I realise that the following book review does not relate to a very spiritual book. However, I like to read a wide variety of books, especially history books. History is a great teacher and I love to read about all periods. I particularly read a lot of history from the period of World War 2. This book plants itself in the period of 1914- 1933. To understand the rise of Hitler and the conditions leading up to the Second World War, you need to understand this period of history so that was the drawing card for me.
This book provides excellent insight into the financial conditions that prepared the world for the unfortunate events beginning in 1939. Lord of Finance describes the world conditions between the two great wars, focusing on four central bankers and the decisions they make, that pinnacle in the period called the Great Depression (1929-1933). Hence the subtitle “The Bankers Who Broke the World.”
There are two things this book clears up in my understanding of history. One, the Great Depression was not caused simply by the Wall Street crash in 1929. In fact, if you had to identify a single cause for the Great Depression it would be the First World War. Second, the Great Depression, in result and cause, was global in nature. Living in North America, it is easy to forget that truth.
The First World War left every country, except the United States, desperately indebted. Germany and Austria, cut off from global finance, had borrowed massively from their own people. Russia and the minor belligerents had borrowed from France. France and Italy had borrowed from Britain. Britain had borrowed from America. This part I knew. However, what I learned from this valuable book, is that every major power had determined to return to the pre-war gold standard. The gold standard meant that the value of paper money was tied to the amount of gold a country possessed. But as Ahamed points out, all the gold mined in the entire history of the world to 1914 would have fit in a small two-storey house. Gold was simply too rare and too valuable to fulfill any ordinary currency function. The decision to return to the gold standard caused great world economic problems and the writer adequately explains the reasons for this.
The consequences of the attempt to reimpose gold after 1918 are the focus of Liaquat Ahamed’s book. The Lords of Finance of his title are the central bankers who were handed the job. By and large, they made a mess of it, and Ahamed’s story recapitulates the sad story in a way that is both detailed and interesting even if monetary policy is something that would normally bore you. Although, the book clearly lays the blame with these men, and often quotes the brilliant economist John Maynard Keynes as proof, it also empathizes with the characters who were clearly products of their time and place in history. For all four of them, the resurrection of the prewar monetary system ranked as a supreme priority, both economic and moral. Ahamed brings a poignant appreciation to the task facing these central bankers: to restore a functioning global economy to a world that had not in fact made up its mind to live in peace.
The book is a good reminder of the destruction that war brings on so many innocent people. So many died fighting in the actual wars but what might be now forgotten is that millions died, or lived in immense hardship, long after the wars had ended. The wars had killed millions in battle but had destroyed the world’s economy to the point where it would be a half century before the world would recover.