The Ascent of Money

The Ascent of Money

In the part two, the author talked about how finance became the realm of the masters of the universe. It was through the rise of the bond market in Renaissance Italy. With the advent of bonds, war finance was transformed and spread to north-west Europe and across the Atlantic. It was the bond market that made the Rothschilds the richest and most powerful family of the 19th century. In the book, he rightly points out that the early growth of European finance was driven more by the needs of the state than by those of commerce. His thesis, familiar from his two volumes on the Rothschilds, is that state policy determines the development of finance, not vice versa. This reverses the usual Marxist argument that finance controls governments. “Behind each great historical phenomenon there lies a financial secret,” Ferguson says. He goes into fascinating detail about how “it was Nathan Rothschild as much as the Duke of Wellington who defeated Napoleon at Waterloo” by selling bonds and stockpiling gold for the British Army. The richest bankers on the Continent in the 19th century, the Rothschilds became known as die Finanzbonaparten (the Bonapartes of finance). And, as Ferguson argues, they also played a crucial part in the South’s defeat in the Civil War by declining to invest in Confederate cotton-collateralized bonds. Because underdeveloped financial system in the south, largely self-sufficient plantation economy, the south government issued cotton bond to the British government which was guaranteed by the cotton produced in the South in response to the huge war expenses. However, the northern army occupied an important port of Mississippi River, New Orleans, in the April 9, 1862, making the South's cotton cannot be shipped out. Bond investors failed to believe that once the south army was defeated they can get collateral cotton. Thus, including the Rothschild family, the whole UK finance has chosen to support the north, which eventually led to the...