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A Lesson Among The Crises

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By JANET MASLIN

The Tampa Tribune

Published: January 25, 2009

"Lords of Finance: The Bankers Who Broke the World," by Liaquat Ahamed (The Penguin Press, $33)

Liaquat Ahamed's "Lords of Finance" is supposed to be a history book about the economics of World War I and the Great Depression. But there is terrific prescience to be found in its portrait of times past.

Ahamed, an investment manager who proves to be a writer of great verve and erudition, easily connects the dots between the economic crises that rocked the world during the years his book covers and the fiscal emergencies that beset us today. He does this winningly enough to make his book about an international monetary horror story seem like a labor of love.

In 1999, looking at a Time magazine cover photograph of Alan Greenspan (then chairman of the Federal Reserve Board), Robert Rubin (Treasury secretary) and Lawrence Summers (deputy secretary), Ahamed pondered the article's headline: "The Committee to Save the World." He knew, because he obviously knows a great deal of things about a dazzling range of subjects, that the fiscal team of superheroes concept was not new.

In the 1920s, the press had been infatuated with an international foursome of elite bankers who took on the challenge of restoring global economic balance after the wreckage created by World War I. They had been called the "Most Exclusive Club in the World."

Somehow Ahamed has been able to peg a many-faceted international economic story to the outsize personalities - one each from the United States, France, Britain and Germany - who made up that rescue team. And he succeeds so well that the potential opacity of his material is easily penetrated.

Although "Lords of Finance" is much more than a personality-driven book, it has personalities to spare. The four men and their distinctive strategies are wonderfully drawn.

If only by virtue of the velvet-collared cape and fan-backed Oriental chair he used as accouterments at a top-secret 1927 meeting on Long Island, Montagu Norman of the Bank of England emerges as this book's most exotic figure. The meeting led the Federal Reserve System of the United States to cut interest rates by 0.5 percent to prop up the British pound. That it might have been "the pivotal moment, the turning point that set in train the fateful sequence of events that would eventually lead the world into depression," is in no way trivialized by Ahamed's emphasis on Norman's peculiar personal style.

With the angrily Prussian-mannered Hjalmar Schact of the Reichsbank, the conniving Emile Moreau of the Banque de France and Benjamin Strong of the Federal Reserve Bank of New York as its other principals, and with Winston Churchill, John Maynard Keynes and Franklin D. Roosevelt among its secondary players, "Lords of Finance" tracks the shifting balance of economic power that reflected each country's self-interested agenda. But one of the book's most important points is that self-interest, in the world of global economic fluctuations, can be self-defeating.

Janet Maslin writes for The New York Times

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