Book review: Lords of Finance — The Bankers Who Broke the World

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Ahamed writes in clear, easy-to-digest prose and does a remarkable job at explaining in lay terms some sophisticated economic concepts. And throughout his narrative and analysis, the author sprinkles in astonishing facts, none more so than the severity of inflation in post-WWI Germany:


"Over the next few months (of 1923), Germany experienced the single greatest destruction of monetary value in human history. By August 1923, a dollar was worth 620,000 marks and by early November 1923, 630 billion," he writes. "Basic necessities were now priced in the billions; a kilo of butter cost 250 billion (marks); a kilo of bacon 180 billion; a simple ride on a Berlin street car, which had cost 1 mark before the war, was now set at 15 billion."


How in the ...?


Ahamed does a masterful job of explaining how Germany got itself into this fix (bascially by printing money nonstop) and how it got itself out. And he similarly details the fixes and crises that the other bankers and countries faced. (Yes, he does go into detail about how stock market speculation caused the crash of 1929, but also shows how some astute financial moves could have curtailed the length and severity of the Great Depression).


One of the book's major tenets is that the major economic powers' stubborn adherence to the gold standard caused or exacerbated much of that era's economic woe. Ahamed also lays considerable blame on the Draconian reparations that the Allies negotiated with Germany after the first World War. It's not that Germany shouldn't have paid dearly; it's that there was never any way that the war-ravaged nation would be able to meet such dire obligations.


The domino effects from these and other historical developments are well-organized and, again, fascinating. Lords of Finance is one of those important books that just happens to be a fun and engrossing read.

So you're not an economist, not in the finance or banking business; you dump your 401K money into generic funds. You don't care too much for money, just that it can buy you stuff. You're like me, like a lot of us.

So why would you ever consider reading Liaquat Ahamed's Lords of Finance: The Bankers Who Broke the World (The Penguin Press, $32.95)?

I could tell you that this 500-page tome about the myriad factors that caused the 20th Century's Great Depression mirrors the economic quagmire we are in today. I could say it's a cautionary tale. These things are true, but it makes the book sound like medicine.

Why would you want to read Lords of Finance? Because it's fascinating.

The book's narrative is built around four unique characters: the heads of the central banks of the United States, England, France and Germany. The complex interactions between these men (colleagues of a fashion, but always looking for ways to gain advantage over each other), their strongly held and often wrongheaded beliefs, their constant tussle between nationalism and the increasingly global-based economy, and, ultimately, their blunders, give us invaluable insights into behind-the-scenes machinations, starting from the run-up to WWI through the height of the Great Depression — and, in the process, the rise of Hitler.

About The Author

Eric Snider

Eric Snider is the dean of Bay area music critics. He started in the early 1980s as one of the founding members of Music magazine, a free bi-monthly. He was the pop music critic for the then-St. Petersburg Times from ‘87-’93. Snider was the music critic, arts editor and senior editor of Weekly Planet/Creative...
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