The Pursuit of Wealth: The Incredible Story of Money through the Ages by Robert Sobel; McGraw-Hill; US$27.95.ROBERT SOBEL DIED IN JUNE LAST year. His wife and editor of 41 years, Carole Sobel, and his many friends, rallied around to complete the final proofs of this remarkable book. Sobel was no ordinary financial scribe. A columnist for Barron’s, The Wall Street Journal and The Washington Post, he wrote a number of books on financial history. This one is a highly readable blockbuster.
Sociologists tell us the most powerful human motivations are the pursuit of wealth, status and power. Sobel demonstrates that not much has changed for 5,000 years.
Just a few of his examples: Mesopotamia had a lively commodities exchange going in 3500 BC, when copper, tin, wools, linen, olive oil and slaves were traded throughout the ancient Near East. The development of the Athenian banking business was greatly aided by foreigners wanting to hide assets abroad, ushering in the "offshore banking" still favoured by criminals and tax evaders today.
Alexandria boasted a score of merchant banks and a financial system similar to our modern central banks. Money lenders were in full swing in Greek temples, charging 12-18% for loans secured by collateral, which might be the debtor’s wife, and up to 33% for unsecured commercial ventures - early junk bonds.
Alan Greenspan might be intrigued to read that the phenomena of inflation first appeared during the "Black Death" epidemic, which started in Sicily in 1374, and eventually carried off one third of Europe’s population. The resulting labour shortage forced up wages and prices, causing distress to most consumers.
The first insider dealer and big time market manipulator that Sobel identified was one William Duer. In 1789, as under-secretary of the US Treasury, Duer got confidential information on the bond markets. He became greedy and took huge leveraged positions that went wrong, triggering the first US market crash, and the earliest example of the government intervening to support prices. Duer died in jail.
A century later, Andrew Carnegie, the Bill Gates of what it was permissible to call "the gay nineties", sold his steel empire to JP Morgan for US$492 million in gold-backed bonds, becoming the world’s richest man. Sobel casts a suspicious eye over the origins of that fortune. At 15, Scots immigrant Carnegie got a job in new technology, operating a telegraph relaying buy and sell messages between stock holders. He’d already hit it rich in his twenties.
The Pursuit of Wealth is a tour de force of business history. The next best thing to making a pile of money is to read how others did it. Reading this book may enable you to do both.