The ascent of money : a financial history of the world

by Niall Ferguson

Hardcover, 2008

Status

Available

Publication

New York ; London : Penguin, 2008.

Description

Niall Ferguson follows the money to tell the human story behind the evolution of finance, from its origins in ancient Mesopotamia to the latest upheavals. To Christians, love of it is the root of all evil. To generals, it's the sinews of war. To revolutionaries, it's the chains of labor. But historian Ferguson shows that finance is in fact the foundation of human progress. What's more, he reveals financial history as the essential backstory behind all history. Through Ferguson's expert lens, for example, the civilization of the Renaissance looks very different: a boom in the market for art and architecture made possible when Italian bankers adopted Arabic mathematics. The rise of the Dutch republic is reinterpreted as the triumph of the world's first modern bond market over insolvent Habsburg absolutism. Yet the central lesson of financial history is that, sooner or later, every bubble bursts.--From publisher description.… (more)

Media reviews

...The rise of ancient Babylon was intimately tied to the evolution of credit and debt; without banks and the bond markets, the splendours of the Italian Renaissance would never have materialised; corporate finance was the foundation of the Dutch and later British empires; the ultra-sophisticated Wall Street financial engineering which has now come crashing down is intractably linked with America's global primacy. And now, of course, the new-found geopolitical power of many emerging economies, such as China, comes from their embrace of modern finance and creation of huge sovereign wealth funds. Especially fascinating is Ferguson's discussion of the rush of intellectual innovation, beginning in the 1660s, that created the theoretical basis for life insurance, one of the most important financial inventions of all time...
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...According to Ferguson, much of the current crisis stems from this increasingly uneasy symbiosis. It turns out “there was a catch. The more China was willing to lend to the United States, the more Americans were willing to borrow.” This cascade of easy money, he argues, “was the underlying cause of the surge in bank lending, bond issuance and new derivative contracts that Planet Finance witnessed after 2000. . . . And Chimerica — or the Asian ‘savings glut,’ as Ben Bernanke called it — was the underlying reason why the U.S. mortgage market was so awash with cash in 2006 that you could get a 100 percent mortgage with no income, no job or assets.” Going forward, the system seems likely to be increasingly unstable, as Treasury Secretary Henry Paulson suggested recently when he warned that unless fundamental changes are made, “the pressure from global imbalances will simply build up again until it finds another outlet.”
...Ferguson's biography of finance, told with verve and insight, throws more light on our predicament than perhaps even he realises. The Ascent of Money charts the rise of money from clay tokens passed around the villages of Mesopotamia 5,000 years ago to flickering numbers on a foreign exchange screen; yet it also reminds us that money represents a relationship of trust. Ferguson argues persuasively that the development of money has gone hand in hand with the development of modern societies, by quickening transactions, loans and investment. He gives a selection of case studies, showing how money underpinned the colonisation of South America, Roosevelt's New Deal and the rise of China. Money doesn't make the world go round, but "it does make staggering quantities of people, goods and services go around the world"...
Niall Ferguson has written a brilliant book exploring the historic nexus between money, diplomacy, warfare and globalisation. It's called The House of Rothschild: The World's Banker 1849-1998. His new work, The Ascent of Money, written 10 years later, is an altogether different beast. From its opening sentence - 'Bread, cash, dosh, dough, loot, lucre, moolah, readies, the wherewithal: call it what you like, money matters' - you know this is a TV tie-in...
...There are a score of fascinating details. One example is how John Law managed to persuade the French to appoint him controller general of finances (sort of governor of the Bank of England and Chancellor of the Exchequer combined) and allow him to engineer the French financial bubble in 1720-21 that did far greater damage to French savings than the South Sea Bubble did to British finances at the same time. He describes how grand families, such as the Grevilles, were ruined by spendthrift heirs, while other new dynasties, notably the Rothschilds, were founded on a mixture of thrift, information and acumen. Perhaps the most helpful aspect of the book is Ferguson's ability to link the past with the present – particularly helpful right now. For example, he draws a parallel between international investment during the last great burst of globalisation from 1870 to 1914 and the massive international capital flows of the present global era...
Yet the reader is left wondering quite who the book is aimed at. The finance specialist will not find enough here to begin to compete with the work of Charles Kindleberger, an economic historian. And the reader who wants to know how finance is interwoven with general history would do better to turn to Jeffry Frieden’s excellent 2006 work, “Global Capitalism”.

