Review of The Ascent of Money: A Financial History of the World by Niall Ferguson

By Trevor Taylor, Professorial Research Fellow in Defence Management, RUSI

For those primarily interested in defence and security, economics is a recognised area of concern: there is an established literature and regular conferences on defence economics. Finance alone, however, has attracted less attention, at least until Private Finance Initiatives became so popular in the British defence ministry. There is thus good reason to appreciate Niall Ferguson for his clear assertion of the positive role played by money and financial innovations, not just in economic development, but also the growth in the military and other capabilities of governments: states and financial markets have always existed in a symbiotic relationship, Ferguson concludes. This book demonstrates that financial, economic and military history are significantly intertwined.

Ferguson takes us through the emergence of a whole series of financial innovations – cash in its many forms, bonds, shares, insurance, and so on – that many people today either take for granted, or do not understand, or both. His writing brings home the imagination and innovatory skills of the financial engineers of the mediaeval world and afterwards, but overall he treats financial developments as a significantly evolutionary process in which change is relatively constant. The latest phase, of course, is governments’ (especially the US Government) taking ownership and so control of a number of financial organisations that traditionally formed part of the private sector.

Clearly the book does not address topics in a standard degree of detail: the most attention is devoted to innovations and then specific elements in their evolution seen as key for the present day are highlighted. There is minimal attention paid to the place of financial elements in European integration, including the decision of twenty-plus states to merge their currencies into the Euro. But the sweep of the book is very extensive, addressing hundreds of years of human development and relating money to politics, society and the environment. One of the author’s key messages is an appeal for the study of history, not least to build awareness that events thought at one time to be unlikely have subsequently occurred. He transmits the particular reminder that in 1914 there was a globalised world with massive exchanges of debt as well as trade linking the richest states of the day. Political historians often neglect the financial and economic crisis that followed the assassination of the Archduke Ferdinand even before war broke out. That globalised world disappeared rapidly, raising some doubt about the robustness of today’s structures. He presents the key contemporary economic-political relationship as that between the United States and its chief supplier of finance, China. Anyone reading this book will be drawn to watch that particular space with care.