The Ascent of Money: A Financial History of the World

By Niall Ferguson

24,328 ratings - 3.9* vote

Niall Ferguson follows the money to tell the human story behind the evolution of finance, from its origins in ancient Mesopotamia to the latest upheavals on what he calls Planet Finance. Bread, cash, dosh, dough, loot, lucre, moolah, readies, the wherewithal: Call it what you like, it matters. To Christians, love of it is the root of all evil. To generals, it’s the sinews Niall Ferguson follows the money to tell the human story behind the evolution of finance, from its origins in ancient

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Book details

Hardcover, 442 pages
November 13th 2008 by Penguin Press

(first published November 13th 2007)

Original Title
The Ascent of Money: A Financial History of the World
1594201927 (ISBN13: 9781594201929)
Edition Language

Community Reviews

Riku Sayuj

Imperialism: The Darwinian Justification

Ferguson contends that today’s financial world is the result of four millennia of economic evolution. It is very important to the aims of this book that this metaphor is accepted. Ferguson looks at this evolution of money into the complicated financial ecosystem of today. He explores how money mutated into new tools/organisms and acquired characteristics that allowed it to meet the needs of its users/demands of its environment better. The tools that helped men make even more money or harness their own energies more efficiently were selected for as ‘fittest’ and soon took over the monetary environment.

This happened in fits and starts:

First came the invention of money itself, which is not given much attention to, probably because it is too shrouded in the mists of time (and also because the West has no unique claim on it, at any of its stages - even the more advanced forms). Then it started mutating into its various forms, conquering and occupying various niches according to functionality.

And according to Ferguson, the civilizations who had access to these new and more efficient tools were hugely benefitted and in many cases were at a decisive advantage, down to our day.

The Evolutionary Stages

1. Banks

Money, once it allowed quantification of the value of transactions soon led naturally to delayed payments and then to the institutions of lending and borrowing. These slowly grew to become banks, clearing houses for ever larger aggregations of borrowing and lending.

2. Bonds

The rulers and the lords were the biggest customers of the banks. In time governments that figured out how to utilize the credit market best thrived and their innovations led to government bonds and securitization of streams of interest payments. This matured into full-fledged bond markets by the 13th century. The rulers had great incentive to protect and regulate this amazing new source of funding! This led those governments most dependent on these markets to institute regulated public markets so as to maintain stability and security of transaction, which was in their own best interests. Transaction and discovery costs reduced drastically and areas with such markets proved extremely useful to their rulers, who could no raise money for wars much more effectively. Battles were now to be won and lost in the bond markets.

3. Stock Markets

By the seventeenth century, corporations started aping the states, a process that was not limited to only financial matters, and started to raise equity through share markets. This could only develop first in areas with already well developed bond markets and public markets and thus gave them a further advantage — the advantage derived from the financial tools now extended from wars to trade and industry. The West was rising buoyed by its financial innovations, in Ferguson’s view.

4. Insurance

With the institutions of bonds and shares prospering, the next step was to use the market to spread risk out. insurance funds and then pension funds exploited economies of scale and the laws of averages to provide financial protection against calculable risk. The corporations now had another decisive advantage in being able to have access to protection against risk and in a world where financial risk was the biggest danger any advantage there could prove world-conquering. The accumulation of financial innovations had already tipped the balance for the West and was now on its way to helping them conquer the world.

5. Real Estate

With the rise of more innovative instruments such as futures, options and other derivatives, it was now possible to increase leverage, not only for governments and corporations, but also for individual households. With government encouragement they soon increased their leverage and used that to invest more and more in real estate. This helped the western countries to have a larger and larger propertied class helping them to transition the into property-owning democracies, which, according to Ferguson, are the most robust sort.

