Imagine the American republic of the 19th century: at the beginning, a sparsely populated agrarian nation where the president, Thomas Jefferson, fords rivers on horseback to make it to his own inauguration; at the end of the century, it's a land of densely populated cities, teeming with factories and linked by a network of railroads. This extraordinary transition--and all the economic upheavals that went along with it--is described in the opening chapters of Money, Greed, and Risk
, and provides the historical context for a broader look at how booms and busts happen. Charles Morris tells the story of American financial markets by looking at its larger-than-life characters: Nicholas Biddle (the first U.S. central banker), Jay Gould (a much-hated financial genius who patched together a network of rail lines), steel magnate Andrew Carnegie, oil baron John D. Rockefeller, and, of course, J.P. Morgan, who made America the world's banker. By the time these men had all passed from public life, the U.S. economy had changed from a primitive system that could be bent to the will of a single financier, such as Morgan, to a sophisticated, highly regulated, world-dominating conglomeration of massive corporations.
Then along came Michael Milken and things changed again. Morris makes this chronicle entertaining and enlightening, although the reader is expected to have some previous knowledge of finance and history. He finds connections where we don't expect them--for example, linking the leverage tactics of junk-bond king Milken to early-19th-century "wildcat" bankers. He also makes it easy to understand the accordion-like expansions and contractions in the world's developing economies. Once you've read this book, you'll feel as if you've seen everything before. --Lou Schuler
From Publishers Weekly
Morris's idiosyncratic excursion into the ups and downs of the business cycle is a series of appetizers rather than a meal. He takes the professional's-eye view that market crashes reveal systemic defects rather than moral failings of economic movers and shakers: greed is good as long as it is properly channeled and controlled. Crashes occur, Morris (Computer Wars, etc.) persuasively argues, when financial innovations are too successful and prod the market to expand too fast. While he discusses the American crises of the 1830s, 1870s and 1890s, as well as the 1980s, he barely touches on the crash of 1929 and ignores entirely the Cotton Panic of 1837, probably the worst financial crisis in American history. With a stoical dispassion unlikely to soothe those whose nest eggs are currently nestled in NASDAQ, he sees crashes as necessary, if painful and unfortunate, corrections to excess. The most penetrating question, he suggests, is not about why a market crashes but rather how prices were allowed to get so high in the first place. Most chapters will be easily understood by anyone who has ever played Monopoly, but the "Options" appendix assumes the reader recognizes, for example, the cumulative Gaussian distribution function. This well-written book can be enjoyed as a brief lesson in financial history or as a warning of a correction to come. (Aug.)
Copyright 1999 Reed Business Information, Inc.