The Ascent of Money: A Financial History of the World

The title is a bit misleading. This is not some great sweeping historical narrative moving across the swath of time. It is rather episodic in nature; eight extended essays, each dealing with one specific financial topic and setting an historical context for its evolution and development. Rather than some Vermeer portrait glimmering in the soft radiance of diffuse northern light, each pearl defined and the crisp lace almost jumping off the canvas, it is more some cubist rendition with the entire portrait presented at once from all sides, disjointed, out of perspective, yet somehow all the more complete for its jumble.

The result is not at all chaotic. Ferguson wants us to understand the complexities of modern finance by focusing on specific parts of the whole and seeing how they developed in an historical context. He says, "Accordingly, the key components of the modern financial system are presented sequentially. The first chapter of this book traces the rise of money and credit; the second the bond market; the third the stock market." Chapter 4 is on insurance, while Chapter 5 covers real estate. Ferguson is an accomplished historian and gifted writer and his explanations of both the current real estate debacle and credit crisis are presented in a manner that is comprehensive, while still understandable to the lay reader.

An example of his both his historian's sensibilities and deft writing style is his retelling of the story of John Law and the Louisiana land bubble. Ferguson brings this well-known, often-told story of greed and manic speculation into historical context from the perspective of the development of the limited liability stock company. It is a fresh approach since, while it does not paint over the roguish character of the man, presents a balanced viewpoint of what is normally considered merely an exercise in avarice. Ferguson admires the benefits of market capitalism, while admonishing its shortcomings.

Ferguson discloses the inspiration for his title early on when he says, "To adopt a phrase from Jacob Bronowski (whose marvelous television history of scientific progress I watched avidly as a schoolboy), the ascent of money has been essential to the ascent of man." Yet there is a sense that the book that he set out to write became very different by the time he finished. Bronowski extolled the unexcelled capabilities of mankind. Ferguson, while eagerly anticipating the best, has also come to recognize our limitations.

This becomes apparent at the very end of the book, in the after word: "In writing this book, I have frequently been asked if I gave it the wrong title." Ferguson seems genuinely conflicted. He recognizes the magnificent progress that our financial systems have made, providing a standard of living to many of the world's inhabitant's unimaginable centuries earlier.

He also recognizes that the path of progress in not a straight line. As he comments, "Still, I might equally well have paid homage to Charles Darwin by calling the book The Descent of Finance, for the story I have told is authentically evolutionary." He seems to come to this revelation somewhat late and this quandary is apparent in the book.

His final conclusion is revealing. "I remain more than ever convinced that, until we fully understand the origin of financial species, we shall never understand the fundamental truth about money: that, far from being ‘a monster that must be put back in its place', as the German president recently complained, financial markets are like the mirror of mankind, revealing every hour of every working day the way we value ourselves and the resources of the world around us."

While he remains optimistic about our evolutionary path, he does not encompass this concept fully in this book. For that I would recommend the much more comprehensive and ambitious The Origin of Wealth by Eric Bienhocker (also reviewed in Inside Money). Yet The Ascent of Money is excellent in clearly explaining our current financial condition within the context of an historical backdrop. For that it is highly recommended.

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