6. Imperialism and Globalization: The Justified Culmination

Now we come to the crux of the narrative — Economies that combined all these institutional innovations - banks, bond markets, stock markets, insurance and property-owning democracy - performed better over the long run than those that did not, because financial intermediation generally permits a more efficient allocation of resources than, say, feudalism or central planning. The financial ecosystem evolved in the West was the best suited for governance and for human civilization in general. And it is for this reason that the Western financial model tended to spread around the world, first in the guise of imperialism, then in the guise of globalization, and has been vital for all sorts of progress achieved around the world — from the advance of science, the spread of law, mankind’s escape from the drudgery of subsistence agriculture and the misery of the Malthusian trap.

Ferguson has narrated the history of money as a financial evolution and thus given it the air of inevitable complexity and of progress. This makes it seem like the adoption of the ‘evolved’ financial system first by the West and them by the Rest is but a logical and inevitable choice that is for the best of the world at large.

It is noteworthy that Ferguson makes a point of using elaborate evolutionary metaphors to project the history of financial institutions in a Darwinian light.


According to this interpretation, financial history is essentially the result of institutional mutation and natural selection: Random ‘drift’ (innovations/ mutations that are not promoted by natural selection, but just happen) and ‘flow’ (innovations/mutations that are caused when, say, American practices are adopted by Chinese banks) play a part. There can also be ‘co-evolution’, when different financial species work and adapt together (like hedge funds and their prime brokers).

But market selection is the main driver. Financial organisms are in competition with one another for finite resources. At certain times and in certain places, certain species may become dominant. But innovations by competitor species, or the emergence of altogether new species, prevent any permanent hierarchy or monoculture from emerging. Broadly speaking, the law of the survival of the fittest applies. Institutions with a ‘selfish gene’ that is good at self-replication and self-perpetuation will tend to proliferate and endure.

As we can see there are certain key themes here:

a. That the survived institutions have to accepted as ‘fittest’ under Ferguson’s interpretation, and

b. That ‘selfishness’ of institutions/genes are rewarding for the species/humanity in the long run. So we should encourage the selfish imperialism of countries/the globalization of corporations today.

These are specious themes that are present in this book with a specific agenda, trying to escape notice by being presented in pseudoscientific light. And as we have seen from our discussion of how Ferguson uses the history of finance to show us how Imperialism was a good thing for the rest of the world, we can safely slot this book as another among Ferguson’s life-long attempts to come up with innovative apologetics for Empire.


Yay for empire!

Another book from the vaguely centrist right, you know them, those economists and Greek translators and philosophers from the University of Chicago who assisted Pinochet in his fascist coup, won Nobel Prizes, misconstrued Plato to fit their world-view (I'm looking at you, Leo Strauss), and finally, today, when they are primarily involved in teaching a new generation to do the same things.

Well, Ferguson perhaps isn't so vehemently rabid about his political beliefs, and he doesn't teach in Chicago. But he is their counterpart: the British free-trader. Only he has something the Chicago boys don't: that very old and very British urge to colonize those who have defaulted on their debts. We who are not so verse in financial lingo tend to call this imperialism, a much more effective imperialism because so incredibly beneficial to those who have the most to gain.

Ferguson does a very good job of making economic theory as understandable as possible (which means that I understood and could possibly recall about 30% of those unyielding financial terms and theories). It's an excellent day when intelligent historians do not stoop to "our" level to be understood: Ferguson makes his point without relying on that pitfall of historical writing: making history uncomplicated.

And yet, oh, and yet. The closest thing to socially adept you're going to get here is the gold standard, which by any standard (including its own) is a dangerous illusion of stability. And don't even think for a minute that Ferguson will even mention the naughty word "labor" as applied to a working force. He does his best to put a pretty, imperial British mask over his rough, working-class Scottish face, but for all his talk of bubbles and busts and liquidity and illiquidity and real estate and S & L, you have to wonder: is it possible that something so vacuous as a number on a screen can define us, politically, culturally, and spiritually? It's kind of a scary predicament, and _The Ascent of Money_ not only sets out to prove that this is true, it also aspires to show that "Planet Finance" is an evolutionary process, almost as evolutionary as evolution itself, with a little more ideology thrown in. The last chapter "Chimerica" is one reason to read the book (or at least that chapter) as it portrays a clear-sighted analysis of the US-China situation, which is becoming more intricate and dangerous each day.