User reviews

LibraryThing member Disquiet
The book is titled The Ascent of Money, but it's not about the ascent of money. It's about the path of money, with the assumption that from the origin of the book's historical perspective, money has been the bedrock of civilization. There's no ascendancy, because there is nothing for it to compete with, in the author's telling. What the book really is is a straight history of the above-board financial markets, and to that extent it's a useful and largely enjoyable read, covering the move from barter to coin, and from coin to virtual funds, and from virtual funds to algorithmic trading. The author does a wonderful job of jumping across vast time periods to draw comparisons (showing how even if technology changes, human nature does not). He does a terrible job of telling jokes, which comes across as a sort of nervous habit (mostly alliteration, puns, and pop-culture references), one that someone close to him should point out to him.

The absence of under-the-counter financial markets and their influence on, their substantial part of, the global economy seems like a significant blind spot. There are occasional asides to the Mafia, narco states, and the like, and of course when Ponzi schemes come to light they are acknowledged. But that's it. As such, it's sort of like this: if The Ascent of Money were a study of a city, it would only take stock (so to speak) of the goings on within buildings and institutions, and not of street life. In other words, it's not a full picture. It's like a Chamber of Commerce picture. (One other seeming blind spot: if I'm not mistaken, the author seems to have a disinclination toward companies that are not publicly traded.)

Also: I cannot recall reading a non-fiction book recently with less of a thesis. There is no overarching theme, no consciously enacted perspective, just the steady march of economic history proceeding like a fleshed-out timeline. I'd say most fiction I read has more of a thesis, more of a sense of perspective on the world, than this book does.

To be clear, there is a concluding section in which the correlations between biological evolution and monetary-system change is compared. But in effect what has happened is that after dropping occasional references to such a metaphor throughout the book, he then tries to tie it all together. In other words, the equation to produce this book was: write a history of (largely western) economics at a (largely) macro level, and then add a final chapter proposing a model, supported only by parenthetical references in the majority of the book. A comparison is not a thesis, especially when the comparison feels added on. Furthermore, the evolution metaphor is seriously sloppy. For a widely traveled professor at Harvard, he has created a loose-at-best metaphor with a floating subject that changes according to the need of his rhetoric, on a moment by moment, sentence by sentence basis: Has money ascended, like man is said to have? Has the nature of business? Has the market? If, as the author states, complex technological innovations haven't actually supplanted earlier modes like barter and loan sharks, then how can the comparison to mankind be made? Are we humans surrounded by our own competing ancestors? And if in fact this is about an ecological comparison, and not a one-on-one to mankind, then why not just say so? Because comparisons to man allow for the idea of the free market having a rational hive-mind sentience? Because The Ascent of Man sounds like a better logline than The Ecology of Money? It's altogether unclear. If after this much effort a book's thesis cannot be plainly stated, then it does not have one. What it has is a paper wrapper.

And as a side note, I may be mistaken, but the book seems to clarify when an economist is left-leaning but not when right-leaning. And the fact that George Soros and several other figures in finance are Jewish is pointed out, but no other religion is listed with any particular frequency when other major figures are mentioned.

