Lords of Finance: The Bankers Who Broke the World

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Lords of Finance: The Bankers Who Broke the World

3.98 of 5 stars 3.98 · rating details · 2,907 ratings · 315 reviews

Winner of the 2010 Pulitzer Prize

With penetrating insights for today, this vital history of the world economic collapse of the late 1920s offers unforgettable portraits of the four men whose personal and professional actions as heads of their respective central banks changed the course of the twentieth century

It is commonly believed that the Great Depression that began i...more Winner of the 2010 Pulitzer Prize

With penetrating insights for today, this vital history of the world economic collapse of the late 1920s offers unforgettable portraits of the four men whose personal and professional actions as heads of their respective central banks changed the course of the twentieth century

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 taken by a small number of central bankers that were the primary cause of the economic meltdown, the effects of which set the stage for World War II and reverberated for decades.

In Lords of Finance, we meet the neurotic and enigmatic Montagu Norman of the Bank of England, the xenophobic and suspicious Émile Moreau of the Banque de France, the arrogant yet brilliant Hjalmar Schacht of the Reichsbank, and Benjamin Strong of the Federal Reserve Bank of New York, whose façade of energy and drive masked a deeply wounded and overburdened man. After the First World War, these central bankers attempted to reconstruct the world of international finance. Despite their differences, they were united by a common fear?that the greatest threat to capitalism was inflation? and by a common vision that the solution was to turn back the clock and return the world to the gold standard.

For a brief period in the mid-1920s they appeared to have succeeded. The world?s currencies were stabilized and capital began flowing freely across the globe. But beneath the veneer of boom-town prosperity, cracks started to appear in the financial system. The gold standard that all had believed would provide an umbrella of stability proved to be a straitjacket, and the world economy began that terrible downward spiral known as the Great Depression.

As yet another period of economic turmoil makes headlines today, the Great Depression and the year 1929 remain the benchmark for true financial mayhem. Offering a new understanding of the global nature of financial crises, Lords of Finance is a potent reminder of the enormous impact that the decisions of central bankers can have, of their fallibility, and of the terrible human consequences that can result when they are wrong.

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Hardcover, 576 pages

Published January 22nd 2009 by Penguin Press HC, The

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Apr 15, 2013 Will Byrnes rated it 4 of 5 stars

Shelves: non-fiction, economics

Ahamed has written a fascinating account of how four central bankers were at the core of the economic madness that gripped the world after World War I and led to the second great war.

The personalities are interesting, and the scent of the times wafts from the pages sufficient to sting the nostrils. This is a book written for a popular audience. No great knowledge of economics is required. But that sure would help. It is not only our elected officials, Wall Street brokers and government officials...more Ahamed has written a fascinating account of how four central bankers were at the core of the economic madness that gripped the world after World War I and led to the second great war.

The personalities are interesting, and the scent of the times wafts from the pages sufficient to sting the nostrils. This is a book written for a popular audience. No great knowledge of economics is required. But that sure would help. It is not only our elected officials, Wall Street brokers and government officials who are ignorant of the rules of economics. I, and surely many of you are as well.

For me, it is a sort of blockage, like being able to read music. I taught myself to play the guitar at age 15, not well, but at all, and played for some years thereafter, writing a few songs, even performing on stage a few times, but I was never able to learn to read music. I tried several times, but was never able to get past a crude identification of the difference between whole, half and quarter notes. In the same way, whenever I have tried to crack the code that is economics, the result was intellectual cacophony. As that pertains here, while the story is fascinating, and the wealth of information proffered expands our knowledge of the times, one can only grasp a percentage of what is offered if one is economically tone deaf. I just do not get how a currency can be based upon the presence of gold or any other substance for that matter. Why not seashells or jelly beans? As a considerable portion of the book focuses on the ramifications of the gold standard, my intellectual economic disability severely reduces the understanding I can gain here. If you get the gold standard and are comfortable with discussions of macro economics, this will be mother’s milk for you. Great stuff. For the rest of us, it is a fascinating look at a tumultuous period with color portraits of some of the central players in the world economy.