It is a minor but slightly important book, more about finance than financial history. Then again, maybe finance is financial history.

I think it's time for some Naomi Klein.


Financial institutions are not evil, that's Niall Ferguson's main point. For some, this is already a hard sell. I am not, as it were, temperamentally against the idea, but I sure seem to read a lot of books by people who are, so I was curious to follow his arguments. And I have to admit that for the most part, he makes his case convincingly, arguing that ‘poverty is not the result of rapacious financiers exploiting the poor’ but rather ‘has much more to do with the lack of financial institutions, with the absence of banks, not their presence’.

I guess this makes sense when I think of some countries I know. To flesh out his case, Ferguson goes back to the Middle Ages and, chapter by chapter, takes you through the major milestones in the history of finance: the invention of banking in Renaissance Italy, the development of bonds, the emergence of a stock market, the growth of a concept of ‘real estate’. His point is that a ‘world without money would be worse, much worse, than our present world’.

I have – to my detriment as a journalist and as a solvent member of society – an embarrassingly non-stick mind when it comes to economic matters. Terms like ‘arbitrage’ or ‘fractional reserve’ slide off it, leaving no trace. Among the stories Ferguson tells is the one about the Scotsman John Law, who initiated one of the classic economic bubbles when – having unwisely been put in charge of the economy of Regency France – he frenziedly sold off stock in his new Mississippi Company. Now this is something I have read about in detail on at least three other occasions over the years: Colin Jones wrote about it in his history of 18th century France, The Great Nation; then I read Arthur Herman's account of it in The Scottish Enlightenment; and more recently Ned Sublette covered it from the American perspective in The World That Made New Orleans. I've now read the story for a fourth time. Yet if I sat down to explain my understanding of it, I would probably struggle to fill a smallish postcard.

For someone as weak in this area as I am, this book did much better than most in giving me a proper deep context for understanding the world of finance. For that I'm grateful. How much I accept his thesis I'm not sure; as far as it goes, it's obviously right, but there are things not addressed in here that complicate the picture, which subsequent events have made only too clear.

Because unfortunately for Ferguson, the most salient figure in the book is the one found on the inside cover: ‘Published 2008’. In a cruel twist, the book went to press just as the entire system it was trying to describe came crashing down around everyone's ears. A few panicked footnotes (‘…at time of writing – May 2008’) attest to Ferguson's attempt to stay abreast of events, but it was an impossible job from where he was – namely, in time to explain the ballooning subprime disaster, but before the collapse of Lehman Brothers and the multi-trillion-dollar bailouts.

With this kind of hindsight, any defence of the international finance system, no matter how well-intentioned, cannot help but leave a bad taste in the mouth. Which is not to say that Ferguson would have approved of what happened, far from it – his tone is, on such matters, generally censorious and he writes explicitly against bailouts as a concept (‘Every shock to the financial system must result in casualties’). His broad principles of financial progress may be just about still standing, but it's starkly apparent that the notion of regulatory oversight – which he never mentions – is far more pressing than a 2008 perspective could allow.

Ferguson, turning the old saw on its head, suggests that ‘money is the root of most progress’, and this may be so if you take the long view. The long view is what this book does best. Attempts to turn this into moral arguments about the present, though, only go to show the wisdom of that fine print which warns that a writer's sense of timing – like the markets – can go down as well as up.


Life has a habit of proving me wrong. Recently I wrote a review of The Drunkard's Walk How Randomness Rules Our Lives and said something like you generally get a better understanding of a subject if you can see the historical path that has been followed in building the subject in the first place. This book is all historical path, but it has left me without a clearer understanding of what I had hoped to learn from it.

