The Ascent of Money: A Financial History of the World by Niall Ferguson

In truth, The Descent of Man could be a parallel summation of an account of credit and debt. For as Ferguson graphically shows, at the heart of money's hegemony is our own human failing — never more so than now. For while he planned his charting of our ever-growing devotion to the stuff long ago, the coincidence of the current crisis forms the most lurid backdrop.

He does manage to squeeze in references to some recent events, just, but the second edition should provide an appropriate topping-out ceremony for money's stranglehold. Until then, we've got to make do with previous booms and busts.

If only banks had employed a Ferguson, it's possible that previous mistakes would have been heeded and the disaster of 2008 could have been avoided. But then bankers are not renowned for straying far from the frontline activity of making money and for taking the advice of others.

The main lesson of history, surely and sadly, is that the lessons of history are always forgotten. So we still have not absorbed the message from the past that money does terrible things to people. As well as taking us through the birth of the first loan sharks in Italy and the formation of the first derivatives in the 19th century — you see, nothing is new, not even in today's faster, high-tech-driven world — Ferguson lays bare the tales of the South Sea Bubble and the 18th-century speculative fever spawned by John Law, a Scottish murderer, that brought France to its knees.

The 1929 Great Crash is here as well — as is the demise of Enron. He draws links between the greed of Law which saw him attempt "to make gold out of paper" and the late Kenneth Lay, boss of the Enron energy corporation, who tried "to make gold out of gas".

There is a delicious moment when the reader is forced to do a doubletake: the receipt by Alan Greenspan in November 2001 of the Enron Prize for Distinguished Service (yes, really — the redoubtable Federal Reserve chairman joined Mikhail Gorbachev, Colin Powell and Nelson Mandela on the roster of winners). What we know now is that Enron was built on monumental fraud and at its core was man's love of money.

Ferguson quotes Jeffrey Skilling, creator of Lay's scams, since jailed: "I've thought about this a lot and all that matters is money ... You buy loyalty with money. This touchy-feely stuff isn't as important as cash. That's what drives performance." He interviews Sherron Watkins, the whistleblower on Enron, who recalls: "You got multiples of your annual base pay at Enron. You were really less thought of if you got a percentage, even if it was 75 per cent of your annual base pay. Oh, you were getting a percentage. You wanted multiples.

You wanted two times your annual base pay, three times, four times your annual base pay, as a bonus." The culture of payment by bonuses played a significant part in many Enron staff turning a collective blind eye to what was going on. It was that same obsession that governed the behaviour of our banks — although not crookedly, he said quickly.

If there is a personal criticism it is that there is not enough of this recent history. Ferguson also feels the need to propagate a fresh hypothesis that China and America are bound together financially in "Chimerica".

If he'd taken a bit longer his analysis could linger on the rewarding explosion that was Lehman and with it, the other lesser detonations. That will have to wait. By then, probably, the markets will be climbing again and money's star will be riding high.

But just as certainly, they will plummet again — and once more, we will be left wondering why..

Synopsis by Foyles.co.uk

Bread, cash, dosh, dough, loot: Call it what you like, it matters. To Christians, love of it is the root of all evil. To generals, it's the sinews of war. To revolutionaries, it's the chains of labour. But in "The Ascent of Money", Niall Ferguson shows that finance is in fact the foundation of human progress. What's more, he reveals financial history as the essential back-story behind all history. The evolution of credit and debt was as important as any technological innovation in the rise of civilization, from ancient Babylon to the silver mines of Bolivia.Banks provided the material basis for the splendours of the Italian Renaissance, while the bond market was the decisive factor in conflicts from the Seven Years' War to the American Civil War. With the clarity and verve for which he is famed, Niall Ferguson explains why the origins of the French Revolution lie in a stock market bubble caused by a convicted Scots murderer. He shows how financial failure turned Argentina from the world's sixth richest country into an inflation-ridden basket case - and how a financial revolution is propelling the world's most populous country from poverty to power in a single generation. Yet the most important lesson of the financial history is that sooner or later every bubble bursts - sooner or later the bearish sellers outnumber the bullish buyers - sooner or later greed flips into fear. And that's why, whether you're scraping by or rolling in it, there's never been a better time to understand the ascent of money.