by Liaquat Ahamed
(Penguin Press, 576 pages, $32.95)
Experts charged with setting national and international economic policy are capable of being dead wrong, says author Liaquat Ahamed. Following World War I, the four men who ran the central banks of France, Britain, Germany, and the U.S. were briefly viewed as wizards. Prickly Hjalmar Schacht saved Germany from postwar hyperinflation. Haughty Émile Moreau triggered a boom in French exports by keeping the value of the franc low. Bank of England governor Montagu Norman restored order to the entire international financial system by re-establishing a relationship between the value of the pound and gold. But that was the idea that “broke the world,” Ahamed says. The nations that managed to hoard gold—France and the U.S.—inadvertently pushed the international economy into the Great Depression.
A history of economics between the great wars may sound like dry stuff, said Steve Weinberg in the Houston Chronicle. But Ahamed’s first book is a “tour de force” of storytelling. The former investment manager can create a vivid character with a few quick strokes, and he transforms the leaps and lurches of the markets into gripping episodes in the lives of his four lead characters. The book “has personalities to spare,” said Janet Maslin in The New York Times. Its stars are so winningly eccentric that Ahamed is free to demote Winston Churchill, Franklin Roosevelt, and John Maynard Keynes to supporting roles. “Among the minor highlights of this eminently readable story” are the aristocrats and the shady scam artists who drop in for arresting cameos.
Blaming the Depression on the return to the “gold standard,” though, is simply misleading, said James Grant in The Wall Street Journal. Tying currency values to gold leads to its own problems, but 20th-century central bankers did something worse: They crowned a single currency as king and then empowered its backing government—first Britain, later the U.S.—to reset the currency’s value at whim. One of Ahamed’s great strengths is showing readers how difficult it was for experts to foresee the results of their blunders, said John Lanchester in The New Yorker. That awareness helps enormously to make his entertaining book “feel timely today.”
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