And this is a pity, as there are many things about money I would like a deeper understanding of. These are things that people ALWAYS take for granted in writing these sorts of books – and they are also things that I have NEVER understood. Exactly the same thing happens with astronomy. A lot of the universe seems to be made up of matter that has formed essentially into planes – our solar system is a good case in point with all of the planets going around the sun in what looks a lot like a disk. I know that Kant was one of the people who worked out why this should be the case, but other than knowing who worked it out, no one seems to ever explain why that ought to be the case. For years I had much the same problem with water freezing – in most liquids moving from a liquid to a solid decreases the volume, water does the exact opposite. It was only when someone explained the crystal structure of ice that this started to make sense. I do particularly like things to make sense.

My question about money has to do with the Stock Market. This is my understanding. Capitalism’s great invention was the joint stock company. This was a way of raising lots of money from lots of different sources so that a company could be formed that would do what needed to be done (build a railroad, put down a gas pipeline, whatever else). The motto of capitalism could just as easily be ‘spread the risk – spread the joy’. The point being that even if you had enough money on your own to build a railway it would probably not be a good idea for you to put all of your money into that one thing just in case things went terribly, terribly wrong. By getting lots of people to put smaller amounts of money into a broader range of activities the chance of all of them turning sour at the same time is greatly reduced. What you loose in total control, you more than make up for in avoiding sleepless nights.

So, let’s say I want to start a company to build a better mousetrap, following on from the remarkable success of both Agatha Christie’s and Hamlet’s earlier versions. I need $10,000 and so I issue 100 shares worth $100 each. People are crazy enough to buy these shares and now I have my money and start researching mice and killing them. All is good with the world. I come up with said mousetrap, one that kills mice by quoting all of the major soliloquies of Hamlet at them until they decide the answer to the question is ‘not to be’. I start making lots of money. The value of my company goes up to $20,000 – so each of the shares has doubled in price. I think I understand all of this so far. But now there is a market in my shares and people, not content with receiving dividends from the profits I’m making hand over fist, want to sell my shares and take their profit in one go. Okay, good. Lots of people decide to sell my shares at pretty much the same time – perhaps there has been a bit of a slide in confidence somewhere more generally and even though the ‘boring vermin to death’ mousetrap is selling well and people have even started talking about how nobly designed it is and in apprehension, how like a god and so on … the general downturn in the market means people are selling stock left, right and centre (which just also happens to include mine) and no one seems to be interested in buying stock. So, the price of my shares plummets.

The question I always have is – well, so what? Surely the only time the company ought to be worried about the price of its shares is when they are being issued – as, it seems to me, this is the only time when they are going to bring in any money to the company. What happens to the price following this would seem rather academic from the company’s perspective. I issued the stock to build a company, I have built that company, that company is going well – why should the stock price bother me at all?

Look, I know I’ve got this arse about face in some way – and that is fine – but my point is that I would have expected to come away from this book understanding how this sort of thing works – and I didn’t. Now, don’t get me wrong. I’ve read lots of books on pretty much this same theme and subject and I’ve never had this bit explained to me in a way I can understand. It is very possible that I’m just a dolt and have completely missed what is so utterly transparent to everyone else they don’t even see the point in explaining it (and as I’ve said already, it wouldn’t be the first time). All the same, it would be nice if someone, somewhere could point me to a book that explains this stuff in a way that even I can understand.

The bits of this book that were particularly good were mostly towards the end when he started discussing behavioural economics. I’m becoming a big fan of this subject, but I do seriously wonder what it will end up adding to economics theory per se. The fact we are ‘predictably irrational’ (Predictably Irrational The Hidden Forces That Shape Our Decisions)is interesting enough in itself, but what will be much more interesting will be when this subject stops being about curiosities (as discussed in books like Freakonomics Rev Ed A Rogue Economist Explores the Hidden Side of Everything) and when a more substantial and unified body of theory (preferably able to make predictions) grows up around these curious and fascinating facts.

The part of this book where he brushes aside Confessions of an Economic Hit Man by talking about how little of a percentage of US total trade comes from Panama (and therefore it simply wouldn’t make sense for the US to kill their president) is so silly as to beggar belief. Surely the percentage here is not of total of US trade, but the total of Panama's trade that is dedicated to the US. Surely too the canal should figure somewhere in these calculations – it did very much so in the hit man book. And surely before dropping this argument entirely someone might want to talk about things without a direct 'economic' value to the US, say the value of having yet another UN vote always in US favour by a compliant Panama.

