The first and most important question to ask of this book is: what is it trying to do? It is not a detailed history of money and finance like Glyn Davies’s A history of money: from ancient times to the present day (1994). Rather, Ferguson’s interest is in explaining how the immensely complicated current system of globalized finance came into existence, his argument being that, in trying to understand the significance of present-day financial phenomena, it is always best to look at their origins and to see why they were first required and invented. On that basis, Ferguson discusses the emergence of paper money, bills of exchange, bonds, equity finance, insurance, mortgage debt, international financial flows, and central banking; and he then extends his enquiries into the emergence of modern financial instruments such as hedge funds, derivatives, and swaps. In investigating origins, Ferguson travels swiftly from ancient Mesopotamia to medieval Italy, takes in the Spanish discovery and exploitation of Peruvian silver in the sixteenth century, investigates the Dutch development of the joint-stock trading company in the following century, and looks at the financing of the Napoleonic wars, this last discussion being informed by his own specialist knowledge of the Rothschild dynasty and its rise to fame.

The second major question is: what audience is the book aimed at? Since it emerged in tandem with Ferguson’s recent TV series of the same title, it is meant to have a wide appeal. In the introduction, Ferguson explains his purpose as educative, as trying to get the average man or woman to understand the current financial scene. He gives two main reasons why he thinks this is important. First, he argues that ignorance of money and finance is very great; and, since the economic fortunes of most of us are now dependent on this incredibly intricate web of finance, it behoves us all to try to understand it better in order to serve our own immediate interests. Second, he is at pains to argue that, despite the problems that financial evolution has brought in its wake, we need to appreciate how important it has been to our economic development in the past and will be again in the future. In other words, populist hostility to finance has its dangers because it threatens to stifle financial innovation and thus retard economic progress in the long run. The latter argument takes on additional significance from the fact that Ferguson finished his book in mid 2008, when the credit crunch we are now experiencing was already on its way and when anti-bank animus was beginning to grip the public both here and in America.

The book has many merits. Ferguson is very clear that uncertainty is an inevitable companion of financial development – he quotes Keynes very effectively on that – and that Minsky and Kindleberger have it right in seeing ‘manias, panics and crashes’ as integral parts of the story. He also espouses a Darwinian theory of financial evolution that takes off from Veblen, and from Schumpeter’s famous notion of ‘creative destruction’. These parts show Ferguson at his best: that is, as a historian who, besides producing high-class scholarly work, has the ability to write genuinely popular history. But one must wonder, in this case, whether he has really repeated the success he had in translating the complexities of British and American imperial history into readable and informative narratives. Finance is much harder than empire to write about for a wide audience because it requires from its readers a capacity to think rigorously, alongside a need to master arcane detail; in consequence, however important it is as a subject, it seems both formidably intellectually demanding and boring except to a small band of devotees. Despite brilliant passages, an anecdotal style, and a careful attempt to define difficult concepts and to translate City and Wall Street jargon into everyday language, turning financial history into easy-to-read history is a problem that sometimes defeats him. There are many passages throughout the book that will be very hard to follow for all but the most dedicated layperson. The book will sell because it is associated with a TV series and because Ferguson has celebrity status as an intellectual. But one suspects that, like A brief history of time, it will be a book more displayed on the shelves of middle-class homes than one actually read and understood by the inhabitants. However, a run through the footnotes shows that Ferguson has done an impressive amount of homework (although he has an irritating habit of occasionally failing to reference quotations in the text). So, although the experts are unlikely to think that there is anything seriously new here that might take the subject in fresh directions, the book should make a very good text for students studying the origins and significance of that phase of financial globalization that, as I write, is struggling to survive.