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Lords of Finance
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Lords of Finance (2009) (edit title/settings)

The Bankers Who Broke the World

by Liaquat Ahamed (Author) (edit contributors)

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With penetrating insights for today, this vital history of the world economic collapse of the late 1920s offers unforgettable portraits of the four men whose personal and professional actions as heads of their respective central banks changed the course of the twentieth century It is... read more

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Liaquat Ahamed's Lords of Finance (Penguin, 2009) is the surprisingly dramatic and human tale of the four central bankers of the United States, Britain, France and Germany who financed the First World War and then witnessed the Great Depression.

The book introduces us to Benjamin Strong,... read more (warning: may contain spoilers)

Liaquat Ahamed's Lords of Finance (Penguin, 2009) is the surprisingly dramatic and human tale of the four central bankers of the United States, Britain, France and Germany who financed the First World War and then witnessed the Great Depression.

The book introduces us to Benjamin Strong, the first Chairman of the Fed who established the institution that became the world's defacto central bank. It also details the fall of Montagu Norman and the Bank of England from its central position in the global economy. Its most painful tale describes the Faustian bargain of the Reichsbank's Hjalmar Schacht who careened from hyperinflation to Fascism.

This book has powerful lessons for our own time including the dangers of overspending, inflation and inaction in the face of an economic crisis. It teaches the lessons on spending discipline, debt reduction, oversight, transparency, inflation control and decisive action to maintain confidence.

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  • “These bubbles and crises seem to be deep-rooted in human nature and inherent to the capitalist system”
  • Popular Highlights from Kindle Customers
  • Boiled down to its essentials, a central bank is a bank that has been granted a monopoly over the issuance of currency.1 This power gives it the ability to regulate the price of credit—interest rates—and hence to determine how much money flows through the economy.
    Highlighted by 100 Kindle customers
  • The United States and Britain took the route of deflation, Germany and France that of devaluation.
    Highlighted by 86 Kindle customers
  • Unlike today, however, when central banks are required by law to promote price stability and full employment, in 1914 the single most important, indeed overriding, objective of these institutions was to preserve the value of the currency.
    Highlighted by 81 Kindle customers
  • Strong recognized that by buying or selling government securities from its portfolio, the Fed could directly and immediately alter the quantity of money flowing through the banking system.
    Highlighted by 73 Kindle customers
  • These bubbles and crises seem to be deep-rooted in human nature and inherent to the capitalist system. By one count there have been sixty different crises since the early seventeenth century—the first documented bank panic can, however, be dated to A.D. 33 when the Emperor Tiberius had to inject one million gold pieces of public money into the Roman financial system to keep it from collapsing.
    Highlighted by 67 Kindle customers
  • Over the next few months, Germany experienced the single greatest destruction of monetary value in human history. By August 1923, a dollar was worth 620,000 marks and by early November 1923, 630 billion.17
    Highlighted by 66 Kindle customers
  • Because the value of a currency was tied, by law, to a specific quantity of gold and because the amount of currency that could be issued was tied to the quantity of gold reserves, governments had to live within their means, and when strapped for cash, could not manipulate the value of the currency. Inflation therefore remained low. Joining the gold standard became a “badge of honor,” a signal that each subscribing government had pledged itself to a stable currency and orthodox financial policies. By 1914, fifty-nine countries had bound their currencies to gold.
    Highlighted by 65 Kindle customers
  • Only on reparations did Germany seem able to fight back. It discovered what every large debtor at some point discovers: that when one owes a large amount of money, threatening to default can give one the upper hand.
    Highlighted by 58 Kindle customers
  • A simple analogy of the choice between deflation and devaluation might be that of the man who has put on weight and is having a hard time fitting into his clothes. He can either choose to lose the weight—that is, deflate—or alternatively accept that his larger waistline is now irreversible and have his clothes altered—that is, devalue. Whether to deflate or devalue became the central economic decision for every country after the war. The burden of deflation fell on workers, businesses, and borrowers, that of devaluation on savers.
    Highlighted by 55 Kindle customers
  • All, however, shared a common pattern: an eerily similar cycle from greed to fear.
    Highlighted by 54 Kindle customers
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First Sentence edit see section history

In 1914, London stood at the center of an elaborate network of international credit, built upon the foundations of the gold standard.

Table of Contents edit see section history

Introduction

Part One - The Unexpected Storm
1. Prologue
2. A Strange and Lonely Man - Britain: 1914
3. The Young Wizard - Germany: 1914
4. A Safe Pair of Hands - The United States: 1914
5. L'Inspecteur Des Finances - France: 1914
6. Money Generals - Central Banks: 1914-19

Part Two - After the Deluge
7. Demented Inspirations - German Reparations
8. Uncle Shylock - War Debts
9. A Barbarous Relic - The Gold Standard

Part Three - Sowing a New Wind
10. A Bridge Between Chaos and Hope - Germany: 1923
11. The Dawes Opening - German: 1924
12. The Golden Chancellor - Britain: 1925
13. La Bataille - France: 1926
14. The First Squalls - 1926-28

Part Four - Reaping Another Whirlwind
16. Into the Vortex - 1928-29
17. Purging the Rottenness - 1929-30
18. Magneto Trouble - 1930-31
19. A Loose Cannon on the Deck of the World - 1931
20. Gold Fetters - 1931-33

Part Five - Aftermath
21. Gold Standard on the Booze - 1933
22. The Caravans Move on - 1933-34
23. Epilogue

Authors & Contributors edit see section history

  1. Liaquat Ahamed (Author)

First Edition edit see section history

Original Language: English
Publisher: The Penguin Press HC
Country: United States
Publication Date: December 29, 2009
ISBN: 9781594201820
Page Count: 576

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Classification edit see section history

  • Library of Congress: HG172.A2 A43 2009
  • Dewey: 332.10922

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