Our Financial Forebearers

There been a lot of finger-pointing in this blame-game that our recession has become. We’ve cursed the CEOs, damned the politicians, and even kicked ourselves for spending too much. But a new book, Lords of Finance, by Liaquat Ahamed, offers a dispassionate look at the Great Depression—and its financial leaders—as context for today. New York Times "Talking Business" columnist Joe Nocera steps out of his regular section to review the book, and assess it for its ability to illuiminate the current financial situation. The book is focused around four men who controlled the post-war financial landscape: Benjamin Strong, of the New York Fed, Montagu Norman, head of the Bank of England, Émile Moreau of the Banque de France, and Hjalmar Schact, chief of the Reichsbank. “The decision to build Lords of Finance around these four men is a brilliant conceit,” Nocera writes. “Each of them was a powerful personality, with the full range of strengths and weaknesses, insights and eccentricities. Because much of the book concerns decisions, for instance, to raise or lower interest rates, you need great characters to pull the story along, and Ahamed not only has them but also knows how to make them come alive.” For Nocera, examining the Great Depression through the lens of these men is both informative and foreboding. He says of our current economic situation: “Here at this critical moment, with a new administration having just taken office, and with so much riding on its policy responses to the current crisis, “Lords of Finance” poses an unsettling question. Do we really understand the workings of that delicate machine any better than our forebears did? Or do we only think we do?”