Ahamed appears to be blaming the four economic titans on which he focuses for the ensuing economic and military maelstrom. But what should they have done, what could they have done, had the power to do, differently that would have changed the outcome? To lay blame at their door seems a convenient way to personalize blame for undercurrents that are all too widespread in humanity, short-sidedness, greed, mean-spiritedness, and downright stupidity. OK, wise guy, what should they have done? Yes, people, individuals, particularly powerful, influential individuals matter. But history is not just a series of he did this and she did that. There are currents to history that flow, regardless of how large the fish may be that inhabit the waters. The economic miseries of today are not merely a product of the madness of King Dubyah. The latter reflects the former and not the other way around.

One reason to read this book is to see how our current fiscal crisis might resemble those of the past. And indeed it does. Perhaps the mis-steps that were taken might be avoided today if we are to learn from history. But if there is one thing that we learn from history it is that people rarely, if ever, learn from history. It is an easy and interesting read. Whatever the conclusions the author may draw from his story, and whatever the cranial incapacities of an individual reader, the story itself is quite intriguing.
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Mar 14, 2010 AC rated it 4 of 5 stars

Shelves: 20th-21st-century, markets

I returned to and finished this book on audible -- driving about the local streets -- to and from work -- and driving the kids hither & thither... what it lacks as a book (and my opinion about the issue of reparations has not been changed by L.A.'s arguments) -- that it is somewhat shallow qua analysis -- it gains as an audible -- in that it is very strong on narrative.

The result is that the author often strives for effect, rather than truth -- there is a rhetorical element, common to many b...more I returned to and finished this book on audible -- driving about the local streets -- to and from work -- and driving the kids hither & thither... what it lacks as a book (and my opinion about the issue of reparations has not been changed by L.A.'s arguments) -- that it is somewhat shallow qua analysis -- it gains as an audible -- in that it is very strong on narrative.

The result is that the author often strives for effect, rather than truth -- there is a rhetorical element, common to many books, of course. At any rate, I'm glad I finished it, as it fills in many of the blanks.

Take two...

(I've lost interest -- the book is second-rate. The hedge fund guys thinking they're historians... because they can spot a trend. Good reading for those with the time to spare)

I've lowered my rating. This book is good, and got off to a rousing start. Well-written, fascinating... and it is certainly informative. For anyone looking for a good book on the Depression, and real page-turner (not kidding), this might be it. But then I got to chapter 7, and Ahamed's discussion of the Weimar inflation. It is awful. It seems to be contaminating by the writings of Niall Ferguson, that arch-reactionary who argued, in Pity of War, that the Great War was Britain's fault (not Germany's), and Ahamed blames the inflation on reparations, which is bunk.

This view was debunked by both Jens Parsson (http://mises.org/web/4017 a tremendously good book) AND Bresciani-Turroni (http://www.questia.com/PM.qst?a=o&...). The reparations had NOTHING to do with the inflation, and the claim that it did was due to ultra-nationalist German propaganda -- meaning everyone to the right of Rosa Luxemburg.... (If anybody REALLY wants to know about this issue, email me and I'll forward some notes on the topic....)

The fact is, contrary to popular myth, Versailles was too mild. Proof? 1939-1945. Had the Entente pressed on for another two weeks after November 11th, the German experiment in unification would have ended then and there.

Chapter 8, which deals with the US handling of the Allied war debts -- another sorry chapter in our history -- is much better, though by now it has become clear to me that the author's knowledge is second-hand, and not free of Neoclassical conventions....

The book, at any rate, was finished during the current market crisis, and the author is informed. He is a money manger, not an academic -- which is, in part, a plus.

I do expect to keep at it, and to finish this book -- deo volente(less)

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Mar 01, 2009 Julia Pheifer is currently reading it Recommends it for: history buffs

I'm three chapters in and this book is great. The author is a former finance guy who is a surprisingly good writer--a strong and interesting voice. This is no plodding, chronological history book. There's good insight into the times, orientation to the times with people other than the main characters, with nuggets of information (also known as gossip, my favorite part of history) and stuff that's applicable to current times. That fulfills all my requirements for history.

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Mar 27, 2013 Evan rated it 5 of 5 stars

I thoroughly enjoy listening to this audiobook, having done so twice now. It is a great combination of history, economics and finance. It's great learning about the banking history of the US. All the crashes and panics that continue to repeat themselves (although none of them have been as bad as the great despression).

