Saving The City
by Richard Roberts
Revisited this fine book on a day when, once again, the world’s financial machinery appeared to be breaking down. A significant difference now is that the people in charge are fools and poltroons, some of them actively seeking to end civilization.
Here’s what I wrote before:
A fascinating and detailed study of the financial crisis that struck London in 1914 and engulfed the world. World Trade in 1914 was highly globalized – far more so than at any time before, and world trade only surpassed this mark recently. Back then, the Pound Sterling was the international reference currency, all major currencies were pegged explicitly to gold and implicitly to sterling, and trade was based on bills that could be settled for sterling in London and subsequently converted at the Bank of England to gold. (In practice, settled bills went into accounts and gold was only shipped for arbitrage.)
The problem was that, as war approached, everyone wanted safety, and so everyone bought up London bills. There were soon no bills available, and that meant if you wanted to make a routine transaction, like paying for a shipload of shirts you’d ordered, you couldn’t: you could have plenty of money but you couldn’t get any of the de facto international currency because there wasn’t any to get.
It’s a complex and technical story with some interesting characters, and Roberts tells it skillfully.