One final thing: There is an anecdote about the film Mary Poppins early in the book that I highly recommend reading. I can't do it justice, but in brief: the author was invited to speak at a business event, and since the tone of his talk was somewhat negative about the economic short term and midterm, several of the attendees (all successful business-people) complained afterword, essentially taking issue with the presence of a non-businessperson, especially one deemed not enough of an optimistic booster). One of these complaints stated that they should have ditched him and just shown the movie Mary Poppins. The author then takes the opportunity to point out the extent to which Mary Poppins' plot rests on the instability of British banks.
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LibraryThing member solla
I just finished [The Ascent of Money] by [Niall Ferguson]. Ferguson says that the purpose of this book is to educate. He quotes a number of statistics about widespread ignorance of financial matters. He also makes a statement that rather than being "filty lucre", money is the root of most progress.

I'd say he does a decent job in the first few chapters just in introducing various financial ideas. It begins by talking about the start of banking systems. He points out how Spain's extraction of gold from Peru was a mixed blessing, because, even if it the money supply is gold, the expansion of the money supply still devalues the currency. And, because they were rolling in gold, Spain got left behind in other developments.

What will probably stick with me is the story about the Dutch East India company, the first, or one of the first, stock corporations, and how it spread the risk, and produced a decent return for a long time.

He goes on to do a pretty good job of explaining why bond prices can fluctuate depending on risk, and what hedge funds are. I have to admit, that, by that time, I was anxious for the book to end. There was so much going on at the end, as it got into more recent events, that I was overwhelmed. This is probably because I am not really very interested in the financial markets in themselves.

What I am interested in (and had some hope in the early chapters that Ferguson might address) is how you can have an economic system with some of the benefits of a modified capitalism - which I see as the fluency of money as a means of exchange, and being able for some at least to accumulate some capital to do some creative things - and yet not be locked into the boom/bust cycle. In other words the boom/bust cycle could be described as having to consume for the economy to be healthy - by healthy I mean providing a livlihood to the great mass of people, and providing a means for them to develop themselves (as opposed to making a killing). Not only do we have to consume, so the economy won't contract, but even that is not enough to ensure that there aren't huge groups of people unable to live adequately while others have more wealth than they could ever use.

We're told the health of the economy is affected by the health of the automobile industry, yet I want people to buy fewer cars. We should have fewer cars, and better ways of getting around. We need an economic system that allows for less consumption for some, and more for those whose basic needs are not being met now. I want to read books by people who are beginning to puzzle out what that system is.

While this book wasn't that, it did give some pretty clear explanations of some basic financial institutions and some of their history. It's worth a read, but don't feel bad if you abandon it somewhere in the middle.
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LibraryThing member kukulaj
This is a nice survey of the world of finance. It's a collection of stories - lots of crashes, of course, starting with John Law in the 18th Century. We get to watch the Rothschilds get rich in the 19th Century. The timing of the book was a bit awkward - it seems he was writing in May of 2008. He did say that credit default swaps looked like a looming problem - itsn't that what brought down Lehman Brothers in October?

The main problem with the book is that it doesn't have a thesis. It's a bunch of evidence that doesn't really go anywhere. The lack of evidence means that there is no real analysis of the evidence - there is no need to push down to the real nuts and bolts details. So the whole thing is a kind of broad brush survey without any solid substance.
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LibraryThing member bruchu
Money Makes the World Go Round

The latest book by Harvard professor and popular commentator Niall Ferguson is a historical look at the rise of finance. Ever wonder how the stock market came to be? Exactly how and why did the evolution of credit lead to the rise of civilizations? Could all the world's conflicts be explained by economics? These are the historical questions Ferguson poses and attempts to answer in "The Ascent of Money."

Ferguson's primary purpose for the book is by using economic history to help explain the complexities of modern financial institutions. Why, might you ask is this important? Because the average person knows little to nothing about such simple financial facts such as the interest rate charged by their credit card. Never before, in this globalized, highly coupled world that we live in today, has financial knowledge and a fundamental understanding of financial institutions been more important than it is today. Everyone is affected by world markets, interest rates, and inflation one way or another.

While I think Ferguson does an admirable job in explaining such complex subjects such as mortgage-backed securities or credit-default swaps, I still think that anyone who does not have a Econ 101 or Fin 101 will still have problems following these inherently difficult to understand topics. Ferguson's writing, thank goodness, does not contain the snobbery that sometimes comes across when he appears as a commentator.