This book clearly presents the case for why tying a country's money supply to the gold standard doesn't entirely make a lot of sense. However, in the Battle of Bretton Woods, the p...more

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Dec 09, 2012 Waseem rated it 2 of 5 stars

Ok this book probably wasn't aimed at me or what I expected, so perhaps my 2 star rating is unfair to this author who clearly put a lot of work in to create such a detailed book

Myself I personality didn't see the point to go so deep behind the stories of each banker as its non-required filler in my opinion that just lengthens the book beyond than it should be

We only will ever retain x amount of what we read whether you agree or disagree with me on that, and such large piece of history with detai...more

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Oct 27, 2012 Andrew rated it 4 of 5 stars

Shelves: business, history

I thought this might be a good book to read during this campaign season (2012). There has been so much rhetoric about economics offered by politicians who know little about it, but claim to know a great deal.

Since we are in the recovery period following the Great Recession, it seemed sensible to read a book about the economics of the Great Depression. And a great choice this was. Ahamed tells the story of follies that essentially drove the world into bankruptcy and set the stage for World War I...more

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Sep 09, 2012 S'hi rated it 4 of 5 stars

An interesting development in books about finance and the economy is the tendency toward reading like a novel. By that I mean much is made of setting and characterization of particular players. Yet, strangely, how we fit into the picture is still hardly touched upon.
I don’t complain. I know how hard it is to write about such things – after all I started writing False Economies some seven or more years ago and still haven’t settled on the most appropriate style! I have considered whether somethin...more An interesting development in books about finance and the economy is the tendency toward reading like a novel. By that I mean much is made of setting and characterization of particular players. Yet, strangely, how we fit into the picture is still hardly touched upon.
I don’t complain. I know how hard it is to write about such things – after all I started writing False Economies some seven or more years ago and still haven’t settled on the most appropriate style! I have considered whether something in the style of Charles Dickens would do justice – False Economies seemed to me similar in intent to Great Expectations. But the shift of global awareness makes such a task seem almost impossible.
So I approach Lords of Finance with my own particular interests and yearnings. And I am not disappointed. I find it covers much ground in a way which draws together the very human qualities that economics is really all about. It covers the desire to objectify and understand, and the failure to live up to one’s own self-expectations (let alone those of others). And it covers technical details in some depth and perspective.
However, I still find there are short-comings in respect to the consistency of valuations across countries and time periods. When I was first introduced to Economics in secondary school it was all about charts and diagrams. Granted, many of them were not true representations, but merely acted as metaphor toward complex abstractions. However, in a book of over five hundred pages to only have about half a dozen graphs depicting consumer prices, gold reserves and profits seems to me a little on the sparse side.
To actually chart the movements in gold reserves compared with movements in GDP across the four countries covered in this monumental work would have added so much to the digestibility of its information. Around the middle of the book I found myself needing other quick reference points to reconnect, as it is not a read-in-one-sitting book.
Perhaps I distracted myself by thinking of a friend who was born in Germany in 1923 and titled her autobiography A Billionaire’s daughter (copies available for sale by contacting me). I wanted to be able to quickly verify her lived experience against the facts and figures available to a distant researcher. Nevertheless, it is through such distractions that we retain what we can of a work, and find what would help us do so more readily.
I very much enjoyed the style of combining personal details and idiosyncrasies of the various bankers, and I high recommend this work to others who seek to understand more about that everyday substance ‘money’ which seems so illusive to us all.
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Jul 24, 2012 Sean McCabe rated it 3 of 5 stars

I bought this one at an outdoor bookstand in the middle of Harlem this past March. I'd read great reviews of it, how it gives us an understanding of how the financial crisis started. But in fact it's about the financial crisis in the 1920's that led to the wall street crash of 1929. How the experts who were supposed to save the world economy actually led it to ruin. The hero of the book is John Maynard Keynes, the Paul Krugman of that era, who advocated spending and more spending to get out of t...more

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Jul 14, 2012 Constantine rated it 4 of 5 stars

