“A Financial History of the World” is only one order of magnitude shy of “A Short History of Nearly Everything”, so Ferguson’s work is necessarily along the lines of précis or highlights. That doesn’t stop it from being extremely readable, and it is a subject deserving of the author’s storytelling expertise. However, “whistle-stop”, as it is described by one of the comments in the cover, hints at the cursory treatment given to just about everything.

In its favour, none of the tale seeks to capitalise on the shock value of the 2008 meltdown which has generally been very good for polemics about greed, injustice and outrage. Right at the outset the reader is informed that financial systems and services arose to meet genuine needs of society, not previously required by citizens who raided and consumed, but never traded and saved. Pretty quickly after that though, chapter one concentrates on the more obvious uses to which early banking was put—wars, land grabs, plundering of someone else’s riches. (The Spanish crown is left to look foolish though, for seeing so much more lucre in South American gold than that continent’s natives ever did).

The message in this potted history would appear to be that financial innovation, and misdeeds or mishaps are never to be found very far from each other. But this reviewer was left in some doubt as to what was wrong and what was right. For example, British loan-shark Gerard Law, profiled early on, is defiled for charging punitive interest to uncreditworthy borrowers (and using menace as an incentive to honour payment), but a later section on African micro-credit has to admit that the terms on which customers obtain loans in that world are really not too different, and yet it remains one of the great new hopes for those looking for a way out of mass poverty. In another example, the chapter on bond markets is thorough and informative, but the market is held to have both awesome power over everyone, including governments, at the same time as being the forgiving lackey of errant states that repeatedly repudiate sovereign debt but still get later investors to suck up more (defaults are underpriced until the last minute). In another, hedging (offsetting a position as fully as possible) is touted as less of a moral hazard and cheating-scheme than insurance (risk pooling), only to give way to revelations that the best planned of hedges have a habit of doing for the mightiest funds with frustrating regularity.

The chapter on residential property vacillates a bit between the ills of excess leverage and inappropriate pressure to borrow, and the indisputable external (social) benefits of owner occupied housing relative to state provision. But there are hidden gems too: “remember: it’s not owning property that gives you security, that just gives your creditors security. Real security comes from having a steady income”. Globalisation is chronicled as the spread of scarcely voluntary trade under the auspices of imperial might, eventually giving way to commerce with benefits that are a bit more evenly dispersed, presumably as oligopolies on coercive and bargaining power become hard to sustain and get frittered away, or as the interests of the original exploiters become more encompassing such that faster growth—rather than a larger take of it—makes more sense to all.

Ferguson’s “afterword” added in February 2009 is a let-down, where the author opts to give a somewhat bland tutorial on heuristic-and-bias behavioural finance as though it has just been discovered and/or was the principal component of the more recent descent of money. This reviewer would have preferred it if the afterword was not bothered with as it adds little—but she supposes that the “extraordinarily timely” quote slapped on the paperback’s cover is a multi-edged sword really—signifying all of heightened reader interest in the subject, and more intense author competition, and shorter shelf-life without updates given the speed of events. Probably explains the whistle-stop anyway.

Francesca ( )

I was drawn to this book after watching BBC documentary from same author. There are lots of facts presented in understandable and logical manner. Great book for financial education. Last part, prologue, added recently is explaining problems running in monetary world during financial crisis of 2008 with fine explanations of mistakes people are doing in their research and analysis which is worth of book alone.
I would like that author tried to incorporate Veblen thoughts more into this work although he is citing Veblen in this book. Veblen theories of conspicuous consumption would increase quality of explanations in chapters about houses and Chinamerica. ( )

Very clear, well-written history of finance and financial innovation. Written in the midst of last year's credit crunch, after the Bear Sterns bail out but before the Lehman Brothers collapse, there is a clear note of the urgency of the events of the time and the potential for meltdown ahead. This later section of the book was a shift away from the detailed historical examination of such events as the creation of bonds in medieval Florence, the bets, and fortune, made by Nathan Rothschild on the Napoleonic wars and the creation of the insurance market, closely tied to developments in mathematics. Overall, a clean and neat, easy to read, history-heavy book. ( )

A good look at the history of finance and the role it has played in history since the development of bond markets. This isn’t as much of a big-idea book as James Burke’s Connections or Jared Diamond’s Guns, Germs, and Steel, but it provides another valuable perspective on many historical events, so I’m shelving it next to those volumes. It also shows the benefits of financial markets when they operate well, which is a good counterbalance to some of the general outcry against capitalism as a reaction to the excesses of the bad deregulation in the 1980–2007 period. ( )