The Ascent of Money: A Financial History of the World

Image of The Ascent of Money: A Financial History of the World: 10th Anniversary Edition
Release Date: 
October 26, 2009
Penguin Books
Reviewed by: 

Well over a year passed between the publication of Niall Ferguson’s The Ascent of Money in hardcover and the paperback text reviewed here. Over this period, financial markets remained in the profound distress that erupted while Ferguson wrote the original book, prompting him to amend it and address the substantial ongoing market developments in the later paperback version. In this sense the paperback is a second edition and somewhat more timely than the hardcover.

The subtitle of this depiction of the history of money, its “ascent,” promises a layman’s education on centuries of the development of currency and financial markets akin to the journey through the history of man and civilization in Jared Diamond’s Guns, Germs, and Steel. In a sense, Ferguson’s discussion may be a more satisfying read or a lesser one depending on a reader’s specific interest. Indeed, Ferguson’s discussion is more accessible than most books venturing into this arcane territory. Still, for a reader with little background in finance, this is not as entertaining and spoon-fed a primer as Diamond’s book. If, on the other hand you are at least moderately comfortable with the musings of a first-rate financial scholar, you are unlikely to find a better tour guide than Ferguson. Indeed, this book, like others produced by the author/professor—who splits his time between Harvard and Oxford—was conceived as a companion to a television program produced for a relatively broad audience. For just about anyone eager to dive into a book that is half textbook and half the encyclopedic acrobatics of a deft master of his topic, this is compelling stuff.

Because the promotional copy and quotes on the exterior of the book portray the book as far breezier and more revelatory than it actually is, if you relish a sensational tale of financial misdeeds, you will be hugely disappointed and are unlikely to finish the book. This audience will do better picking up one of the many popular financial crises books that read more like novels, or in some cases memoirs, still stacked to the ceiling of every chain bookstore.

While financial professionals will already know a fair amount of what Ferguson relates, particularly on the back end of his depiction of money’s ascent from ancient Mesopotamia through modern times, the eloquence of his depiction, as well as the endless factoids and nuggets of insight will unquestionably deepen understanding as well as provide endless evidence of what this group of readers already knows: financial crises occur at intervals and are likely to repeat.

Ferguson traces the origins of money as a rudimentary means of exchange to its current infinitely more complex incarnation in contemporary financial markets. That he accomplished this seamlessly is a feat. However, Ferguson at times overplays his hand as he seems to view nearly all of history through a monetary paradigm. Certainly, there is a case to be made that following the money is one way to better understand human history. Yet, there are numerous paradigms through which we may trace mankind’s journey. While the book is consistently fascinating, Ferguson at times slips into a myopic explanation of world events that cannot be fully analyzed through this single lens, and leaves us at times with partial explanations. Indeed, Ferguson seeks to cover so much territory in a book of moderate length that he at times progresses at a pace that is overly breathless. For much of the book the reader is not permitted to stroll through and contemplate money’s history. Rather, we move as if aboard a high speed train, picking out Ferguson’s many fascinating details amidst a blurred landscape.

Once Ferguson reaches current times, he slows to a more studied pace, though he remains above the fray into which many current crisis books take a deep dive. Ferguson hardly mentions figures such as Paulson and Geithner, if at all, but does consider key factors that led to the current financial crisis. Indeed his focus is on a far larger, enduring canvas. In his protracted discussion of contemporary global economics he focuses most extensively on what he describes as the “dual country of ‘Chimerica’—China plus America—which accounts for . . . a third of economic output” globally. He essentially argues that China, in its state-directed linkage to global markets has beaten the U.S. at its own capitalist game. Ferguson notes, as is widely known, that China has emerged as America’s banker, financing a larger portion of the U.S. deficit than any other buyer of U.S. government bonds. He also points out that U.S. business has created jobs in China as foreign enterprises are frequently compelled to directly invest in local Chinese manufacturing, as opposed to manufacture at greater expense domestically or outsource to a locally financed Chinese manufacturer.

Just as it is a tall order for Ferguson—as the author himself points out—to comprehensively cover the history of money and financial markets in a single book of some 350 pages, it is challenging to summarize the mass of lucidly depicted content of his book in the space accorded a book review. It is conspicuous, that as noted, Ferguson does not provide a detailed account of the current economic crisis. Certainly Ascent has little in common with Sorkin’s fly-on-the-wall account of the financial meltdown in his bestselling Too Big To Fail. But, in all fairness, The Ascent of Money is financial history, and we do not yet have the benefit of hindsight to either write about our current financial crisis as such or discern all of its lessons. At the same time, The Ascent of Money makes quite clear that recent events have multiple precedents. And perhaps it is in this that the book is most valuable. Indeed, Ferguson’s analysis and insight into earlier crises provide historical lessons learned that are useful in addressing our current conundrums. Unfortunately, these lessons are rarely utilized to guide us—at least concerning financial markets where memories are tragically short.