The Ascent of Money: A Financial History of the World

Pizarro was a Spanish conquistador who led expeditions to Peru in the 1500s in search of gold and silver. His men fought and defeated the Incas, taking their precious metals. He was killed in 1541, four years before the Spaniards discovered the hill called Cerro Rico, which held great quantities of silver ore. The Incas were forced to mine the ore so that coins could be minted and shipped to Spain.

Fibonacci wrote a book called Liber Abaci(“The Book of Calculation”)in 1202, which was crucial for the development of credit. It introduced Hindu-Arabic numerals and described fractions and decimals, both of which were necessary to calculate interest.

Giovanni was the patriarch of the Medici family and established them as successful bankers in Renaissance Italy. He used bills of exchange to make his fortune and set up a bank that was uniquely structured to avoid risk of failure. The Medici family grew so powerful in Florence that the Pope remarked of Giovanni's son, Cosimo, "He is King in everything but name" (46).

Rothschild was the founder of the London branch of the bank his family owned throughout Europe. He became famous for his assistance during the Battle of Waterloo in 1815, in which Napoleon Bonaparte was defeated for the last time. The British government had called upon him to collect enough gold to finance the war. He did so, but when the war ended swiftly, with the gold still in his possession, he realized it would soon depreciate in value. He gambled on the notion that British bonds would increase in value, and bought them up as fast as he could. The bet paid off and he made a fortune. The Rothschild bank was the largest bank in the world for most of the 19th century. 

Law was a Scotsman who founded the Banque Générale (later the Banque Royale) in 1716, what would become the central bank of France. He also founded the Mississippi Company, a joint-stock company that had a monopoly on trade in France’s Louisiana Territory in the New World, and later became the Controller General of Finances in the French government. He had vast wealth and great influence over the French economy. Trading in the shares of the Mississippi Company led to a bubble that burst, rendering them worthless. 

Greenspan was the Chairman of the US Federal Reserve from 1987 to 2006. He was credited with successfully steering the economy through the stock market crisis of October 1987, when the Dow declined by 23% in a single day. 

Lay was the founder of Enron, primarily an energy-trading company based in Houston, Texas. Enron pioneered a new type of energy delivery in an era of deregulation in the 1990s, in which Enron acted as an “Energy Bank” between producers and consumers. Its actions to maintain high energy prices led to disruptions in the market, and its unlawful accounting practices hid losses for a time. In 2001, Enron went bankrupt, and Lay was indicted three years later. He died in 2006.

Wallace and Webster created the Scottish Ministers' Widows' Fund in Edinburgh, Scotland, in 1744. It was the first insurance plan to use financial principles and actuarial science to determine premiums, and invest the premiums so payments could be made from the returns, rather than the principal. 

Friedman was an economist at the University of Chicago who won the Nobel Prize in economics in 1976. He advised Chile during the Pinochet dictatorship, using the country to test his theories about controlling inflation with monetary policy.

Piñera was an economist and government official in Chile who instituted a system of private retirement accounts to replace the government’s public pension system in the 1980s. His goal was to give workers a greater sense of ownership and to improve economic growth. 

De Soto is a Peruvian economist whose work equates home ownership with generating wealth. He theorized that shantytowns in poor areas around the world represent trillions in property value that is not being utilized because its occupants cannot obtain titles to their homes, which are necessary for taking out loans that can be used to start business. His theory was tested in Quilmes, near Buenos Aires, and it did not work in practice as expected. 

Yunnus is an economist in Bangladesh who originated the concept of microfinance, or making small loans to individuals who otherwise would have no means of obtaining credit. He won the Nobel Peace Prize in 2006.

Soros is the founder of the Quantum Fund, a hedge fund in the United States. His theory of “reflexivity” postulates that the biases of current investors influence the market, and what happens in the market influences investors' biases, starting the cycle anew. He made over $1 billion in 1992, when he bet on the devaluation of the British pound.