Book Review: Lords of Finance, by Liaquat Ahamed

Blame this book- besides my college schedule- that I picked up reading for my 30 days absence on this site. Before I say anything about the book or vaguely closer to anything intellectual, here is a word of caution: If you hate economics, or if would go as far as signing a deal with the devil to keep you away from economic conundrums then this book is not for you.

Presenting to you: Lords of Finance, by Liaquat Ahamed.

I am nowhere close to be tagged as a person with qualification suited enough to take on this incredible work of Liaquat Ahamed, a veteran investment manager. A gripping narration about the events that led to the economic recession in 1930s, detailed analysis about the global happenings post World War I, and unbiased opinions (though mootable) by the author at required junctures in the book, Lords of Finance is a must read. I would not say that it is primarily about the ‘bankers who broke the world’ – which the author time and again keeps reiterating and hence the subtitle- but is more about the outcomes of the erroneous decisions taken by politicians & policy makers responsible for maintaining a global economic homeostasis. One of the reasons for this book holding more relevance in today’s hard times is the role repeated by bankers around the world for the economic muddle we are all currently in. Among the many accolades Lords of Finance garnered, it won the Pulitzer Prize for History in 2010.

The book encompasses almost all events that led to the biggest economic collapse in the capitalist history in the wake of the 20th century. The  chronological sequence in which Ahamed has arranged the events makes them easier to grasp and comprehend. Though, having fundamental knowledge of the economic factors and the interrelationship between them might be more helpful in understanding the book better. The author has ensured that all required information, like graphs & numbers, are included to make the text more interesting.

The text makes you relive the horrors of the aftermaths of World War I; the return to Gold Standard, the seismic shift of economic & financial muscle from Britain to United States, the Versailles Treaty, German Hyperinflation (in 1923, 10 million Reichmarks would buy you 2 pounds of potatoes), introduction of land backed German currency Rentenmark, Great Depression, Nazism, suicides, bankruptcies, and the culmination of all events- the World War II. Ahamed has attributed- with strong rationale- the collapse of the world economy between 1920s-1940s to a series of wrong decisions taken by the central bankers of the 4 largest economy during the 1920s- Benjamin Strong, governor of the New York Fed; Montagu Norman, governor of the Bank of England; Emile Moreau,  governor of the Banque de France; and Hjalmar Schacht, president of the Reichsbank. The pivotal moment that set in train the fateful sequence of events that eventually led to depression was the meeting on Long Island in 1927. The decision of artificially depressing interest rates, in 1927, to prop up the pound, the Fed helped fuel the stock bubble that subsequently led to the crash two year later. The other culprits, according to Ahamed, were the politicians who presided over the Paris Peace Conference, in 1919. During this conference Article 231, the ‘article of shame’, branded Germany as solely responsible for the war.

The book also introduces the world’s most famous and renowned economist, Maynard Keynes, who turns out to be a hero when his theory of the absurdity of gold standard was accepted. He had a great influence in formulating policies post World War II that helped economies avoid the fallacies committed during and after the World War I. He was also instrumental in setting up of an international money lending institution. We now call it as the International Monetary Fund. I would suggest you to take your own time in reading the pages. Skipping any point, or a page, would create a void in forming a clear picture of the events. I found myself many a times doing regression, as either the facts were too fantastic or too baffling. Whatsoever may be the reason, I cannot find any reason why one should not read this super-cool book. The language of the author is easy. Fundamentals are explained in crisp and precise manner. No circumlocution involved. Hitler only comes where he is needed and hence does not make you remember the gruesome and devilish acts undertaken during his regime. Effect of interest rates, unemployment, inflation, government printing too much money, devaluation of currency, everything explained beautifully. And above all, the role played by the 4 central bankers make the book seem more of a story rather than Wikipedia. Don’t miss out on this. You’ll enjoy every second invested in this book.



5 thoughts on “Book Review: Lords of Finance, by Liaquat Ahamed

  1. Ankit, glad to see you back here and tackling such a substantive book. Alas, I am ignorant of economics (though I do have common sense about money–not the same thing)!

    Hope your studies are going very well!


    1. Thank you! Maria. It feels really great to be back here and hearing from you 🙂 I like reading books based on facts. Occasionally, however, I do lay my hands on fictional stories. Studies are going fine but not great 😦 Have projects to execute and teams to manage. But I’m enjoying these stuffs. Hope you are also doing great.

  2. So glad to know you’re doing well, Ankit! It makes sense that you enjoy books based on facts. My husband Tom and I are doing well. We’ve had a mild winter until last night, and now the world is cold and WHITE!
    Bless you!

    1. Thank you ma’am for taking time out to read my post. I trying to work on my writing to make it more simple and concise. I’m glad that you look forward to my posts. 🙂

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