I wrote this review of the Cash Nexus a long time ago before Niall Ferguson was all that famous.  I wasn’t very good at writing reviews  back then.  But to be fair, he wasn’t all that great at writing them either.

Have you got a friend who is interesting and intelligent, and is well worth listening to on a subject on which he is very knowledgeable? But who ruins it all by behaving as if he is even more interesting and intelligent than he really is, and being pompous and pouting about it as well. I imagine that Niall Ferguson is such a guy. The Cash Nexus is certainly such a book.


It covers the fascinating subject of what effect financial affairs have on general history and politics. We rarely glimpse this aspect of things when looking back on past events. But when you think about it, the people at the time would have had to pay close attention to their balance sheets before taking action, so we usually have an important thread missing from the story. But if you are reading this Niall, for God’s sake rewrite your introduction. The book’s introduction gives a preview of what the book is to cover. Fair enough, that is what an introduction is for. The book is about economic and political history.

A few choice quotes to give background and context would be good. A 21 page introduction is a generous size. But it has to be that long because it includes references to the musical Caberet, the Bible, Karl Marx, a synopsis of Wagner’s Ring Cycle, George Berard Shaw, Dickens, Zola, Carlyle, Hobsbawm, Dosteovsky (full paragraph quote from Crime and Punishment) and for good measure Peter Cook. Okay, okay, you are well read. We get it.But we put up with writers like this because they do offer us value. The writing style is clear and he explains the complex issues in a way that illuminates them without oversimplifying them.

It is interesting to consider the business of war in economic terms. For instance contrast the British and American approach to the second world war with the Russian one. The bombing campaigns over the skies of Germany were effectively investments in capital expenditure to save allied lives. The Russians had less access to financial resources and so had to pour their men into the battlefields and suffer huge losses. The huge casualties they suffered still have their impact today. The Americans on the other hand have maintained their winning strategy. In the 1992 Balkan War stealth bombers from Missouri were able to fly half way round the world to bomb Serbia and get back in time for pizza for tea. This may have been the only war in history when one of the sides suffered no deaths at all as a result of enemy action.

Stealth bombers are the defining modern warfare technology – so expensive that only the number one superpower can afford to deploy them. But Ferguson makes an easy to miss point. As a proportion of the USA’s financial resources they are probably a very cost effective way of projecting its power globally. Relative to its gross national product, a stealth bomber costs the US less than a dreadnought cost the pre-First World War British Empire. And it probably is more effective.

Raising money to fight wars has been a problem throughout history. In the Cash Nexus Ferguson claims that the key factor in a conflict is often the ability to borrow ready cash in large quantity. This seems to have been Britain’s great strength in its many conflicts with France. We often tend to think of huge budget deficits and massive public debts as being a modern invention, and possibly a worrying one. In fact states seem to have had a habit of going into the red from about as soon as they were able to. This has led to bad consequences sometimes. The French Revolution was the result of a prolonged crisis where the state could not find the revenues it needed to meet its obligations. Britain on the other hand was able to manage a bigger debt resulting from the war with Napoleon with no obvious ill effects.

History has recorded the military exploits of Napoleon in great detail and armchair generals have spent a lot of time paying attention to the emperor’s tactics.  The financial side of warfare in that era is much less well known and discussed.  But the people at the time were well aware that the depth of your pockets was as important as the strength of your soldiers.  Napoleon in fact was convinced that Austria relied on paper money to keep its troops in the field.  In 1809 he even ordered the printing of fake Austrian banknotes which were to be distributed in an attempt to deliberately undermine their currency and their war effort.  It could easily have worked.

He would in fact have had very close to his heart a recent experience. After the French Revolution there had been extensive printing of money.  This had the effect of causing massive inflation. It not only wiped out France’s foreign debt by effectively writing off all liabilities in the now much less valuable currency, it also destroyed many people’s savings.  In February 1796 the printing came to an end when the printing presses were publicly smashed.  Much of Napoleon’s popularity came from his restoration of order to the country’s finances.

The weakest part of the book is the conclusion which reads a bit like a school essay.  You get the impression that he started the book with a couple of ideas he was going to prove, but didn’t find the evidence to support the conclusion he was aiming for leaving him with nothing much to end the book on.  So I will offer an alternative conclusion.  Looking at the past it is clear that the present day is nowhere near as different as we like to suppose it to be.  Economics plays a key role in the way history unfolds, but that doesn’t make it the determinant of history.  Individual genius and individual idiocy overide rationality time and time again.  But at the end of the day, there is always a cost and somebody somewhere always picks up the bill.


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