Lords of Finance: The Bankers who Broke the World is a 2009 book that won a Pulitzer Prize. It was written in Washington, DC, by Liaquat Amend, who, at the time of the book’s writing, had worked in the finance industry for 25 years. The book tells how the world slid into the Great Depression, a global calamity of unbelievable breath. Lords of Finance is on the long side, at 564 pages, but it is well-written and fascinating. Has there ever been a worse disaster than the Great Depression?
Lords of Finance Summary
Lords of Finance tells the story of the efforts of central bankers to reconstruct the system of international finance after the First World War, whose effects were far-reaching. Lords of Finance describes how the central bankers succeeded for a short period in the mid-1920s. The currencies in the world were stabilized, capital started to flow freely around the world, and there was worldwide economic growth.
But cracks were starting to appear beneath the economic surface, and the gold standard (long thought a sign of stability) became a straitjacket. The book’s final chapters describe the futile attempts of central bankers as they fought the eventual downward spiral of the world into a Great Depression. The Lords of Finance details these central bankers, humanizing them as tragic figures.
The Four Horsemen of the Apocalypse
The book discusses the four Lords of Finance in detail. We can start with Montague Norman, Chief of the Bank of England. He was neurotic and an engineer, per Amend. At the Banque de France, the central bank of France was Emile Moreau, who was suspicious and xenophobic, according to Ahmed. He is a tragic figure who was so distraught by his failed efforts that he killed himself. The Reichsbank Chief, was Hjalmar Schant. He was brilliant and cunning! The fourth Lord of Finance was Benjamin Strong, the head of the American central bank. According to Ahmed, he had a veneer of energy and drive but was a deeply wounded and overburdened man.
How Bad was the Great Depression
The Lords of Finance oversaw the world’s slide into the Great Depression. The Great Depression was a calamity of unbelievable depths. Many people did not have enough to eat, and unemployment in the United States exceeded twenty-five percent. That was not the worst in the world. However, it was still devastating. The Great Depression began on October 24, 1929, also known as “Black Thursday,” when the stock market crashed, leading to a panic sell-off of stocks. The depression lasted for over a decade until the start of World War II in 1939. The production for the war shook the world out of the Great Depression.
The peak of The Great Depression occurred between 1932 and 1933. About 15 million Americans were jobless, and almost half of the United States banks had failed by 1933. We owe many social programs, like social security and unemployment insurance, to the efforts to counter the Great Depression in the United States. Americans could not imagine that The Great Depression would occur after the stock market crashed because 90% of American households did not own stocks in 1929.
Conclusion
The scale of the Great Depression was such that it affected almost everyone in the world. The Great Depression was deeper in many countries other than the United States. The Lords of Finance, the central bankers of the world’s largest economies (at the time) oversaw this disaster, but it was possible that they could not have done anything about the global recession, maybe they blamed themselves too much. Academics are still debating the origins of the Great Depression.
