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The Ascent of Money: A Financial History of the World
By Niall Ferguson
The Penguin Press, 432 pages, $29.95

On June 18, 1815, 190,000 men assembled outside Brussels, three patchwork armies poised to do battle over the future of Europe: troops from Britain, the Netherlands, Belgium, Hanover, Brunswick, and Nassau under the command of the Duke of Wellington; his Prussian allies to the northwest under Gebhard von Blücher; and, against them to the south, the French. The reconstituted Armée du Nord, 123,000 strong, was led by an unlikely Corsican commander of Italian stock, for whom French was a second language and a second nationality, and whose battlefield brilliance had made him not just Emperor of France but the most powerful and terrifying man in Europe—twice now. The bloody confrontation at Waterloo would be the end of Napoleon, his brief “Hundred Days” restoration and his dream of a Gallic Europe, and it signaled the rise of a new nation in the pneumatic imperial history of the continent.

But Waterloo, contends Niall Ferguson in The Ascent of Money, his new micro-history of macro-economics, was not so much a battle between armies as a “contest between rival financial systems”: the French, based on conquest and plunder, and the British, based on issued debt. And in this battle, the Brits had their own Napoleon: the German-born Jewish financier Nathan Rothschild.

The son of a Frankfurt antique dealer who spent his early adulthood pushing textiles in the north of England, Nathan Rothschild was, by the time of his death in 1836, perhaps the richest, and certainly the most powerful, businessman in Europe, with a personal fortune comprising just over half of 1 percent of all British national income. He accomplished this, mainly, by betting on the fates of nations, through a crude, and then poorly understood, financial instrument: bonds.

Elsewhere, Mr. Ferguson has used the price of bonds to measure the strength of governments; the real trick, Rothschild understood, was using the strength of governments to make money off them. If you can do that, you haven’t just made yourself rich—you’ve given a few nations a big boost, too, and won yourself a seat at the table in the bargain. One German prince complained that, without Rothschild’s support, “no power in Europe today seems to be able to make war,” while to Metternich, the family was simply “die Finanzbonaparten.” (These sentiments, and several cruder still, formed the basis of many anti-Semitic conspiracy theories targeting the Rothschilds in the 19th and 20th centuries.)

Rothschild the power broker is a typical hero and a favorite subject for Mr. Ferguson, in Great Britain a celebrity intellectual of the kind we don’t produce but do envy and sometimes appropriate in America. (Having left his native Scotland, he now splits time between academic appointments at Oxford and Harvard.) Mr. Ferguson made his name, young, with provocative economic histories—his two-volume House of Rothschild (1998), on the banker and his family; Paper and Iron (1995), a study of Germany in the years between Bismarck and Hitler—but he’s best known stateside for a series of impressive, contrarian studies of empire, each clever, sometimes to the point of contempt.

His work on that subject tells a single story. In The Pity of War (1998), Mr. Ferguson condemned the British entry into World War I, arguing it prolonged what might have otherwise been a quick and painless continental conflict and hastened the end of what he believes was a benevolent British Empire. In Empire (2003), he elaborated, suggesting that John Bull modernized the world at what we should admit was an agreeable price, and by Colossus (2004), he was pushing the British model on the American public, urging the United States to not only acknowledge its own imperial status but to embrace it, and less ambivalently than the British had a century before—and earning himself a reputation as something of a warmonger in the process. “The greatest disappointment facing the world in the twenty-first century,” Mr. Ferguson wrote memorably in 2001, “[is] that the leaders of the one state with the economic resources to make the world a better place lack the guts to do it.”

That was then. With The Ascent of Money, Mr. Ferguson has returned, chastened, to his own Elba of financial history. He has not yet lost his declarative flair, but in the place of ideas he’s now offering little more than a theme. “Behind each great historical phenomenon there lies a financial secret,” he writes—and in his diverting nonfiction picaresque he shares a few of them.


THREE MEDICI APPEAR AS wise men in Botticelli’s Adoration of the Magi because, as inventors of modern banking, Mr. Ferguson tells us, they made possible the Italian boom that fueled the Renaissance arts. The Spanish turned a mountain of Peruvian silver, a worthless pile of mud to the Inca, into a 17th-century empire through the brutal alchemy of forced labor—then lost it all to unanticipated inflation, which gave Europe an unprecedented monetary stimulus but bewildered the Spanish crown, which defaulted on its debt 14 times between 1557 and 1696.

The beneficiaries of the Spanish collapse were the Dutch, Mr. Ferguson writes, whose stock and bond markets created a robust investor class with an ownership stake in the fate of the United Provinces, and who won the Eighty Years’ War on the back of those markets. He blames the Scottish huckster John Law, enamored of the Dutch system, for inducing an unsustainable stock bubble in France, bankrupting the monarchy and inadvertently causing the revolution. He also believes a Confederate liquidity crisis lost them the Civil War, and that a monetary shortage produced the Crusades, as Europeans went east to plunder precious metals that had accumulated in the more productive economies there.

In recent years, we’ve tended to make our politics an awkward referendum on the economy. Mr. Ferguson’s work is a picture of what happens when we do the same for our study of history. Along with his earlier The Cash Nexus (2001), The Ascent of Money represents a kind of economic determinism for the right—not history of growth but history as growth. “Money is the root of most progress,” Mr. Ferguson declares, and “the ascent of money has been essential to the ascent of man.” An anecdotal survey of speculators and entrepreneurs, economists and advisers, Money suggests not a Great Man but a Great Brain theory of history, in which the ingenuity and intelligence of men like Nathan Rothschild and John Law—and not the martial virtues of soldier-statesmen like Wellington and Bonaparte—shape, irrevocably, the fates of nations, and of peoples.

This is not the most hospitable climate, of course, for tributes to ingenuity in financial speculation: Those boy geniuses on Wall Street don’t look so heroic these days, shipwrecked and scrambling for life rafts. To plenty of people they look not just reckless but plain dumb. Tom Wolfe, for one, has called the financial mess the result of a brain drain on Wall Street—all the real talent, he says, fled to hedge funds in Connecticut, leaving the banking industry more or less to the junior varsity. To Jacob Weisberg, the crisis is an indictment not just of the men who steered it but of the ideology they embraced—a death knell for libertarianism and the end of what George Soros has called market fundamentalism. And last month, Alan Greenspan acknowledged before Congress that the crash had shaken even his reverent, lifelong faith in the self-regulating economy.

The Ascent of Money is a history, if a peripatetic one, but it doesn’t shy away from the present day, tracing the roots of the mortgage crisis back through many decades of our “property-owning democracy,” and counseling stoicism in the face of gloomy forecasts. Though Mr. Ferguson is a clear and unapologetic believer in the power of markets, his model of economic history is less permanent growth than eternal recurrence. And this means, he believes, that there might actually be something to be learned here.

Drawing on the work of behavioral economists—whose study of human irrationality has capsized much of conventional economic theory and whose boats alone seem to be rising in this withdrawing tide—Mr. Ferguson suggests the problem might not be with the instability of our financial system, per se, but with our difficulty dealing with risk. Individuals, corporations and markets all suffer from a kind of risk amnesia: We don’t anticipate it, cherry-picking history; we don’t plan for it, underestimating vulnerabilities; and we can’t stomach it, refusing to tolerate even a single quarter of negative growth. The real problem with the gospel of Greenspan, Niall Ferguson suggests, is not its fundamentalism, exactly—it’s that we all want to be saved.

David Wallace-Wells is a former books editor of The Sun. He can be reached at

Remember Money?