Don't know why I continue to read books on finance. Economics is too esoteric a discipline for me. Is all talk of economics ultimately sound and fury that signifies nothing.? Perhaps a lay reader should steer clear of the topic...or maybe it's just me and I'm just never going to get it. Having said that...this book was actually enjoyable...because it is more a history book than a theoretical presentation of economic theory (although I'm sure a reader with a background in that arcane realm would...more Don't know why I continue to read books on finance. Economics is too esoteric a discipline for me. Is all talk of economics ultimately sound and fury that signifies nothing.? Perhaps a lay reader should steer clear of the topic...or maybe it's just me and I'm just never going to get it. Having said that...this book was actually enjoyable...because it is more a history book than a theoretical presentation of economic theory (although I'm sure a reader with a background in that arcane realm would appreciate this book much more than a neophyte such as myself). Other reviewers have laid out the general scope of this book: four powerful and influential financial gurus (the Lords of Finance)...a world wide banking crisis that they were ultimately unable to avert (because they were all too human?, a crisis that was shaped by several forces:mainly the issue of reparations and the repercussions of capitol bound and,then, set free from an international standard of gold.
The cover and the blurb on the jacket seem to indicate it was these four lords that caused the meltdown...but the book itself shows that they,too,were subject to forces beyond their control.
In summation...I actually was able to enjoy this work because of the narrative and the dynamic interplay of these four powerful men. There really is an interesting story here. I also learned just how large a historical role the issue of reparations played. so for me...a Good read!
Part of my motivation for reading this book and other books dealing with economics or the Great depression is probably born of my sense of foreboding as I try to negotiate the mess we're in and peek into what looks like a disastrous immediate future. My logical self knows that such prognostication (especially of the economic sort) is a fool's game of no consequence....but I'm powerless to look away as I try to get a bead where we are heading.. To what avail? By way of analogy: Is it better to guess at the size and force of a meteor that is about to destroy the earth ...or to enjoy your remaining moments blissfully unaware of its existence?(less)

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Dec 28, 2011 Michele Weiner rated it 3 of 5 stars

This explanation of the perfect storm that lead to the Great Depression was oddly reassuring in light of the current economic climate. Ahamed describes the sorry state of economic and monetary theory, the straightjacket that was the gold standard, and the mediocrities who were in charge of the world's money during the period between the wars. Today, he says, we have Keynes, we are not tethered to gold, and the crises that we have experienced have had the decency to occur one at a time with a dec...more This explanation of the perfect storm that lead to the Great Depression was oddly reassuring in light of the current economic climate. Ahamed describes the sorry state of economic and monetary theory, the straightjacket that was the gold standard, and the mediocrities who were in charge of the world's money during the period between the wars. Today, he says, we have Keynes, we are not tethered to gold, and the crises that we have experienced have had the decency to occur one at a time with a decent interval between shocks. Ahamed's final chapters sum up the factors that lead to the complete breakdown of the wold economic system in the 1930's. First, the Treaty of Versailles institutionalized debts connected with WWI. Each of the major countries of the world owed money to the United States, and Germany owed reparations to all the Allies. Figuring out how to collect or to avoid paying these debts consumed the energy of most of the world for a decade to the detriment of progress. The leading central bankers of the decade of the '20's, Montagu Norman of England , Benjamin Strong of the US Fed, Hjalmar Schacht of Germanyb and Emile Moreau in France, were responsible for the "second fundamental error of economic policy in the 1920's: the decision to take the world back onto the gold standard." Britain overvalued its currency due to pride and could not sell its goods to other countries as a result. The supply of money in each economy was tied to the supply of gold. More money could be printed under the mysterious and totally voluntary rules governing gentlemen's agreement that was the gold standard only when more gold was discovered. Gold supplies could not keep up with the need for money. The difficulties that England brought down on the pound by an early and incorrect pegging of the pound to the pre-war gold standard affected the economic health of the entire world. Gold flowed, unwanted, to the US and France, and undermined international cooperation.

