Review of 'A Concise History of International Finance: From Babylon to Bernanke'

Abstract

Addressing how modern nations have found themselves, as President George W. Bush saw it, 'stuck with these miserable choices' when it comes to resolving financial crises, is at the centre of Larry Neal's concise history of international finance. Neal's book is in fact the latest in a long list of works which have sought to explain to men like Bush, and the wider readership at large, exactly how current financial frameworks came to be. Where A Concise History of International Finance: From Babylon to Bernanke seeks to be different, however, is that where Neal has identified most studies to date as having provided 'detailed indictments of the apparent perpetrators of the crisis' (that is whatever financial crisis happens to be under discussion at the time), be that politicians, regulators, or financiers, his work, rather than vilify individuals or institutions, takes both an international view and a 'very long historical background' (pp. 1-2). For Neal, his approach is intended to provide a 'broader and deeper perspective on the financial innovations that accompany economic expansion' (p. 2). Yet, Neal's aim is not simply to provide a history of financial crises, but instead intends that, through recognising the common elements and causes of financial crises, solutions to such problems might be identified. The 'ultimate goal' of this work is detailed by Neal as being to provide solutions to the problems being experienced by the billions of stakeholders who had been created by the years of global prosperity prior to 2008; presenting them with a way to 'both preserve the gains already achieved and also mitigate the dangers of future crises' (p. 3). Indeed, this is no small feat. Beginning with stone tablets used to record financial transactions in the ancient Mesopotamian city of Uruk, through to the first use of coins, minted from electrum in the Grecian kingdom of Lydia, as currency, and on to the importance of Roman sovereign debt in prompting the first embryonic shifts of the character of debt from the personal to the impersonal, Neal's coverage of the 'first 3,000 years' is indeed brief; amounting to less than 13 pages in total. Arguably this concise history may have been better subtitled From Pope Gregory VII to Bernanke; admittedly it does not have the same ring to it, but it is really with the beginnings of the papal revolution in 1077 that Neal's financial history begins to take shape. It was this moment, when Pope Gregory proclaimed his spiritual authority over the Holy Roman Emperor, Henry IV, that has been identified as launching 'the legal tradition that has guided Western politics, philosophy, and economics ever since' (p. 4). From here, Neal charts the impact of Italian financial innovation-bills of exchange, the practice of 'change-rechange'-on intra-European trade during the high middle-ages, and on to the establishment of the Casa di san Giorgio in Genoa in 1408. This organisation-a joint-stock company whose shareholders held

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