As for the historical content, I think Ferguson is a little selective in some of the topics he chooses. As one would expect, Lord Rothschild is used throughout the book as an example to explain the rise of debt worldwide. There are detailed accounts of the rise and fall of Argentina, the American Civil War, the French Revolution, and much more.

Regarding Ferguson's philosophy. He appears to be a pragmatic neoliberal. He is a proponent of free-trade, but for example he writes that "of all the lessons to have emerged from this collective effort... inept or inflexible monetary policy in the wake of a sharp decline in asset prices can turn a correction into a recession and a recession into a depression." (p. 163). Ferguson takes exception with the Keynesians like Stiglitz and Krugman but while at the same time exploring the relative benefits of Milton Friedman's Chicago School "Washington Consensus". He describes Chile's economy as the shining star in Latin America following Pinochet while passing judgment over the massive human costs. And finally, he places the primary blame on Alan Greenspan for his "loose" monetary policy for the current crisis we find ourselves in.

Some reviewers have critiqued the book for its lack of historical breadth, and to some extent I would agree. However, the book is already 350+ pages, and more historical examples would dilute Ferguson's arguments. As ambitious as it is to try to explain such a complicated subject, Ferguson is mostly on the mark. I highly recommend this book for anyone who wants to know more about the history of finance.
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LibraryThing member ebnelson
Ferguson’s unabashedly positive banking apology functions primarily to bolster those who want to believe that capitalism is good and as an indictment of the same system to those who question its efficacy and legitimacy. The book is exactly what I’d expect if Gordon Gekko wrote a series of articles on the history of banking for Slate.com: narrowly biased, unsympathetic to detractors, and triumphant as it marches through bankers steps as they inevitably grow larger and more powerful. Seemingly ignorant of Adam Smith’s theory on unintended consequences, ironically Ferguson quickly moves through the early Renaissance dissolution of usury prohibition as though the traditional prohibitions were completely baseless. Banking innovations are elevated as the engine of other innovations, as though innovation were an end unto itself, never pausing to think about what it means to decouple money from actual work and resources. Granted Ferguson completed writing in May 2008, but even so, his reduction of the world’s problems to individual’s ignorance of banking theory is laughable upon any reflection.… (more)
LibraryThing member jztemple
I rather enjoyed this book although I am, like some other reviewers have admitted, financially challenged. Ferguson writes in a style aimed at the general reader who may not know his Fannie Maes from his Blue Chip preferred. I do think that the book tried to be too much of an overall survey, which left some subjects inadequately covered. This especially seemed true in the arena of more recent events. However, his sections on early financial history, including the origins of the several types of financial institutions, were excellent.… (more)
LibraryThing member ykkim
Good Book. But, too biased with banker's view.
LibraryThing member slothman
A good look at the history of finance and the role it has played in history since the development of bond markets. This isn’t as much of a big-idea book as James Burke’s Connections or Jared Diamond’s Guns, Germs, and Steel, but it provides another valuable perspective on many historical events, so I’m shelving it next to those volumes. It also shows the benefits of financial markets when they operate well, which is a good counterbalance to some of the general outcry against capitalism as a reaction to the excesses of the bad deregulation in the 1980–2007 period.… (more)
LibraryThing member roblong
As a non-economist I found this a useful and interesting introduction to the financial history. The focus is Western, perhaps justifiably, and clearly written with the present (looming as the book was written) financial crisis. This might mean the book becomes less relevant over time, but I suspect not. As the book explains, we have seen similar downturns before and can expect them again as the financial system evolves. I feel marginally wiser having read it, so it was certainly worthwhile!… (more)
LibraryThing member mikeg2
Good in its covering of the major events and crises that hit the financial world; from Florence's Medici family to the 1929 Wall Street crash, the book explores financial events and how what happened often led to other unrelated events, many of which shaped the world we live in.
Reading it you really get the feeling that we humans are often too eager to repeat the mistakes of history, as it draws parallels between todays financial crisis and those of days gone.