This writer is very much of the Chicago School – never even mentions that even in its heyday (and even in the US) there were saltwater economists who rejected the ultra-liberalism of the freshwater economists. But economics is a political and ideological ‘science’ – which is another reason we should hope that adding some cutting edge psychology into the mix might help. His mostly uncritical review of the Chilean ‘economic miracle’ gives the ‘all is sunshine’ version of Naomi Klein’s much darker version in The Shock Doctrine The Rise of Disaster Capitalism.

There is a television program that goes with this – I ought to watch it, I guess, but am probably unlikely to.

Marc Weidenbaum

The book is titled The Ascent of Money, but it's not about the ascent of money. It's about the path of money, with the assumption that from the origin of the book's historical perspective, money has been the bedrock of civilization. There's no ascendancy, because there is nothing for it to compete with, in the author's telling. What the book really is is a straight history of the above-board financial markets, and to that extent it's a useful and largely enjoyable read, covering the move from barter to coin, and from coin to virtual funds, and from virtual funds to algorithmic trading. The author does a wonderful job of jumping across vast time periods to draw comparisons (showing how even if technology changes, human nature does not). He does a terrible job of telling jokes, which comes across as a sort of nervous habit (mostly alliteration, puns, and pop-culture references), one that someone close to him should point out to him.

The absence of under-the-counter financial markets and their influence on, their substantial part of, the global economy seems like a significant blind spot. There are occasional asides to the Mafia, narco states, and the like, and of course when Ponzi schemes come to light they are acknowledged. But that's it. As such, it's sort of like this: if The Ascent of Money were a study of a city, it would only take stock (so to speak) of the goings on within buildings and institutions, and not of street life. In other words, it's not a full picture. It's like a Chamber of Commerce picture. (One other seeming blind spot: if I'm not mistaken, the author seems to have a disinclination toward companies that are not publicly traded.)

Also: I cannot recall reading a non-fiction book recently with less of a thesis. There is no overarching theme, no consciously enacted perspective, just the steady march of economic history proceeding like a fleshed-out timeline. I'd say most fiction I read has more of a thesis, more of a sense of perspective on the world, than this book does.

To be clear, there is a concluding section in which the correlations between biological evolution and monetary-system change is compared. But in effect what has happened is that after dropping occasional references to such a metaphor throughout the book, he then tries to tie it all together. In other words, the equation to produce this book was: write a history of (largely western) economics at a (largely) macro level, and then add a final chapter proposing a model, supported only by parenthetical references in the majority of the book. A comparison is not a thesis, especially when the comparison feels added on. Furthermore, the evolution metaphor is seriously sloppy. For a widely traveled professor at Harvard, he has created a loose-at-best metaphor with a floating subject that changes according to the need of his rhetoric, on a moment by moment, sentence by sentence basis: Has money ascended, like man is said to have? Has the nature of business? Has the market? If, as the author states, complex technological innovations haven't actually supplanted earlier modes like barter and loan sharks, then how can the comparison to mankind be made? Are we humans surrounded by our own competing ancestors? And if in fact this is about an ecological comparison, and not a one-on-one to mankind, then why not just say so? Because comparisons to man allow for the idea of the free market having a rational hive-mind sentience? Because The Ascent of Man sounds like a better logline than The Ecology of Money? It's altogether unclear. If after this much effort a book's thesis cannot be plainly stated, then it does not have one. What it has is a paper wrapper.

And as a side note, I may be mistaken, but the book seems to clarify when an economist is left-leaning but not when right-leaning. And the fact that George Soros and several other figures in finance are Jewish is pointed out, but no other religion is listed with any particular frequency when other major figures are mentioned.

