BOOK REVIEW: THE HISTORY OF MONEY

 

Review of ‘The History of Money' by David McWilliams.

"Imagine money falling from the sky. Would you slip a tenner into your pocket before you told anyone? Chances are, most of us would trouser a few notes rather than inform the authorities." This is the opening of economist and banker David McWilliams's rollicking history of money, and his description of Operation Bernhard, the Nazi campaign to destabilize Britain by flooding the country with counterfeit cash.

Lenin tried a similar ploy in Russia. Despite having different political beliefs, they "both understood the phenomenal power of money: undermine money and you undermine the fabric of society."

That right there is McWilliams's underlying theme: money is the fabric of society. He wants people to understand how cash shapes our world. As he puts it: "Despite being a fully paid-up member of the economist tribe for many years, I've concluded that most economists do not really understand money."

His description of the earliest markets, and how coinage in the ancient world allowed the development of long-distance trade, is clear and evocative. For the Sumerians, money was linked to agriculture. A shekel represented the value of a bushel of grain:

Pretty soon after the arrival of money, we discovered the value of lending it. That gave money itself a price: the rate of interest. In his words: "[I]nterest isn't merely a price; it is also a code, a mini-encyclopedia of information about the person we are lending to, the chances of success, the risk in the region, the competition in the market, the technological infrastructure, and a whole host of other variables."

Lenders in Ancient Greece were figuring out the concept of the FICO score, in a very basic way—it was borrowing that enabled growth. A farmer could borrow against next year's harvest, in order to buy tools today, while the lender made a bet that the farmer would pay him back. All with money that they were both trusting would retain its value.

That trust is essential to the system is a key point for McWilliams. Today, if you hand me $10, I'm trusting many things at once: first, that this piece of printed paper has a meaning, a meaning that will be understood by a shopkeeper when I try to exchange it later that day for a coffee; second, that the government which issued this bill will back it; third, that you are not a forger, and the bill you give me is genuine. Our entire relationship with money is based on trust.

If you want to understand just how cash operates, how banks create it, and how we all play our part in defining its value, this book is an engaging introduction.

To read the complete article, see:
Money Makes the World Go 'Round (https://fee.org/articles/money-makes-the-world-go-round/)

 
Financial metaphors in the L. Frank Baum novel that inspired "The Wizard of Oz"

Divided into five fast-moving sections, "The History of Money" starts with the Ishango Bone, reputed to be the first "commercial tallystick," discovered in Congo, and comes, continentally at least, full circle to M-Pesa, a flourishing Kenyan currency based on phone credits.

McWilliams writes with extra zest about the ancient Roman general Vespasian, who paid his legionnaires with coins backed by salt — hence the origin of the word "salary" — and, upon becoming emperor, levied attendants in public bathrooms, who collected urine, then prized for its cleaning abilities (even of teeth).

He shows how writing and money have always been tightly intertwined, from cuneiform to letters of indulgence to check writing — anyone else miss the satisfying rrrip of tearing off a check? I haven't seen any other economist mentally hopscotch from the Bankman-Fried scandal to "The Bubble," the satirical 1720 poem by Jonathan Swift.

Despite its title, "The History of Money" is not an encyclopedic volume, but an opinionated, irreverent parsing of currency's charms. It could not possibly be comprehensive — money is one of those subjects, like air or water, that are sort of everywhere and everything, arising and ebbing and flowing — but it is idiosyncratic and interesting.

To read the complete article, see:
Making Sense of Dollars and Cents (https://www.nytimes.com/2025/11/09/books/review/the-history-of-money-david-mcwilliams.html)

 

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