Money for Nothing: The Scientists, Fraudsters, and Corrupt Politicians Who Reinvented Money, Panicked a Nation, and Made the World Rich

Everything you wanted to know but were afraid to ask ...<br /><br />There are things that you feel you ought to understand, but don't. For me, it's things like basic physics (why metal aeroplanes fly and why metal boats float) and basic linguistics (why the Great Vowel Shift happened in the late medieval period). The South Sea Bubble has also always been one of those elusive things. I knew people lost a lot of money, but I never really new anything more than that.<br /><br />Leveson does a really good job of patiently explaining. He is a scholar who writes with a warm and light touch. He provides the nitty-gritty details from the original sources to give the book authority, and yet at the same time communicates with the skill of a gifted teacher.<br /><br />One thing that made the book really enjoyable for me was the context that the author provided. The first third of the book sets the scene of what was happening in scientific thinking and observation, in mathematical theory, and in monetary practice in the middle to late C17th. Without those changes and the prevailing national debt, it is difficult to see how the bubble could have happened at the time that it did. It grew out of a context, and it was helpful to be able to understand more of that context.<br /><br />A second feature of the book is that it clearly explains many of the basic concepts necessary to understand how the bubble started and how it was deliberately pumped up. If you had previously said to me, "The company was set up to swap debt for shares," that would have meant nothing. Thanks to the clarity of the author, I now feel I can grasp what was happening. We are also taken through the many ways in which the share price was recklessly inflated by the company directors.<br /><br />The reason for four stars and not five is that there were parts that I felt needed greater clarity. For example, I could understand that Newton was seeing things in new ways mathematically, but I couldn't really see what those new ways were, or what the link was with the bubble. However, I am ready to accept that that may have been more to do with my limited grasp of calculus.<br /><br />Nevertheless, it was a thorough, helpful, and enjoyable read.

The author at Scalzi's: <a target="_blank" rel="noopener nofollow" href="https://whatever.scalzi.com/2020/08/19/the-big-idea-thomas-levenson/">https://whatever.scalzi.com/2020/08/1...</a><br />Excerpt: "[Isaac] Newton had lost £20,000–roughly four million dollars in 21st century money–in a financial scam that happened exactly three centuries ago this year, an event called the South Sea Bubble. Afterwards, he told his niece that he could “calculate the motion of heavenly bodies but not the madness of the people.”<br /><br />DNF. OK+, but it didn't really hold my interest. Returned some time ago, and I have largely forgotten the book. Not recommended. but not bad.

This was a very good book. <br /><br />A really important and timely book on money and power. How they overlap, and how they complement each other - to the detriment of us honest citizens. <br /><br />Very good read. <br /><br />Would recommend!

