As I’ve done over the last couple of years, I go to a bookstore in the beginning of the summer and look for the Pulitzer Prize winners in non-fiction. This year, it was Lords of Finance: The Bankers Who Broke the World. Ah, it was going to be another book comparing the crisis we are in with the Great Depression. Or at least that is what I thought when I picked up the book. Ironically, it was given some kind of ‘best book of the year’ by Goldman Sachs. Hm. If the current bankers who broke this world thought this was a good book about past bankers who broke their world is a good read, I thought I would give it a try.
Because I have read a heavy amount of books about different issues, events and individuals in history, I usually can determine how and why it was written from the first chapter. Journalist-historians have a powerful narrative to tell. They are great at weaving together different facts to make the story a fun read, but usually without much depth of research. Academic historians are a bit more stuffy. They love the research and can’t wait to share the two or three hundred footnotes they’ve collected after a decade of basement-dwelling and document reading.
This was a surprising blend of the two. It reminded me of Timothy Egan’s powerful book on the Dust Bowl, The Worst Hard Time, and how it was written. In this case, the story focused on the leaders of the central banks in the nations of the United States, Great Britain, France, and Germany and their role trying to preserve the gold standard and prevent the economic damage caused by World War 1 from destroying their collective economic wealth and prosperity. By their misplaced actions, they helped strongly to contribute to the same collapse they dreaded. One voice stands out among this crowd, almost arrogant, but definitely prophetic – John Maynard Keynes. As a nay-saying economist he more than anyone else saw the dangers of these actions and warned the world about them – to naught.
Another surprise was that the book was written before (actually, part of it was during) the collapse of Lehman Brothers – the rock that began the avalanche. As with all good lessons in history, this book teaches us our mistakes. Hopefully we can learn and avoid them in the future.