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The past is never dead. It's not even past

Not Even Past

Lords of Finance by Liaquat Ahamed (2009)

imageby Mark Eaker

For those watching the financial markets, events in Europe are front and center.  Market participants await announcements by government leaders, finance ministers, central bankers, and economists with anticipation. Depending upon the degree of optimism or pessimism generated by a given announcement, the market reaction leads to hundreds of billions of dollars lost or gained on equities, currencies, bonds and commodities from Frankfurt and London to New York and Tokyo.  One might assume that the enormous worldwide impact that events in Europe are having is a function of globalization, new forms of financial engineering, and the speed of information transfer brought about by the Internet. Without doubt each of those has had an impact, but as the Liaquat Ahamed’s superb history of the events leading up to the Great Depression reminds us, it has all happened before.

Lords of Finance is a multiple biography of the four most prominent central bankers of the 1920s: Mantagu Norman of the Bank of England; Benjamin Strong of the New York Federal Reserve Bank ; Emile Moreau of the Banque de France and Hjalmar Schacht of the Reichsbank. There is a colorful supporting cast including the economist John Maynard Keynes, Winston Churchill as Chancellor of Exchequer and Thomas Lamont of J.P. Morgan & Co. However, the focus is on the actions and inactions of the four bankers.

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Ahamed did not write the book in anticipation of our reaction to the financial crisis of 2008. He does not draw direct comparisons of the events of the 1920s to those of today. His narrative is an artful description of the roles each of the men played with rich and meaningful insights about their individual characters, their relationships with one another, their ambitions, and their personal struggles. Those insights are not just bits of historical gossip but they are at the heart his explanation of the failure of the United States and Europe to confront the problems that ultimately brought about the Depression and set the stage for the rise of Hitler and Nazi Germany.

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The historical and biographical details are engrossing. In addition, Ahamed’s economic and investment background allows him to deliver an excellent primer on currency, the gold standard, and international banking.

Although Ahamed does not relate the events or lessons to today’s problems, it is hard for a reader to refrain from doing so. At the root of Europe’s problem was the debt burden imposed on Germany in the form of reparations after World War I and the decisions made to return to the gold standard at pre-war rates of exchange. Today’s problems are also related to excessive external sovereign debts and a Euro currency mechanism, which, like the gold standard, eliminates devaluation as an instrument of economic policy. In the 1920s, the economic prescription was austerity and it is the same medicine being prescribed today.

Let’s hope for a better outcome and that someday another author will describe the events of our era as well as Ahamed does the 1920s.

Photo Credits: 

John Maynard Keynes and Harry Dexter White at the 1946 Bretton Woods Conference (Photo courtesy of Wikipedia Commons)

The Federal Reserve Bank of New York, 1936 (Photo Courtesy of The New York Public Library. Photography Collection: Miriam and Ira D. Wallach Division of Art, Prints and Photographs)

Trading Roles: Gender, Ethnicity, and the Urban Economy in Colonial Potosí by Jane Mangan (2005)

by Zachary Carmichael

In only a few decades during the seventeenth century, the Spanish American colonial city of Potosí, in modern-day Bolivia, grew from a small settlement to a metropolis of almost 200,000.image With twice the total population of all of Britain’s North American colonies, Potosí became one of the largest cities in the Americas despite being at an elevation of over 13,000 feet. This expansion centered on the massive silver mines at the nearby Andean mountain of Potosí that fueled Spain’s imperial ambitions. How did the city’s infrastructure keep pace with this startling urban growth?

Jane Mangan’s Trading Roles focuses not on the Indian, African, or Spanish silver miners, but on the local urban economy, run by poor, mostly indigenous men and women, that kept the city functioning. She argues that Potosí, with its extremely active market, fostered a degree of social mobility that was unknown in the rest of the Americas and Europe. It was the indigenous population (whom Mangan intentionally calls Indians), particularly women who shaped the city’s economy. In their struggle against Spanish competition and the colonial bureaucracy, natives used urban entrepreneurship to power Potosí’s growth.

Trading Roles traces Potosí’s development from the middle of the sixteenth century, discussing the growth of an indigenous business market among natives who had left their communities for the silver capital. Leaders tried to regulate commercial space in the city to curb perceived excessive drinking among mine workers and to maintain social order. The commercial system created by unmarried Indian women was at the heart of the Potosí economy. Mangan uses several striking examples of their social mobility and entrepreneurship. Indian women were able to make a comfortable life for themselves by running bakeries and breweries and loaning money to customers. By the end of the seventeenth century, however, external economic forces caused Potosí to enter a period of irreversible decline. The end of the silver boom devastated the economy and cut the population in half, marking the end of this extraordinary social mobility.

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The book is extremely well-researched, ably drawing upon the surprisingly large number of sources available about the city. Mangan draws upon notarial records from the old colonial mint in Potosí, minutes of city council meetings housed in Sucre, Bolivia, and imperial archives in Seville. Although records of business transactions between indigenous women and their customers are rare, Mangan compensates by finding contextual evidence of this economic activity. Her research demonstrates the crucial role of court and notarial records in recreating the lives of early modern non-elites.

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The unique urban character of Potosí was exceptional in the seventeenth century, so it is difficult to apply Mangan’s arguments about social mobility to the rest of Spanish America and the wider early modern world. The discussion of the growth and decline of Potosí lacks the incisive analysis of the sections on Indian women entrepreneurs. Despite this, Trading Roles is an important contribution to the study of urban history and social mobility in colonial Spanish America. Mangan’s conclusions offer a counterpoint to prevailing theories about the economic role of the indigenous populations in the Americas and challenge conventional views about European control of colonial urban economies.

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Photo credits:

All images courtesy of Wikimedia Commons

You may also like:

Zach Carmichael’s other reviews on Spain’s colonial posessions in Latin America:

Patrons, Partisans, and Palace Intrigues and Barbaros: Spaniards and their Savages in the Age of Enlightenment.

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