Review | Liaquat Ahamed’s ‘Lords of Finance’

“In the long run, we are all dead”–  John Maynard Keynes

Speaking for the first time after a long time, about the demonetization move by the Modi Govt, Former PM Manmohan Singh quoted these famous words by John Maynard Keynes on the great depression of late 1920s. It was Keynesian economics that saved the world from a crumbling economic order, the first of this magnitude created by man-made actions.

1929 is a year etched in the history of modern economics. 88 years hence, thlordse world still derives lessons from the fiasco, mostly created by men and one that led to what is now referred to as the great depression.

In his book “Lords of Finance: The Bankers Who Broke the World” , Liaquat Ahamed follows the footsteps of the central bankers of 4 major world economies at the time, – Benjamin Strong at the Federal Reserve, Montagu Norman at the Bank of England, Hjalmar Schacht at the Reichsbank in Germany, and Emile Moreau at the Bank of France.

The book tries to give insights into the socio- political-economic condition of the world as well as the personal turmoil of the leaders, which may have prompted them to take the decisions they took during the economic crisis of gargantuan proportions.

Hjalmar Schacht, initially a right wing Nazi party associate, managed to disconnect himself from the economic standpoint of the party. The central banker on Germany was crucial in designing policies to lift an ailing Germany from the hyperinflation caused due to excessive spending in world war-1.

At the same time, Benjamin Strong was grappling with the great depression kick-started by a massive stock market plunge in the US. For those interested. Together, the central bankers decided they knew best when it came to world economics. Perhaps, what made the great depression “great” was the reluctance by these very bankers to let go of conservative economic standards at time, such as moving from the gold standard or intervening in the economic order to create jobs for the masses,

The book offers an interesting comparison between the financial crisis of 2008 and the great depression of 1929. Several situations elaborated are comparable to the present day, such as this anecdote on President

Herbert Hoover: “He frequently claimed in press conferences that employment was on the rise when clearly it was not. The Census Bureau and the Labor Department… responsible for data on unemployment, found themselves under constant pressure to fudge their numbers.”

As reiterated time and again, history repeats itself. This vital piece of history is a true indicator of financial mayhem. What makes learning about the great depression through Lords of Finance deeply enjoyable is the spotlight it gives to the personalities for the people responsible for it – Most importantly a reminder of how human fallibility can lead to unfathomable chaos for the whole world.

Authored By:

Sharika Nambiar E P

Member, Caf-Fin