The Ascent of Money by Niall Ferguson

Money allows us to move value, especially the value of our labor and perishable products, across space and time. Banking allows us to move money across space and time. Bonds and stocks go beyond banks and allow us to finance longer term investments, an essential component of economic progress and wealth creation; of course, they also allow us to gamble with both our own and other people's money. Betting on the future is risky, which is why we have insurance markets; and few bets are as important for both financial health and living standards as betting on houses. All these components come into play in the global financial history Niall Ferguson weaves together in The Ascent of Money.

The book was written as the financial panic, housing bust, and global recession of 2008 were still snowballing. Ferguson offers a historical perspective on what he considers the key markets influencing the unfolding crisis. From the clay tablets of Mesopotamia to the silver mines of Cerro Rico to the international exchange machinations of George Soros, the book walks a sweeping path through thousands of years to the first few months of that fateful year.

The style of the book is, unsurprisingly, a bit rushed, but generally enjoyable. Ferguson freely bounces between the ludicrously anecdotal and the abstractly mathematical. Consider this passage, introducing the founders of the Scottish Minsters' Widows' Fund (now the insurance & pension fund Scottish Widows):

We tend to think of Scottish clergymen as the epitome of prudence and thrift, weighed down with an anticipation of impending divine retribution for every tiny transgression. In reality, Robert Wallace was a hard drinker as well as a mathematical prodigy, who loved to knock back claret with his bibulous buddies at the Rankenian Club, which met in  what used to be Ranken's Inn. Alexander Webster's nickname was Bonum Magnum; it was said to be 'hardly in the power of liquor to affect Dr. Webster's understanding or his limbs'. Yet no one was more sober when it came to calculations of life expectancy.

With my Presbyterian background, I had to chuckle; I'm like to think that Ferguson, himself a Scot, must have done so when he wrote it.

On the whole, I was quite pleased with the book. I actually assigned it as required reading for my money and banking students before I had finished it, and am looking forward to in-class discussion on it in a few weeks. On the other hand, I also learned that there is a 6-hour BBC miniseries version, so a number of students might not read it at all. I'm still undecided if that's a bad thing or not.

I recommend the book to anyone who wants a broad historical background to understanding either the recent recession or modern finance. There are other sources with more detail and more focus, and as I mentioned earlier, the flow suffers a bit from trying to release the book in medias res. But I get the sense that this is Ferguson doing what he does best, and he's quite good at it.