Lords of Finance: The Bankers Who Broke the World

Niall Ferguson reviews, in the FT, what appears to be a most interesting and timely book -Lords of Finance: The Bankers Who Broke the World – not the current bankers, but a story beginning 94 years ago:-

When the history of the current financial crisis comes to be written, the battle of the index entries will surely be won by central bankers not politicians. The name Bernanke will appear on many more pages than Bush, King more often than Brown, and Trichet will trump even Sarkozy. Most of the time, central banks strive to be dull places; the people who run them relish their obscurity. But when crisis strikes, the limelight shines.

The last great liquidity crisis to hit the global financial system happened 94 years ago, at the end of July 1914. It paralysed the wholesale money market, closed the world’s stock markets for months and necessitated unprecedented government intervention in the banking system. Rightly, this is where Liaquat Ahamed begins.

A semi-retired investment manager, Ahamed set out to tell the story of the four dominant central bankers of the inter-war period. He cannot have foreseen how timely his book would be. Unlike most works on the origins of the Great Depression, 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.

This is a book which Adam intends to purchase.

Ferguson concludes:-

As the world teeters on the brink of another great financial cliff, we can only hope that the modern-day Lords of Finance will co-operate to better effect. I suspect none has much time for bedtime reading these days. But should Messrs Bernanke, King and Trichet need a reminder of what can go wrong when central bankers achieve only the semblance, but not the reality, of co-operation, Lords of Finance is the book they should read.

As a matter of urgency, a Chinese translation should also be sent to Zhou Xiaochuan, governor of the People’s Bank of China.

Interestingly Kim Hill recently interviewed Ferguson. Whilst not a Kim Hill fan Adam heard this interview and found Ferguson interesting to listen to. This is the podcast.

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