Book Reviews

Book Reviews Finance & Development, June 2016, Vol. 53, No. 2

Money, It's a Hit William N. Goetzmann

Money Changes Everything: How Finance Made Civilization Possible

Princeton University Press, Princeton, New Jersey, 2016, 600 pp., $35.00 (cloth).

A five-year 3.78 percent loan between two businessmen in 1796 may not seem remarkable, but it turns out that’s 1796 BCE, and the businessmen lived in the ancient Sumerian city of Ur. William N. Goetzmann’s sprawling Money Changes Everything spans ancient Mesopotamia to 20th century America, China, and Europe, with excursions through classical Greece and Rome, ancient and imperial China, and centers of financial innovation in medieval and Renaissance Europe.

Goetzmann aims to show the enabling role finance played in the development of human society, culture, and knowledge. His core thesis is that financial innovations through the ages have overridingly had a civilizing influence. Today, when financiers are so often seen as malign influences, such a view may seem contentious, but Goetzmann makes a strong case.

His method of persuasion is to deluge the reader with a wealth of historical detail. The sheer density can overwhelm at times, but he leavens his account with fascinating historical episodes and characters and personal tales of discovery (for example, his role in unearthing the 1372 founding charter of the Honor del Bazacle in Toulouse, France—a corporation that survived into the 20th century).

The book starts in the Mesopotamian city of Uruk, where markings on clay tokens that served as financial records evolved into cuneiform, one of the earliest forms of writing. Early financial innovations influenced humanity’s concept of time. A 360-day Sumerian calendar did not correspond in any way to astronomical time, but 360 is a number divisible into many whole numbers, ideal for parceling time into even ratios convenient for financial contracts. (In fact, the 360-day year is still used in calculating modern-day bond interest accruals.)

Conceptions of time in medieval financial contracts may have been a counterpoint to ecclesiastical notions, contributing to a clash between the church and commercial society. Arm’s-length financial transactions—and therefore a level of trust in a financial system that could substitute for the personal relationships that prevailed in traditional societies—were critical to increasing population densities.

Finance also fostered the capacity for abstract thought. Most...