, as history threatens to repeat itself, compounds its appeal." (Financial Times)
"Erudite, entertaining macroeconomic history of the lead-up to the Great Depression as seen through the careers of the West's principal bankers....Spellbinding, insightful and, perhaps most important, timely." (Kirkus Reviews)
The more they stay the same.
Fascinating book which reminds us that disastrous consequences often arise from best laid plans.
Greed and hubris were as much at play in the interwar period as they are today.
A great book for history buffs.
Extremely good. Scholarly, accurate, entertaining. Weakest on France, but so good on Norman (especially him), Strong (and then Harrison) and Schacht that the author can be excused.
A highly informative history of monetary policy and economics in the period around World War One through the Great Depression. Focusing on the key players involved in policy in the U.S., England, France and Germany.
I was very pleased with the documentation and history of this book. This is a great view into the change from gold backed monetary theory to the beginnings of worldwide faith backed currency and the decisions that were made.
Don K in Alaska
I learned a great deal about the men who handled the controls of world finance through the Roaring 20's into the Great Depression.
For those who think such matters are simple, this book should correct their misunderstanding. It followed nicely on my old Economics, Money & Banking classes in the late '60s.
This a great book. It tells the tale of the four major financial powers in the beginning of the 20th century: America, Germany, France, and Great Britain. It starts in the pre World War I years and carries through to the end of World War II, covering one of the most dramatic periods in financial history, the Great Depression. The book's premise is that the Great Depression was the result of the mismanagement of the world economy by the central bankers of the four powers, which seemed plausible in my layman's perspective. The performance is very good and compliments the story nicely. I highly recommend it.
This is the kind of styles I like: good pace, cerebral, well-documented, meaty, mind-bending.
I admit it, I delayed reading the book; the Great Depression of the 30s and its preambles is a fascinating period but the inner workings of the Central banks seems the most boring place to watch history.
Not so! Ahamed makes a convincing case that a few people, namely the four heads of the major central banks, were central in the grand orchestra of the Great Depression. Their errors, perhaps a mix of poor economic training, selfishness and obstinacy, led to real consequences, prompting the world toward what would be the greatest disaster in human history.
You will find here a detailed account of the consequences of Britain joining the gold standard, France's policy toward gold hoarding, the well-intentioned but ultimately destructive support by the Fed toward European cheap credit and, lastly, the lacking attempts as everything unravels to take power away from these men.. too little too late.
There is one point where the author, apparently not an economist, appears overly naive and out of context. The book is about the errors of a few men in powers, but in places, the admiration for the economist John Maynard Keynes becomes blinding to the extent that it misrepresents both current attitude toward his theories or, even, at the time, whether his ideas would have worked his place. In a gratuitous manner, the book ridicules I. Fischer not on theoretical grounds but on silly comments he made, or completely fails to note that Keynes' work, falsely presented as the panacea that protected us from crises, collapsed during the decade of the 70s.
The book shines as a epic economic history of the times, not as a guide for future policy.
Intrigue found in this book is both malleable and insightful. I learned a lot about history that I otherwise would have never known, and it was enjoyable.
Hjalmar Schacht. I did not know who he was, nor did I know that he played such a close role to the infamous Nazi party leading up to WWII. It is always good to read (listen to) history, especially of this era. It's exciting to find a figure who is close to the fray, and he is also in this gray area between good and evil - as most of the central banker characters were. They operated in a highly charged ethical and moral environment where decisions mattered almost minute by minute in some scenarios.
A few times I laughed, especially those eureka moments when you realize the history in actuality might be different than the history in pill-form taught to children.
I read it due to an interest in central banking after reading Alexander Hamilton's biography. I would recommend it to any who may just enjoy history in general without a special interest in financial history; however, it can be overbearing with financial details and culture which tended to be more boring than anything else.
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