The central bankers kept the world afloat for a while by keeping interest rates down in the US and lending money to Germany. These stopgap measures lead to a huge bubble in the US stock market, so the Fed was forced to choose between continuing to keep Germany afloat or tamping down the bubble in the stock market. In the end, they destroyed Germany while being ineffective at halting speculation in stocks. The bubble, on the way up, caused recession in Germany and causing deflation in the rest of the world, and on the way down, plunged the US into depression. Economies are greatly affected by confidence. A little firm leadership can go a long way. The group of men who ran the world's major economies did not understand leadership, who had outmoded or incorrect theories about economics, or who felt that nothing could or should be done except to wait out the effect of deflationary(less)

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Sep 11, 2011 Crystal rated it 5 of 5 stars

A lengthy but informative read about the key central bankers and actions that led up to the Great Depression. The author assumes the reader has some knowledge of certain economic relationships, in terms of the implications of deflation, inflation and using the gold standard, which twenty years after my last economics course required a little effort on my part to work out. I wouldn't have minded a little more explicit information to help make sense of all of it.

The author goes into great detail a...more

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Apr 10, 2011 Marks54 rated it 4 of 5 stars · review of another edition

This is a history of the interactions leading up to and including the Great Depression among the chief central bankers of the US, Great Britain, France, and Germany. The story is well known, but the complex interactions between loans to Germany from the US, German reparation payments to allies, and allied debt repayment to the US is always worth some refreshing. In addition, the role of the gold standard in this is also important. Most importantly, this is a story about the strength of these per...more

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Feb 08, 2011 Ramberto rated it 5 of 5 stars

Shelves: economics, history, non-fiction

The best book I read last year. Very comprehensive description of how four men essentially drove the world into depression through monetary policies that were largely unregulated by their central governments. This isn't hyperbole, very little was understood about how the money supply, interest rates, and most importantly, the all important gold standard could be combined to create a perfect storm of currency instability. The stock market may have been the straw that broke the camel's back, but i...more

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Jan 30, 2011 Kendall Nielsen rated it 5 of 5 stars

Most books of this period focus on the war (WWI or WWII) or the human impact of the great depression. This was a great book about the bankers who tried (and failed) to guide world finance between WWI and WWII. It was interesting to see how the gold standard hampered the central banks (US, Britain, France, Germany) from responding to post WWI financial distress.

"Though J.P. Morgan & Co. was by no means the country's biggest bank, Pierpont Morgan himself had acquired an extraordinary aura of a...more

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Oct 02, 2010 Doug rated it 4 of 5 stars

For what most would probably consider a terribly dry topic, I find fascinating. Lords of Finance follows the lives of the central bankers of the four major powers of the world from 1914 through the 1930's: Benjamin Strong of the US Federal Reserve, Montague Norman of the Bank of England, Hjalmar Schacht of the German Reichsbank, and Emile Moreau of the Banque de France. Though most people have not heard of any of these men, Liaquat Ahamed argues that it was the decisions of these men rather than...more For what most would probably consider a terribly dry topic, I find fascinating. Lords of Finance follows the lives of the central bankers of the four major powers of the world from 1914 through the 1930's: Benjamin Strong of the US Federal Reserve, Montague Norman of the Bank of England, Hjalmar Schacht of the German Reichsbank, and Emile Moreau of the Banque de France. Though most people have not heard of any of these men, Liaquat Ahamed argues that it was the decisions of these men rather than some set of mystical forces that caused and perpetuated the biggest economic collapse of modern times.

Never have I enjoyed a book so much whose conclusions I disagreed with more. The book reads like a novel, and provides a balanced view of these historical events. I was shocked to read that Ahamed believes the US stock market crash of 1929 was in fact spurred by a Fed rate cut in 1927: "Though the cut was small...and short lived...the Fed's move was the spark that lit the forest fire."

The biggest problems I had with this book are Ahamed's treatment of the gold standard and our fractional reserve system.

With respect to gold, there will be a lot of people who read this book and conclude that these bankers love of this "barbarous relic" and the inflexibility they clung to was the reason for the severity and duration of the Great Depression. Ahamed conveniently glosses over the fact that it was not the inflexibility of gold that caused the problems he describes, but the stubborn insistence on pegging their post-WWI devalued currency to gold at their pre-war rates. THIS is what created the problems he describes, and even though he eludes to this, he also seems to ignore this fact.