One final thing: There is an anecdote about the film Mary Poppins early in the book that I highly recommend reading. I can't do it justice, but in brief: the author was invited to speak at a business event, and since the tone of his talk was somewhat negative about the economic short term and midterm, several of the attendees (all successful business-people) complained afterword, essentially taking issue with the presence of a non-businessperson, especially one deemed not enough of an optimistic booster. One of these complaints stated that they should have ditched him and just shown the movie Mary Poppins. The author then takes the opportunity to point out the extent to which Mary Poppins' plot rests on the instability of British banks.

John Farebrother

This is a very informative, and convincing book, about the history, and the need for money. I say that despite the fact that I disagree with the author's conviction that capitalism is one of humanity's greatest achievements, and that the price of progress is more than worth it, no matter who loses out. Also despite the fact that I have heard that the author is quite an arrogant individual. But this book is a thorough and comprehensive account of the various milestones that have taken place in the history of money. Above all it is a celebration of the achievements that have been made possible by money's capacity to leverage and create value - a value that some would say is illusory and false. But there is no doubt that the modern world as we know it would not exist without the lubricant and stimulant growth hormone money, for better or for worse.


Ferguson is known as an economic historian yet his last few books were almost purely historical, with only brief passages on the economic aspects of historical events. Here, Ferguson returns to telling about, well, not so much economics as the evolution of finance. First money, then banks, then bonds, then equities, derivatives, insurance, and finally the causes of the recent credit crunch are explained and developed in simple and clear prose. Unlike 'War of the World' - a mammoth retelling of the horror of the 20th century (which I felt had an impersonal and rushed air, as though Ferguson had relied too heavily on his massive, globe-spanning team of researches from a host of universities), 'Ascent of Money' is Ferguson really dealing with what comes naturally to him, as an expert in both the early modern bond markets, quantitative finance, the inner workings of the House of Rothschild (as he should, he wrote the book(s) on them), the hubris behind Long Term Capital Management, and every other complicated aspect of the markets. Also, the endnotes are what really put Ferguson in a class above the rest of the clutter in the 'NEW IN NONFICTION' shelves, because Ferguson really is a world class academic. The footnotes reveal the real depth and breath of Ferguson's learning and research - everything from the Financial Times, personal correspondences, interviews from Democracy Now!, and every major current events book of the last generation, including the new George Soros book which I bought WITH this book - Let's get that straight: Ferguson had read and referenced a book which is so new it was on the same 'NEW IN NONFICTION' shelf near his.

Jan Rice

Contemplating the title of this book, my first thought was that it was by a person of the political left, maybe not the Pope, but an anti-capitalist and moralizer on the all-around evil of the financial system.

"No," said the person who recommended it to me; "He's center right."

So, then I saw the title as deriving from the bad-boy mentality of the author, thumbing his nose at such views. The author has his own intended reference--to The Ascent of Man, a TV series by Jacob Bronowski that impacted him in his youth. But the first two chapter titles, "Dreams of Avarice" and "Of Human Bondage," did nothing to change my impression.

Also, this book is based on a television series, which is, in fact, what I originally set out to watch. And in the series, the author is strutting around, looking very much like a "master of the universe" wannabe (or, to use the old Salomon Brothers' self-descriptor that he quotes, a "Big Swinging Dick").

His presentation notwithstanding, Ferguson isn't an economist or financier but a historian and professor. Yet the teaching wasn't getting across. I must have been looking around online; that's when I discovered there is a book.

From that first chapter, about the origin of finance, I learned that the root of "credit" is in "credo," the Latin for "I believe," and that when Shylock calls Antonio "a good man," he means, not his virtue, but his creditworthiness. And that--the conjoining of goodness with creditworthiness--echoed subsequently in the institutionalized racism of red-lining in the 1940s, whereby African-Americans were deemed "uncreditworthy" (in Chapter Six), and, again, near the end of the book, where the author uses a dollar amount to express what a person would have been "worth," had he pursued a certain investment strategy.

