Book Review: Money: Whence it Came, Where it Went

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Recently I noticed that something like a hierarchy of Western currencies has developed. These are the Swiss franc at about ¢80, the US Dollar, the Euro at $1.35, and the British Pound at $1.55 or so. Those are where they are at today. Not long ago the Dollar was about equal to the Euro, and a Pound cost $2.00. Before World War I, the European countries used a gold standard to keep currencies at a steady and predictable value relative to other currencies. After WWI, they had to go off gold because their gold holdings were spent, in the US, to pay for the war. The US then had so much gold, that it was forced to tie its currency to gold. None of the major economies are on gold anymore; currency values are now sorted through market value based upon the supply and demand of the currencies. Of course, this is pretty much common knowledge, but in considering the current hierarchy and how it got there, I read John Kenneth Galbraith's Money: Whence it Came, Where it Went.

One would be hard pressed to find a better biographer for money. Galbraith, who passed away in 2006, was an economic advisor in some capacity or another to all presidential administrations since FDR, usually maintaining a simultaneous teaching position at Harvard. He also authored 33 books, primarily on economics and economic history.

Money is a short history that begins with 4000 years ago with the first use of exchanging precious metals for goods; a quick dash through official Roman and Byzantine coinage; the 200 year era when tobacco was the major currency in North America; and ending with state of the US Dollar in 1975, when the book was written. Along the way, Galbraith explains how the incredible wealth in gold and silver from the New World changed the nature of European economics; how the Bank of England and the Banque de France developed out of less than upstanding finance schemes; the birth of the 'greenback' and the decade long debate about whether or not it was constitutionally permitted to issue a common currency. Galbraith also explains issues and controversies of Keynesian economics, the creation of the US Federal Reserve and how the Great Depression got so bad.

Most economics books are slow and boring: not this one. It's a quick, easy and interesting read. Galbraith has a sharp sense of humor and expresses his contempt or adulation for others and/or their ideas. His belief that economics are culturally influenced adds to the interesting tales of peculiar money-oriented activities in mankind's history. This book gives historical perspective to anyone interested in money.

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