The Ascent of Money: A Financial History of the World.

• Author: Beckworth, David
• Position: Book review

The Ascent of Money: A Financial History of the World

Niall Ferguson

New York: Penguin Press, 2008, 432 pp.

The historian Niall Ferguson can never be accused of lacking boldness. Over the past decade he has argued, among other things, that Europe would have been better off had Great Britain stayed out of World War I and allowed Germany to win, that the British empire provided a global public good that benefited the world economy, and that the United States should follow suit today by more actively embracing the demands of empire. He has also been championing the burgeoning field of counterfactual history, a development that many historians consider controversial given its speculative nature.

Given this track record, it is not surprising that in his latest book, The Ascent of Money, Ferguson makes another provocative claim: The main driving force of human history is the development and use of finance. This point is clear from file start. On the book jacket, it is asserted that "financial history [is] the essential backstory behind all history," while in the introduction Ferguson writes, "Financial innovation has been an indispensable factor in man's advance.... The evolution of credit and debt was as important as any technological innovation in the rise of civilization, from Babylon to present-day Hong Kong."

This thesis leads Ferguson to examine the history of money, banking, bond markets, stock markets, insurance, financial derivatives, and the rise of leverage and property ownership by households. Hardly a dry writer, Ferguson makes his case with numerous and often entertaining stories. For example, he shows that the success of the Italian Renaissance depended on the advances in banking made by Italian bankers like the Medici family and that the defeat of Napoleon at Waterloo was as much the work of Nathan Rothschild as it was of the Duke of Wellingon. Similarly, he notes that the Dutch Republic successful revolt against the Habsburg Empire was because it had a modern stock market, while the Confederacy in the American Civil War failed because it lacked support from the bond market. Ferguson "also explains that the origins of the French Revolution lie in a stock market bubble while the relative decline of China from 1700 to 19.50 can be traced to its lack of financial innovation. These and other stories show, Ferguson contends, that "behind each great historical phenomenon there lies a financial secret."

Ferguson's view of history is...