The author also touchs on the legal fictions required to avoid running afoul of usury laws against the earning of interest--laws that remained in effect in England until 1833. Examples are the repaying a loan with the inclusion of a percentage of the gains, or the purchase of streams of annuity (if I remember correctly, the latter being one of Voltaire's methods.) ...And there's the Medici's rise via finance from small-time hoodlums to popes, royalty, and arts patrons. "Bank" is from "banci," Italian for "benches," on which the earliest bankers ("banchieri") sat behind their tables. ...And how precious metals do not define what money is. In fact, the importing of mountains of silver into Europe by the conquistadors changed what had been thought to be "the" worth of products: so much silver poured into the economy that there was inflation.

And he talked somewhere about how loans "create" money. You put your money in a bank. So you have that much money. And the bank lends it to someone else. Now that person has that amount of money, too. Presto--more capital! Or, more properly speaking, the depositor and the borrower can each take that money and build or make something. Although the borrower's position is balanced by debt, still, each has the use of the money.

In the afterword, the author defines money as "the crystallized relationship between debtor and creditor"--but isn't that only because he's focusing on finance? It seems to me it would be more basic to say it's the crystallized relationship between buyer and seller. (My husband is gloomily shaking his head while saying he doesn't know enough to comment, so I've probably gotten onto shaky ground.)

My favorite chapters were Chapter Four, "The Return of Risk," and Five, "Safe as Houses." In the former, I wondered why, at the beginning, he was making statements I expect to hear from the political left, such as that financial difficulties are more likely at present due to climate change and "American foreign policy blunders," and quoting Naomi Klein. He talked about risk, using as an illustrative case the uninsurability of parts of New Orleans post-Katrina. He also looked at the problem of inflation in the '70s in a one-sided way, it seemed, positing Milton Friedman as the savior and "socialism" as the enemy. At the end of that chapter, he said the answer to the problem of risk lies in futures, options, and hedge funds, albeit an answer available only to those with money. And that was his answer to his rhetorical leftist references to risk at the beginning of the chapter.

For the rest, there are--houses. Chapter Five begins with the story of Monopoly (the game): invented by a radical who wanted to preach against the uses of money, but turned into a glorification of same by a later developer. The game became so ubiquitous that it was used in WWII to smuggle real cash to spies behind enemy lines.

Ferguson makes clear that, although the owning of homes benefits capitalist democracies, the expression "safe as houses" applies to the lender, not the buyer. The lender can reclaim the property should the borrower default, since you can't pick up your house and abscond with it. What the purchaser must have is an income. Then, and only then, is he home safe.

And, back to the '40s and before, that was when, in the words of a friend of mine, FDR "saved capitalism." In 1932, in the midst of the Depression, Ford Company goons fired on 5000 demonstrating unemployed workers, killing five, and before long 60,000 workers were singing "The Internationale" at the funeral. The New Deal became answer to such unrest--as did the creation of affordable long-term mortgages and federal deposit insurance.

The chapter ends with safe as--not houses--but "housewives," and the merits of microfinance. Women stay home, use, not squander, the money, and pay it back. (Elsewhere I've read of the similar merits of educating women.) But even in microfinance exorbitant interest rates have arisen, supposedly as the only way to make money on a multiplicity of tiny loans.

Although "Safe as Houses" presents the risk to capitalism, the author never puts together in a coherent way that classic liberalism, in the sense of absolutely free markets, sans any sort of planning or mitigation of the travails of "the masses," would lead to just the sort of uprising he describes as having happened back during the Great Depression.

The last chapter, "Chimerica," deals with the Great Recession of 2007 and the relationship between the U.S. and China. They save, they lend us lots of money; awash in all that money, "subprime" loans were made to people with no jobs, no assets, and no prospects--for which he fingers "W." (Take that, you conservative accusers!) Apparently no one knew that defaults on subprime mortgages would shake the international economy and affect people half a world away.

The author talks about the era of globalization that preceded WWI, characterized by imperialism and gunboat diplomacy, of which one low point must be the forced creation of an opium market in China for the merchandise produced in India under British auspices. In light of that, our present status as the drug market for the "developing world" doesn't seem so wrong. Turn and turn about is only fair.

