The Significance of ——
The Ascent of Money
By Niall Ferguson
——- To Me
First, just a reminder for any readers: These, The Significance Of, series are not book reports. They are just reflections that occurred to me for having read the book.
As usual I tend to want to think of humans not to be just advanced animals. I want to believe that we were given this state of advancement for some reason greater than survival or to gain creature comforts.
My previous book was about the Templars and their activities which were supposedly centered on protecting Christian visitors in the Holy Land. The Holy Land was holy to Islamist and other religions and the Christian Crusades elevated the common hatred to ultimate heights. Religion might have been the driving force for the crusaders that actually made the journey and gave their lives and took the lives of others but money or wealth was the factor that really drove the issue. The Islamist had it and the Christians did not. But even here I felt that the great Solomon Temple was somehow a solid focal point for man’s desire to have some proof of purpose. And yes, there were some that found contentment with the belief that serving an unknown God and showing it with the creation of a great temple and protecting it so others could also have something grand and solid to attach to their need of a purpose.
It is money though that is the dependable proof of purpose for Man. Man lived as a hunter gatherer only until the give and take of money was learned. Money though cannot be found simply by searching for it. No, the need for money comes to us almost as basic of a need as is breathable air. Fortunately over time there has been a nucleus of people that have obtained wealth and fortunately these people have found that their wealth brought to them a need to protect it first and to provide special comforts for themselves secondly. To protect it called for the muscles and skills of warriors and the extra comforts called for the muscles and skills of artisans. Fortunately, the various fruits from the differing outputs of the basic common muscle powers required a continuous outlay of money in order to maintain at least the status quo required dynamic means to continue the in-flow of money.
Pooling of funds was attractive because it reduced risk which allowed for larger projects with potentials of greater rewards. In early times it was necessary for actual solid proof to be traded as in systems of barter but this led to a more efficient system where the buyer could write his intentions to pay onto a tablet of clay.
Great expeditions became possible because people with funds pooled with other similar people and made pledges in a written form to pay now for an expected larger return in the future. Examples being the great gold expeditions into South America along with expeditions through uncharted waters in order to find simpler routes to the world of spices found in the Spice Islands of the Pacific. In another book – Over the Edge of the World by Laurence Bergreen is such a story. Massive amounts of money were committed to fund a voyage of four ships led by Magellan. These ships were to return with loads of spices but it did not exactly happen this way. Magellan did discover the route through a terrifying bit of water at the bottom of South America. Only a few of Magellan’s sailors returned, without Magellan, and they had only one much banged up ship but it held enough spices to pay back the financiers with a profit.
At one time in history a solid group of these kinds of financiers were to be found in the Netherlands. These people might have formed what today we consider to be stock markets but their means were very conservatively organized. It took a man by the name of John Law, an escaped criminal, to take what he had observed in their system and to abuse it and put it into use in France. He had a fascinating ride for a period of time using the needs of France to create a vibrant market for the pooling of funds. A vibrant market being one with risky bubbles which the folks in the Netherlands always avoided. John Law used his skills as mentioned from a home base in France but his territory of vibrant financing schemes was Louisiana. This was all fascinating reading.
Early history of money is not nearly all to be found in this book. The adventure takes us through modern times as we have lived them and up to the depression creation of today – 2008 to at least 2009. So, yes, subprime mortgages and derivatives are explained by someone who understands them. Early on in the book is an attention getting statement where it is pointed out: Today, wealth flows simply as digits of text on computer screens. What, possibly, can come after that? Are digits on a computer screen a sufficient visual marker for the proof of purpose of Man?