In regards to fractional reserve banking, Ahamed talks about the inherent instability of the banking system throughout the book, but never once mentions that this instability is due to the fractional nature of our banking system. If bank deposits that are "payable on demand" were actually present in the bank vaults as per the contract the depositor has with the bank, this would never be an issue, and bank runs would not exist. It is because we tolerate a fraudulent system that instability becomes inevitable. For being so thorough in his facts and analysis throughout the rest of the book, I can't help but think that this omission, and his treatment of gold, are deliberate rather than oversights.

Read this book, but read it with skepticism.(less)

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Jul 25, 2010 Stella rated it 4 of 5 stars

Fascinating account of the world of central bankers from just before the Great War to Roosevelt. Describes the life and times of the central bankers for England, USA, France and Germany, comparing and contrasting. Much discussion of the gold standard and also a fifth central character, Maynard Keynes, who wanted to get rid of it, which of course they did eventually. Basically confirms my belief that no one in high finance really understands the system, or what effect their actions will have on i...more

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Jun 08, 2010 Andy rated it 4 of 5 stars

I thought the author wrote a really entertaining account of what might seem like a pretty dry subject. The book looks at the policy decisions that led up to the Great Depression and explains the order in which economies collapsed in the U.S., England, France and Germany.

Studying history in high school, I had always been taught that protectionist policies like the Smoot-Hawley tariffs caused the Depression, but Ahamed explains why this was actually a minor factor and that the real cause was (a) t...more

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Apr 22, 2010 Tony rated it 3 of 5 stars

Shelves: history

Ahamed, Liaquat. LORDS OF FINANCE. (2009). ***. Subtitled “The Bankers Who Broke the World,” this was this year’s Pulitzer Prize winner for History. It’s a massive book, extremely well researched, but...it’s boring. Maybe if you were an Econ major, this would be for you and really get you turned on. I’m a chemist and it didn’t do anything for me. Ahamed’s thesis is that the Great Depression and the economic meltdown was caused by a small number of central bankers that were also responsible for s...more

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Apr 20, 2010 todd rated it 4 of 5 stars

Written by someone with a firm grasp of monetary finance, this book is a fascinating history of the people and events that dominated central banking from prior to WW I to the outbreak of WW II. Reading about the few wise moves, the considerable political posturing, and the many outright blunders that drove Germany to hyperinflation and most major economies into depression provides a wonderful backdrop to today's real time debate.

Through a lively description of the events we learn there is nothin...more

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Sep 29, 2009 Oldesq rated it 3 of 5 stars

Lords of Finance is an informative and extremely detailed account of the money policies of Britain, France, Germany and the United States from the close of the First World War through 1933- with a brief foray into the years of the Second World War. The subtitle “the Bankers Who Broke the World” refers to the four heads of the central banks but is not particularly relevant as Ahamed fails to fully explain how the bankers broke the world- they certainly did not do so in concert. What is most helpf...more

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Jun 11, 2009 Frank Stein rated it 3 of 5 stars

Ahamed's one of those lucky authors who spends a decade working on a book and then pop! it lands at Borders the second its subject supposedly becomes essential to global salvation. Suddenly every anchor with 5 spare minutes wants an interview.

Ahamed wrote a book on central banking and the Great Depression and it came out just as the economic world fell to crap. Lucky him. It also received ridiculously positive reviews from everybody.

To my mind it was tedious, plodding, repetitious, and the stor...more

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Feb 27, 2013 Greg Brown rated it 5 of 5 stars

Even given his opening epigraph claiming that biography was the only way to understand history, Ahamed spends surprisingly little time describing each of the bankers as people. Sure, there are the vivid descriptions of their personalities and the expected personal details that helps to explain some of their behavior, but more important to the story is the unique situations each of them faced in their respective home countries: Moreau in France, Schacht in Germany, Norman in England, and Strong i...more Even given his opening epigraph claiming that biography was the only way to understand history, Ahamed spends surprisingly little time describing each of the bankers as people. Sure, there are the vivid descriptions of their personalities and the expected personal details that helps to explain some of their behavior, but more important to the story is the unique situations each of them faced in their respective home countries: Moreau in France, Schacht in Germany, Norman in England, and Strong in the United States.