A good read indeed.
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LibraryThing member rivkat
Touches on a bunch of financial events and crises through Western history, though rarely in enough depth to satisfy, with some attention to the role of imperialism/foreign investment, especially in China. Maybe I wasn’t paying enough attention, but I didn’t feel that the more complicated transactions were explained in a way that I could easily follow (though that may also simply be impossible). If you’re interested in how people keep making the same financial mistakes, might be worthwhile, but now I’m thinking I should read The Quants or something similar… (more)
LibraryThing member LynnB
I enjoyed reading this book. It is well written, and clearly explains many aspects of financial markets that are anything but simple. The key messages I took from this book are:

1) Financial innovation and misdeeds are never far apart. For example, punitive interest rates charged by loan sharks, and those providing much-needed, and very successful, mirco-credit loans. Another example: the separation of ownership and control was a major factor in allowing corporate growth, but is also a major contributor to a lack of accountability and the excesses we’ve seen by some corporate managers. And one more: the ills of excess leverage and inappropriate pressure to borrow, coupled with the indisputable social and economic benefits of owner occupied housing.

2) Poverty is not a function of rapaciousness but is a function of access to financial markets. .If you are interested in this topic and haven’t read Hernando De Soto’s Mystery of Capital, I recommend it.

3) Markets work. This from an author who is an historian, not an economist. Mr. Ferguson down plays, I think, the value of regulation. For the counter-argument, I recommend The Return of Depression Economics by Paul Krugman.
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LibraryThing member vidra
I was drawn to this book after watching BBC documentary from same author. There are lots of facts presented in understandable and logical manner. Great book for financial education. Last part, prologue, added recently is explaining problems running in monetary world during financial crisis of 2008 with fine explanations of mistakes people are doing in their research and analysis which is worth of book alone.
I would like that author tried to incorporate Veblen thoughts more into this work although he is citing Veblen in this book. Veblen theories of conspicuous consumption would increase quality of explanations in chapters about houses and Chinamerica.
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LibraryThing member GShuk
Excellent book that delivers on its title. Great introduction to the how’s and whys of hedge funds, stocks, bonds etc. as well as financial systems that succeeded and failed in the past. This also adds another angle to view history by. There is also a TV tie in.
LibraryThing member rajaratnam
An excellent exposition by an expert on a difficult subject. Very convincing. Has to be read.
LibraryThing member ritaer
"To work the mines [at Potosi, Peru], the Spaniards at first relied on paying wages . . . . But conditions were so harsh that from the late sixteenth century a system of forced labour had to be introduced,"

What is wrong with that sentence?

I gripe at Microsoft Word when it highlights my intentional use of the passive voice, but the sentence quoted above exemplifies the reasons that writers who value accuracy and clear thinking regard the passive with caution. Why did forced labour have to be introduced? Well, because sane people will not work themselves to death for the benefit of strangers. That much is obvious. But the "had to be" elides the question of "according to whom?" The author seems to regard it as inevitable that a mountain of silver ore be mined. The option of leaving it alone is never mentioned. The same sense of inevitability seems to surround most of the financial innovations explained by the author. The idea that societies could be run in a different fashion is never mentioned. Nor is the notion that the triumph of Western economics owed more to the successful exploitation of fossil fuels than to the excellency of our banking and investment systems. The entire book is a justification for the current system of credit, speculation, investment, etc.

The financial history is probably accurate, yet the explanations never seem to really help the reader understand what is going on. How can billions of dollars of value disappear overnight? How can people who preside over that failure continue to collect huge salaries while others lose their jobs, homes, and pensions. One does not need to be a Marxist to suspect that the explanations aim more to convince than to clarify.
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LibraryThing member nscocozzo
A well written history of the development of financial history, The Ascent of Money, does a great job to explain how our current economic system grew up. It is very detailed in coverage, but doesn't go into every detail of financial history by only going over the big concepts over time - banking, debts, equities, risk, future/derivatives, real estate. The reader will definitely get a heavy Anglo-centric view of the world, specifically in discussing modern times. It would have been nice to bring in over happenings or the lack of happenings into the picture to give the full idea of how financial development affects nations.

