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Book Review: Lords of Finance by Liaquat Ahamed

Lords of Finance: The Bankers Who Broke the World by Liaquat Ahamed may very well be the best book I have or will read this year. That seemed to be the reaction of most critics since the book’s publication last year. The book debuted during the midst of the 2008 Financial tsunami that threatened to be the next Great Depression, so the publication could not have been more timely and helpful to its sales. Ahamed did not however, spit out a book to make the presses during the financial crisis. Lords of Finance is meticulously researched and was 10 years in the making. At 500+ pages long, its only real shortcoming is that it wasn’t longer and more detailed which I was begging for at its completion.

Lords of Finance chronicles the four men in charge of the four most powerful Central Banks after WWI. Benjamin Strong of the US, Montagu Norman of England, Hjalmar Schacht of Germany, and Emile Moureau are the focus of the book as the main premise is that these men helped lead the world into the Great Depression. Each of the bankers has a distinct, powerful personality ranging from Schacht’s forcefulness to Norman’s sheer peculiarity. Though we follow the banker’s decisions and stories closely, do not mistake Lords of Finance for a set of biographies. In fact the book is part biography, history, and political and economic treatise.

Ahamed spends a great deal of time discussing the gold standard and the bankers antiquated belief and adherence to the gold standard. We are also introduced to John Maynard Keynes who plays a large role throughout the book and is the father of Keynesian economics. Keynes is portrayed as the antithesis to the Central Bankers and was unfortunately not in a position to stop what he could see was happening all around. One of the most intriguing realizations for the reader is how little that the men who were running the global finances actually knew about Central Banking and economics in general. That argument could possibly still be made today but we have definitely progressed in our knowledge.

World War I and the lead up to World War II are also focal points in the book. The interrelation between the three watershed events (WWI, The Depression, and WWII) is the most fascinating aspect about Lords of Finance and about history in general. Reparations from WWI crippled Germany for years and led to hyper-inflation and a bitter resentment from the German people. Along with reparations, War Debts (mostly owed by France and England to the US) were also crippling to global economy as every country demanded their pound of flesh and refused to forgive either reparations or debts.

Ahamed writes in a very clear enlightening style, though his chapters sometimes seem to jump back and forth randomly. He also touches on a great deal of subjects but doesn’t necessarily expound as much as one may wish. With the immensity of the subject and time period it would be impossible to address every detail in depth. The book actually gets one my biggest compliments because of the fact that it made me hungrier to read and research more on this time period and these events. Lords of Finance provides a great overview and an economics perspective to a fascinating time in history.