Those three European countries ended World War I financially devastated—not just in terms of direct casualties from the war, but also from the loans needed to finance it. The United States, on the other hand, was on the other side of those loans; removed from most of the financial and human effects of the war, after cessation of hostilities the US found itself newly-elevated in the world order.

But beyond the mere balance-book debts and deficits was a deeper issue: their common reliance on the gold standard. All four had suspended matching their currency to the gold available during the war, but afterwards, desperately wanted to get back on the system for perceived stability.

But then they encountered the first crisis: what should they peg their currencies to now? The money supply had grown in all countries as the government pumped out bills to finance their militaries, and on top of that, their gold reserves had drastically changed as well. While the United States' gold reserves had newly-swelled due to their loans, all three European countries found their reserves drastically diminished.

It's fair to say that the gold standard—in all its allure and limitations—forms the central driver of the book. Each struggled to decide when to go back on the system, and stubborn domestic politics complicated acceptance of a devalued currency for most of the European nations. Their ties to gold sharply limited their available actions during the tumultous decade that followed, and sealed their fate with the catastrophic crash. It continues to be astonishing that there exists a faction of Americans—national politicians, even—who advocate for a return to the gold standard and ignore all history that says otherwise.

And then there were the reparations. Under threat of resuming hostilities, the Allies pried a stiff price out of defeated Germany. Not only was land ceded to France and others, and not just there army largely stood-down, but Germany found itself owing billions to France, the US, and the UK. Again, internal politics played a strong role here; the US argued for lower reparations in the interests of the world economy (and because they wanted to disengage with Europe at the time), while the UK and France wanted to squeeze Germany dry, extracting as many kilograms of flesh as they could.

All these tensions recur throughout the book, and it adds a shocking level of detail to what I previously knew about the crash. Again, while Ahamed claims his project is a four-fold biography of these lead bankers, his actual aims are far more grand: a well-written, accessible look at how and why the financial system failed. Unlike his presumptive thesis that hubris and personal factors led to the crash (as his title and other paratext would have you believe), the book's verdict is far more nuanced and damning. Given the financial systems at play and the political situations at the time, it's hard to imagine how any combination of personalities could navigated the troubles.

But that's not to say the book is entirely fatalist; there is one lone speck of light in the darkness, and his name was John Maynard Keynes. While he doesn't get as much attention as the four main characters, he acts as a hectoring marginalia to most of the decisions of the time. Keynes was utterly prescient, and has rightfully seen a resurrection after the crash of 2008. But he is the Cassandra of his tale, predicting the coming crash, and unable to do much more than step out of the way.(less)

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Jun 21, 2011 Jan-Maat added it · review of another edition

Shelves: 21st-century, finance, modern-history, economic-history

Interesting for its portrayls of the leading men of finance in the years leading up to the great depression and the economic damage done by the decision to maintain the gold standard. Striking how the author glosses over the causes of the Wall Street Crash of 1929. Readable.

Galbraith's book The Great Crash makes the ideal chaser to this volume.

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Jan 28, 2010 Jennifer rated it 3 of 5 stars

Conceptually really interesting discussion of the four bankers who ran the monetary policy of England, France, Germany and the US during the late 1920s and early 1930s...reinforces the case that reparations caused the collapse of Germany's economy and set the ground for WWII, also that all that worry about the gold standard (which nearly sunk Britain's economy in the late 1920s) was for nothing...makes you wonder what we're assuming now that's not true. Also, lots of deja vu if you've been follo...more

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Jan 18, 2010 Courtney rated it 5 of 5 stars

This book centers on four fallible men whose decisions, over more than a decade, contributed to and exacerbated the Great Depression.