Highly recommended. You will not be disappointed.
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LibraryThing member annbury
Interesting, but could have been far better if it had gone a bit further beyond personalities.
LibraryThing member Opinionated
The best explanation of the history and development of finance and financial instruments I have read, making complex derivatives as easy to understand as compound interest. Particularly interesting in its explanation of how most important world events since the Renaissance have had origins in financial decisions (eg want to know why the Confederates lost the war? At least one of the reasons was the decline of the Cotton Bond) and how financial instruments have generally been a power for good - perhaps the most continuous driver of positive change.
Ferguson writes in a down to earth style and seems to enjoy the smashing of shibolleths. Property the best bet? The figures don't back it up. Third world the cause of most financial problems? Generally its the UK and Europe that have caused most trouble. Financial modeling as the key to smooth flawless market predictions? Never underestimate the human capacity for delusion and stupidity.
Highly recommended
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LibraryThing member wbc3
This book is a fascinating look at the development of money from shells to coins to paper money to today’s complex financial instruments such as the famed credit default swaps at the center of the recent financial meltdown. All of these are levels of abstraction that allow for easier transactions. Without them, we would be trying to pay for our iPhones with carts full of grain. What Ferguson does is walk through the development of these financial innovations and show how they happened, how they work, and the impact each had on history. I enjoyed the book, but it was at times a bit of a chore to read. If you like history and would like to learn more about finance, this book is worth reading.… (more)
LibraryThing member rchase
I was hoping for more of a history, especially ancient history. Sometimes, the book became a little too technical and assumed too much of the reader's understanding of money market terminology. But overall, a good read.
LibraryThing member marshapetry
Good book but light on the "history" and very much focused on banking, events, and money transaction in the 1900's, early 2000's and mostly the USA; what was included was interesting, such as the development of insurance... the insuring of ships and tradegoods in the 1600/1700s... and how that progressed to what we call insurance today. However, I thought there would be more history so, personally, I was disappointed... but overall it was probably a good book for those looking to understand the author's views of the events between about 1920-2008 that shaped the mostly-USA-oriented market. It *does* mention foreign markets but seemed to always be in relationship to the USA.… (more)
LibraryThing member AJBraithwaite
I'm not completely financially illiterate, but economic theory has the power to both mystify and bore me more than most other topics. This book helped to explain the ways in which financial markets developed in an interesting enough way to keep my attention.
LibraryThing member EricCostello
The subtitle of the book "A Financial History of the World" is something of a misnomer, though Ferguson (also the author of a two-volume history of the Rothschild family) does cover quite a bit of ground, in time and space, discussing how money evolved, and then how other kinds of financial transactions (stocks, bonds, derivatives) evolved. In fact, there's quite a lot of discussion relating financial products to natural evolution. One interesting thing about the book (at least the hardcover edition) is that it came out in the early summer of 2008, before the crash that hit the financial markets later that year. There are a number of hints in the book that Ferguson (among others) saw something coming, though it's questionable whether he saw the crash. Generally, a pretty light read, and Ferguson does a decent job of explaining some abstruse terms in a more comprehensible fashion. For those interested, he tends to be lightly critical of the capitalist model; this is not an analysis from the left, a la Piketty. Those of you who are concerned about the angle an author takes, be warned. I did like the book, and do recommend it.… (more)
LibraryThing member jonfaith
The anecdotal aspects of the book were appreicated, but obviously not conclusive. The financial theory remained just of out of reach and I often felt lost, or that I was being sold something. Despite my interior antipathies, I have always liked Ferguson. the accompanying PBS film challenged that devotion, but alas I plowed through the book with a dusting of enlightenment, which is all I hoped for, anyway.… (more)

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