Ferguson quotes some of the financial elite of the Victorian era--that prior era of globalization--as saying war would be a disaster, but most of them were saying it couldn't happen; the world was just too interconnected. Of course, he's comparing that to our own globalized times. Then, Britain was paired with Germany as the U.S. is with China now. (But his picture neglects to touch on the pervasive belief that Europe needed war to cleanse or purify itself, that I've picked up from other sources.)

Markets have short memories. Workers in the financial sphere have careers of around 25 years. English-speaking westerners feel so secure. They are lacking in imagination, and they are complacent. The author closes with a review of economic thinkers such as Nassim Nicholas Taleb (Fooled by Randomness and The Black Swan) and Daniel Kahneman. He's looking here at the hard-wired irrationality that calls into question all economic forecasting--without the benefit of hindsight, that is.

Niall Ferguson's TV series as it was shown in England is available on YouTube. There was also a four-session NPR showing but we were lucky to end up with the six sessions that matched up with the six chapters. The book goes into more detail--sometimes confusing, as when terms are defined on the show but not in the book. The book tends to contain jargon not readily understandable to the uninitiated--sometimes unintentional but sometimes, just maybe, intended to mystify. For example he says countries with financial intermediation do better than those with other systems such as feudalism or central planning. The latter is a code expression for communism. Is the former a code for capitalism?

The book suffers from the severing of finance and commerce, as they are intertwined and interrelated, and as commerce, as well as finance, started off being in a bad light.

This book purports to be, per the subtitle, a "financial history of the world," but, if so, only in the sense of the special events and highlights that illustrate the rise, in historical succession, of banks, government bonds, markets for securities, the stock market, insurance and pensions, derivatives, and, finally, the political encouragement of home ownership.

It is a history in the sense of a 1926 book I had from my mother and uncle as a child in the '50s--"The First Days of Man"--that had chapters with such titles as "How Mother Nature Made the Earth Ready for Man," "The Fish that Got Stuck in the Mud," and "The Ape that Walked Like a Man." One can fit some more pieces into the puzzle, but won't find a comprehensive picture that provides massive new insights.

Taking Niall Ferguson at his own word, here's his view of money:

(F)ar from being 'a monster that must be put back in its place,' as the German president recently complained, financial markets are like the mirror of mankind, revealing every hour of ever working day the way we value ourselves and the resources of the world around us.

It is not the fault of the market if it reflects our blemishes as clearly as our beauty.

The Ascent of Money was published in 2008, a year into the "Great Recession."

Postscript: Are there no other paintings of the exchange of money? This book uses on its cover the very same one that is on the cover of The Mind and the Market.

Update for October 13: I noticed this article reprinted in my local paper that seems to reflect the author's concept of "goodness" as "creditworthiness:"


"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance".
Cicero - 55 BC

So what have we learned in 2 Millennia? Evidently nothing?

Ferguson argued that financial markets are like the mirror of mankind, revealing the works of how we function in the world. Why can we learn anything from history? He told us -- in his most brilliant segment of the book, the "afterwords" -- that there are three reasons:

1. financilal market is about future, and future lies in the realm of uncertainty, as opposed to calculable risk (risk is measurable, but uncertainty is not).

2. because we are human, our behavioral bias generates inherent instability in the system.

3. financial markets are analogous to a Darwinian system where institutional mutation and natural selection processes play important parts. "Things just happen" (the "drift" of random mutation) and "Things are made to happen" (the "flow" of the natural section) generate unpredictable dynamism in the system.

Overall, this is an excellent book with good contents and good writing style.


4.0 stars. I am a big fan of Niall Ferguson and this book certainly added to my appreciation for both his skill as a writer and his knowledge of history, especially financial history. After spending the early portion of the book on the history and development of currency, this book becomes a brief look at the origins and development of the major financial institutions (banks, commodity exchanges, hedge funds, insurance companies) and categories of assets (bonds, stocks, real property, options and derivatives). For each of these various categories, Ferguson provides the historical background that led to their development as well as the benefits and problems that came along with each.

A well researched, well written survey of financial history and an interesting read.