The Money Men: Capitalism, Democracy, and the Hundred Years' War over the American Dollar

This is a book about US money as told through short biographical sketches of five men. The book was interesting and well written. It is certainly quite accessible for someone with only a little familiarity with US history and finance. However, those with a deeper understanding of these subjects may find the book a bit too basic. I liked the book and found that it did bring new facts to light.What is in the book - The five men covered and there impact on US money were:1. Alexander Hamilton the first US Sec. of the Treasury and the man who organized the US monetary system and formed the first Bank of the United States. This section of the book discusses the founding of the bank and how it operated. There is also a discussion of US tariffs during the period.2. Nicholas Biddle and the second Bank of the US. This chapter focuses on Biddle and his conflict with President Andrew Jackson.3. Jay Cooke and the Union financing of the Civil War. This chapter is about the question of money and banking in the Civil War.4. Jay Gould and his attempt to corner the gold market. The chapter discusses Gould’s railroad schemes, but focuses of his attempt to corner the gold market. It also discusses the gold backing of the US dollar during the last part of the 19th century and how this led to the attempted corner of the market.5. J. P Morgan and his support of the US gold reserves during the Cleveland administration and his quelling of the Panic of 1907. There is some general discussion of Morgan and his impacts on the US business in general (railroad financing, formation of US steel, etc.) with a focus on the above-mentioned events. There is also a discussion of the silver coinage movement.

What would it be like if there were no central bank? What would it be like if the U.S. Treasury did not print money and had to redeem its notes in gold (or silver)? How is it that government can print money and control interest rates? Did the framers of the Constitution intend this? That is what this book is about. And it is a very timely telling the story from perspective of key people in our history starting with Alexander Hamilton and moving forward from there.What this book shows is that the Tea Party and other conservative arguments espoused today are not new. We have had experience with a gold standard (albeit fractional), a bimetal standard (gold and silver), not printing money to finance wars and more recently, printing a lot of money to finance wars, no central bank and now a central bank. All have their problems and, through history's lens, we can see what the people at the time thought about the various approaches. Much of this will resonate today and may suggests solutions to our financial problems.I highly recommend this book along with This Time Is Different (Reinhart and Rogoff)  This Time Is Different: Eight Centuries of Financial Folly  and Lords of Finance (Ahamed)  Lords of Finance: The Bankers Who Broke the World , The Mystery of Banking (Rothbard)  The Mystery of Banking  and The Theory of Money and Credit (Mises)  The Theory of Money and Credit  for those interested in the history of our money and banking system. I would read them in reverse order rather than in the order listed if you are really interested in exploring the subject. Mises is a little tough going but it is all downhill from there. If you get bogged down, go right to The Mystery of Banking.One caveat, while the author of this book, which I highly recommend, and of the first two books listed above are great at illuminating the practical problems and forces that led to significant economic upheavals in money and banking in the U.S. and the arguments raised by all the involved parities, these authors don't necessarily draw the correct conclusions as to how the situation could have been handled better or prevented.These authors, but not Mises and Rothbard, follow the conventional wisdom which is that printing money and loosening credit is the best way to deal with a banking and economic crisis. Maybe it is and maybe it isn't. But the real question is how can these problems be avoided or at least if unavoidable, how can we minimize their severity?It seems to me that any economic system, such as ours, that requires that vast majority of society to work and add to the economic pie before sharing in it (by working to acquire and spending money) while allowing a special group, banks, to create money out of thin air (if you don't understand how this works, be sure to read the Mystery of Banking or any book explaining the fractional reserve banking which is practiced throughout the world) is suboptimal because if favors some citizens over others. This may be good for a monarchy or dictatorship but not for a democracy. Government favoritism undermines the public spirit and social cohesion.In addition to being inherently unfair and, as far as I can see, unnecessary, the creation of money out of thin air injects false demand signals into the market because this money looks the same as the money earned by people who worked for it. The unspoken assumption about money is that those who have it earned it by adding to the economic pie. Money created out of thin air creates apparent demand as if the money were earned by productive workers when that is not the case. Those who receive money created out of thin air have not added to the economic pie before taking a piece of it. If everyone could do that, there would be no pie.Permitting banks to lend money that they create out of thin air, rather than money earned and deposited with them, can cause a much larger measure of misallocation of resources than would otherwise be the case because because it creates false demand signals (via bidding up prices with thin air money) that fuels bubbles. This misallocation of resources manifest itself in larger swings in the business cycle (bigger booms and busts such as in the stock bubble, in 2000, and real estate bubble, during the past decade).This is just as true when the government spends money it creates out of thin air as when banks do it. When government spends money it does not have and has not borrowed or taxed, it creates apparent rather than real demand which would represented by dollars that were earned by taxpayers and then acquired by government through taxes or borrowing. It creates inflation - more money chasing the same amount of goods.This issue of creating money out of thin air to support expenditures was well know to our forefathers. It discussed in this book, The Money Men. At the outset of the Civil War, the financially strapped Union had to raise money to support the Civil War. They recognized that they had to either raise taxed, print money and/or sell bonds. The Money Men shows you what they did and who and how it was done. It is quite an interesting story all by itself.Read The Money Men and enjoy!

I have long been a fan of HW Brands - In fact he is the author of two of my favorite works on US History ("The First American" and "The Age of Gold") However, what has consistently made Brands a favorite of lovers of American history is missing in "The Money Men" - that is his amazing attention to personal details. Typically, Brands is able to bring his subjects alive like no other. Unfortunately, "The Money Men" is a very brief glimpse at five loosely associated men... each is given between 30-50 pages. The result of Brands work is an overview of the formation of the banking industry in the United States. I would approach "The Money Men" as a way to decide if you would like to tackle one of the more complete books on the subject... such as Chernow's masterful books on JP Morgan, Rockefeller, and Alexander Hamilton (And I highly recommend each of them). A final note.... at the time of publishing this review the price of "The Money Men" is less than three dollars. This is an outstanding price - and definitely worthy of a place in your library at this price!

A very interesting viewpoint to look at competing political figures not just as Democrat versus Federalist/Republicans, but more from an economic standpoint of labor versus capitol in which case the parties continually switch back-and-forth. Thoughtfully written and clearly articulated. I am becoming a big fan of this author and look forward to reading more of his work. Highly recommended to anyone interested in American history or fundamentals of economics.

I am writing as a mediocre professional in economics and banking, which makes me aware of the difficulties which the subjects present to the non-specialist. This short book is as engaging as any novel and will reward the attention of anyone who has a passing interest in the financial crisis that has characterised 2007 and 2008. By way of by-product it will also whet anybody's appetite for more knowledge about the USA, which is such a young, open and dynamic economy - and this from an erstwhile cynic on American proselytisation. Try it. It will open up numerous avenues of exploration for you. For example, it has tempted me to read about the Astors, and Cliveden, as well as high finance and US history.