"Lords of Finance" is no dry accounting. It's a dense, but thrilling, examination of the leaders of the world's most powerful central banks -- in the U.S., France, Germany and Britain -- and their efforts to sustain their countries through World War I, and to rebuild when the fighting stopped. These men's ideas were often wrong, built on the fallacy of the gold sta...more

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Nov 12, 2011 Zhifei Ge rated it 5 of 5 stars

Shelves: finance

It's a good book leading people back to reality from conspiracy theory. The author in this book tries to demonstrate that it's the four major bankers' limited wisdom that finally culminated in the Depression. The author described how decisions were made at different situations with detailed motivations.
There are many implications for contemporary society, especially when we are talking about sovereign debts these days. As noted by the author "many banks experiencing withdrawals would have been...more

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Aug 05, 2011 Liam rated it 5 of 5 stars

"'Financiers in fright do not make a heroic picture.'" (quoting Lloyd George in July 1914, 32)

"He was 'gay and whimsical and civilized' with 'that gift of amusing and surprising, with which very clever people, and only very clever people, can by coversation give a peculiar relish to lige,' remembered the art critic Clive Bell." (on Keynes, 113)

"'At particular times a great deal of stupid people have a great deal of stupid money. ... At intervals ... the money of these people -- the blind capital...more

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Apr 15, 2009 Bookmarks Magazine rated it 3 of 5 stars

Shelves: may-june-2009

Almost all critics praised Lords of Finance for its command of economic history and engaging, lucid prose. Ahamed, noted the New York Times, illuminates wise parallels between the misplaced confidence that spawned the global depression in the 1930s and the illusory calculations of risk that led to the current financial crisis. His compelling biographies also personalize economic history. While critics disagreed about whether lay readers will, in a century's time, care about Norman, Moreau, and S

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Jun 04, 2010 Keith Akers rated it 3 of 5 stars

This is a good historical book. I like the approach of describing the actual lives of the bankers in question, who actually come across as sympathetic figures. Actually, they led pretty interesting lives, and this woven in with all the economic stuff is the main strength of the book. You get the sense that he is talking about people, not economics theory.

I don't think that the book quite supports the conclusion on the dust jacket, that the "decisions taken by a small number of central bankers ....more This is a good historical book. I like the approach of describing the actual lives of the bankers in question, who actually come across as sympathetic figures. Actually, they led pretty interesting lives, and this woven in with all the economic stuff is the main strength of the book. You get the sense that he is talking about people, not economics theory.

I don't think that the book quite supports the conclusion on the dust jacket, that the "decisions taken by a small number of central bankers . . . were the primary cause of the economic meltdown." In fact the book itself gives a rather different conclusion, p. 501, pinning the primary blame on the Versailles treaty and reparations, and only secondly on the bankers.

I would have appreciated a bit more attention to why the gold standard brought (or helped bring) the system down -- perhaps with an overview of different theories as to what actually caused the crash. The book got off to a good start, but by the middle of the book it became harder to follow the argument. You start to hear about other bankers and characters besides our main four, and the characters and plot becomes harder to follow. As you are reading the book, if you know nothing in particular about economics, you have to ask yourself, "so what exactly is so bad about the gold standard?" Might it not have prevented Germany's hyper-inflationary period, for example?

And the subsequent recoveries of Germany and the U. S. in the 1930's don't exactly support this conclusion, either. Germany afterward experienced a recovery of sorts during the 1930's, despite remaining on the gold standard. The U. S., which effectively devalued its currency and ceased reliance on the gold standard, had perhaps a "better" recovery, but still had very high levels of unemployment -- higher, evidently, than Germany. So how does the gold standard tie into this?

After reading the book, let's put it this way -- I'm not advocating a return to the gold standard! The book actually seems to support the thesis that the dust jacket blurb purports that the book refutes: that in fact the Great Depression was the result of "events beyond any one person's or government's control." If they were due to one person or one government, the author needed to point out a particular person or government, and say -- "Here! If only Strong, or Schacht, or Norman, or Moreau, had just done X instead of Y -- everything would have been different." But such a point never emerges.
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Nov 14, 2009 Emily rated it 3 of 5 stars

Shelves: 2009

In the early 1930s, a reporter asked John Maynard Keynes whether anything like the Great Depression had ever happened before. His reply: "Yes, it was called the Dark Ages, and it lasted four hundred years." This book is about the four central bankers (of the U.S., Great Britain, France, and Germany) who presided over the economic collapse between the World Wars. Imagine something much worse than the banking crisis of 2007 taking place after a brutal war in which millions of men were killed and i...more

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About Liaquat Ahamed

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 advisor 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...more

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Economic Adjustment and Exchange Rates in Developing Countries

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