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Summary
Summary
Winner of the 2010 Pulitzer Prize
"A magisterial work...You can't help thinking about the economic crisis we're living through now."-- The New York Times Book Review
It 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 that economic meltdown, the effects of which set the stage for World War II and reverberated for decades. As yet another period of economic turmoil makes headlines today, Lords of Finance is a potent reminder of the enormous impact that the decisions of central bankers can have, their fallibility, and the terrible human consequences that can result when they are wrong.
Author Notes
Liaquat Ahamed has been a professional investment manager for 25 years. He has worked at the World Bank in Washington D.C. and the New York based partnership of Fischer Francis Trees and Watts, where he served as Chief Executive. He is currently an adviser to several hedge fund groups, including the Rock Creek Group and the Rohatyn Group, is a director of Aspen Insurance Co. and is on the board of Trustees of the Brookings Institution. He has degrees in economics from Harvard and Cambridge Universities.
Reviews (4)
Publisher's Weekly Review
If you think today's economy is scary, check out the Jazz Age horrors chronicled in this financial history of the interwar years and the central bankers who blighted them. Ahamed, an investment manager, surveys the economic upheavals of the 1920s and 1930s, when crushing war debts and reparations from WWI sparked hyperinflation in Germany and a host of lesser eruptions, all of it climaxing in the American stock market crash and the Great Depression. He tells the story through the central bank chiefs of Britain, France, Germany and the United States as they confront unprecedented crises while "shackled" by the "dead hand" of the gold standard, the era's reigning financial orthodoxy (economist John Maynard Keynes, foe of gold and apostle of economic activism, is the book's hero). The author injects unnecessary commentary about the bankers' neuroses and marital difficulties into his coverage of interest rate and currency fluctuations (New York Federal Reserve head Benjamin Strong, he notes, possessed a "large nose that spoke of ruthlessness"). Fortunately, his protagonists' high-wire efforts to stave off national bankruptcies furnish Ahamed with plenty of drama to highlight his engrossing analysis of the complexities of monetary policy. Photos. (Jan.) (c) Copyright PWxyz, LLC. All rights reserved
Booklist Review
Investment manager Ahamed tells the fascinating story of the Great Depression and the central bankers whose decisions were the primary cause of the economic meltdown from 1929 to 1933. They were Montagu Norman of the Bank of England, Emile Moreau of the Banque de France, Hjalmar Schacht of the Reichsbank, and Benjamin Strong of the New York Federal Reserve Bank. Interrelated crises not unlike modern events included Germany's recession prompted by the halt of American capital to Europe in 1928 (similar to the Mexican peso crisis of 1994); the collapse of the stock market in 1929 (parallel to the market fall in 2000); the sequence of banking panics from 1930-33 (much like the credit crunch in 2007-08); and the European financial crisis of 1931 (not unlike the emerging markets crisis in 1997-98). Although not exact comparisons, they offer excellent lessons, and Ahamed concludes that the Great Depression was not an act of God, but resulted directly from a series of collective blunders in economic policy. Excellent book.--Whaley, Mary Copyright 2009 Booklist
Choice Review
Ahamed, an investment banker, has written an engrossing biographical history of four central bankers who played key roles in reconstructing the gold standard after WW I: Mortagu Norman of the Bank of England, Emile Moreau of the Banque de France, Hjalmar Schacht of the Reichsbank, and Benjamin Strong of the Federal Bank of New York. In many ways his book is a biographical companion to Barry Eichengreen's Golden Fetters: The Gold Standard and the Great Depression, 1919-1939 (CH, Dec'92, 30-2190), which argued that the gold standard increased the severity of the Great Depression. Ahamed also blames the gold standard for the severity of the Great Depression and presents the economics of the argument in an accessible way. But he intertwines this core argument with fascinating biographies of the key players. His writing style makes the 500 pages seem short. Summing Up: Highly recommended. General readers and all levels of undergraduate students. B. B. Andrew Juniata College
Library Journal Review
In this historical study, Ahamed, a professional money manager, sums up the causes of the Great Depression as a series of economic policy blunders that could have been avoided. He cites as causal factors the inflationary financing of World War I by printing money, the insurmountable war debts of Germany and the Allies, Germany's plunge into hyperinflation, and the return of most currencies to the gold standard at excessive and deflationary prewar rates. For example, he explains that when the U.S. stock market bubble burst in 1929 and economic activity collapsed, the central banks were restrained in stimulating the economy for fear of losing their gold reserves. In an epilog, Ahamed draws parallels between the crises of the Great Depression and those in recent times. He keeps his history interesting by highlighting the personalities of the heads of the major central banks, and he employs the economist John Maynard Keynes as a one-man Greek chorus critiquing the bankers' actions. This erudite and exceedingly well-written tale of financial chaos in the 1920s and 1930s is both timely and instructive for today's economic climate. Highly recommended for all academic and most public libraries.-Lawrence Maxted, Gannon Univ. Lib., Erie, PA (c) Copyright 2010. Library Journals LLC, a wholly owned subsidiary of Media Source, Inc. No redistribution permitted.
Table of Contents
| Introduction | p. 1 |
| Part 1 The Unexpected Storm: August 1914 | |
| 1 Prologue | p. 19 |
| 2 A Strange and Lonely Man | p. 23 |
| 3 The Young Wizard | p. 35 |
| 4 A Safe Pair of Hands | p. 45 |
| 5 L'Inspecteur des Finances | p. 61 |
| 6 Money Generals | p. 73 |
| Part 2 After the Deluge: 1919-23 | |
| 7 Demented Inspirations | p. 99 |
| 8 Uncle Shylock | p. 130 |
| 9 A Barbarous Relic | p. 155 |
| Part 3 Sowing a New Wind: 1923-28 | |
| 10 A Bridge Between Chaos and Hope | p. 179 |
| 11 The Dawes Opening | p. 193 |
| 12 The Golden Chancellor | p. 217 |
| 13 La Bataille | p. 241 |
| 14 The First Squalls | p. 270 |
| 15 Un Petit Coup de Whisky | p. 291 |
| Part 4 Reaping Another Whirlwind: 1928-33 | |
| 16 Into the Vortex | p. 307 |
| 17 Purging the Rottenness | p. 347 |
| 18 Magneto Trouble | p. 374 |
| 19 A Loose Cannon on the Deck of the World | p. 393 |
| 20 Gold Fetters | p. 422 |
| Part 5 Aftermath: 1933-44 | |
| 21 Gold Standard on the Booze | p. 451 |
| 22 The Caravans Move on | p. 477 |
| 23 Epilogue | p. 497 |
| Acknowledgments | p. 506 |
| Notes | p. 509 |
| Bibliography | p. 533 |
| Index | p. 545 |