<b> <u>TL;DR</u> </b><br /><br />In <a href="https://goodreads.com/author/show/23036.Thomas_Levenson" title="Thomas Levenson" rel="noopener">Thomas Levenson</a>'s <a href="https://goodreads.com/book/show/52128986.Money_for_Nothing_The_Scientists__Fraudsters__and_Corrupt_Politicians_Who_Reinvented_Money__Panicked_a_Nation__and_Made_the_World_Rich" title="Money for Nothing The Scientists, Fraudsters, and Corrupt Politicians Who Reinvented Money, Panicked a Nation, and Made the World Rich by Thomas Levenson" rel="noopener">Money for Nothing: The Scientists, Fraudsters, and Corrupt Politicians Who Reinvented Money, Panicked a Nation, and Made the World Rich</a>, the scientific revolution coincides with England’s need for financial innovation, and Levenson depicts the turmoil, hope, promise, and despair with a novelist’s eye. Highly Recommended.<br /><br /><u>Disclaimer:</u> The publisher provided a copy of this ARC in exchange for an honest review on NetGalley. <a href="https://primmlife.com/blog/" rel="nofollow noopener">Read more reviews on Primmlife.com.</a><br /><br /><b> <u>Review: <i>Money for Nothing</i></u> </b><br /><br />Until I read Terry Pratchett’s <i>Making Money</i>, I never thought about the development of money as a historical process. I never would have thought the history of money could be interesting, but along came <i>Money for Nothing</i> by Thomas Levenson. While Mr. Levenson wasn’t as funny as Pratchett, he kept my interest as well as any Discworld book. <i>Money for Nothing</i> started by discussing Isaac Newton, and that’s guaranteed to get my interest going. But from there, he goes on to document how the scientific revolution of Newton’s time affected money leading into the South Sea Company and the market bubble (?bubbles?) it created. <i>Money for Nothing</i> by Thomas Levenson wrote this evolution of money as close to a novel as historical non-fiction gets. It dealt with a lot of history I knew nothing about, shedding new light on historical figures, and showing that when it comes to money, people never really change.<br /><br />Thomas Levenson’s <i>Money for Nothing</i> was the historical book I didn’t know I wanted to read. I picked it up because the description promised it would show how the scientific revolution affected the concept of money. Levenson delivered. <i>Money for Nothing</i> examines the process of money becoming an ever-more abstract concept. During Newton’s time, England faced a number of unique monetary issues from the metal of their coins being worth more than the face value to untenable national debt to insurance betting to stock bubbles. Despite being roughly 300 years ago, England faced modern financial troubles. The more things change, the more they stay the same.<br /><br />Levenson says that this period starts the formation of modern finance. He lays it out in an intriguing and well written way. While the focus is how money evolved into ever more abstract forms, Levenson uses people and their lives to convey the concept. His writing on Newton fascinated me, and I’ll have to check out his other book, Newton and the Counterfeiter, because of this. Sir Isaac is an amazing person in the history of science, for sure, but just in general, he led an interesting life, including time at the Royal Mint. Levenson writes Newton so well because he focuses on the person, both good and bad. The author brings this same attention to humanity for all the people in the book, and there’s lots and lots of names here. While some sought to make finance a purely reason-based pursuit, the South Sea Bubble shows that reason had little to do with the rise in price. Archibald Hutcheson used mathematical reasoning to show that the South Sea stock was overpriced. He printed pamphlets about it, and yet no one believed him. Levenson’s explanation of Hutcheson’s work and why it mattered despite being ignored is wonderful. He explains the revolutionary shift in thinking Hutcheson made. Would the bubble have been avoided if Hutcheson was taken seriously? It’s hard to say, but maybe it wouldn’t have been as bad.<br /><br /><b> <u>Individuals</u> </b><br /><br />When I started reading, I noticed a neat pattern. Each chapter focused on an individual and their contribution to the financial issues of the day. For example, chapter one focused on Newton, two on William Petty, and three on Edmund Halley. But quickly the list grew too long for me to keep up with, and I got caught up reading, forgetting to break to make name notes. There are many, many people in this book, but Levenson does such a good job of describing and presenting them, that they all remain distinct. It helps that a number of these people are well-known, but even those who aren’t receive attention and care. I appreciated the time Levenson took to ‘flesh out’ his characters. We learn about Hutcheson, John Blunt, Daniel Defoe, and many more. Each fit in without derailing the overall narrative. It’s really, really well done.<br /><br />When learning about historical figures, we tend to learn only a fraction, and we think its their whole lives. For example, Newton did more than just invent calculus and gravity. But those are the things I learned in school about him, and other aspects of his life received no thought from me. Sorry, Isaac, old chum. But one of the great things about books like <i>Money for Nothing</i> is that the audience gets to see famous figures from history living life and doing things that they aren’t famous for. Seeing historical figures getting caught up in Exchange Alley’s rush towards the Bubble made them all the more human, and I think that’s a great thing. It’s hard to look at figures of the past, giants of society, and remember that they occasionally drank too much or made bad mundane decisions occasionally. With all the people moving in and out of this book, Levenson gives a taste of how the South Sea Company affected the whole of London.<br /><br /><b> <u>Nonfiction that Reads Like a Novel</u> </b><br /><br />If a fiction reader were to ask me for a book to get started on nonfiction, in general, or history, in particular, I’d recommend this book. I can’t praise this aspect of <i>Money for Nothing</i> enough. I am easily distracted, and since most nonfiction books don’t build tension – granted it’s hard to do that when the ending is widely known – I lose focus easier than when reading fiction. However, Levenson’s focus on the ‘characters’ of this historical drama kept me engaged. Even though I knew what was coming, I didn’t know how the individuals would be affected. So, this created a form of tension that a lot of nonfiction books lack. If I were to write a history book, <i>Money for Nothing</i> would be one I’d emulate.<br /><br /><b> <u>Caution is Required</u> </b><br /><br />This book documents the dangers of modern finance, and it shows that most financial innovations are done through trial and error. This method is necessary but can be disastrous, as the book so thoroughly shows. <i>Money for Nothing</i> demonstrates that risk increases as money moves from the hard backing of land, silver, labor, product, etc. to more abstract concepts. What does this say, though, about fiat currency? Does Levenson believe that a nation’s money should have a hard backing? I’d love to know his take on Modern Monetary Theory, a la The Deficit Myth.<br /><br />I do agree that we need to be cautious with innovating and evolving money. Also, I agree that the more abstract money gets, the harder it is for non-finance people to understand. But I think fiat currency is important; in The People, No, Thomas Frank says the need for fiat currency led to the formation of the Populist Party around the end of the 1800’s. I don’t know enough to articulate the difference between a fiat currency versus a stock derivative, but I think there is one. I could be wrong; I’m not an expert in the field. They have a commonality in that they are abstract versions of money. Maybe it’s the level of perceived risk that I see between the two. Based on <i>Money for Nothing</i>, I’d like to hear Levenson’s analysis of the two concepts.<br /><br /><b> <u>Conclusion</u> </b><br /><br />Thomas Levenson’s <i>Money for Nothing</i> shows the lessons from the South Sea Bubble apply today as much as back then. The scientific revolution coincided with a time when England needed financial innovation, and Levenson depicts the turmoil, hope, promise, and despair with a novelist’s eye. <i>Money for Nothing</i> proves that we often fail to learn from history, especially when there’s an easy dollar to be made.<br /><br /><i>Money for Nothing</i> by Thomas Levenson becomes available from Random House on August 18th, 2020.<br /><br /><b>8.5 out of 10!</b>

Good look at financial markets and lessons not learned<br /><br />I enjoyed this book. It reads more like a novel than non-fiction as it is a well-told story, full of interesting, well-developed characters; some sympathetic, some not. Author Thomas Levenson creates a good sense of drama and I found the book hard to put down but I also found some descriptions of the financial tools used a little confusing. However, this may be more a result of the actual tools than the writing. The lessons from the events of the book are still applicable today, and Levenson addresses this in later parts of the book where he looks at the 2008 market crash. I had also read “The Hunt for Vulcan” by Levenson which was excellent. Some of the charm I saw in “The Hunt for Vulcan” did not carry over into “Money from nothing” but perhaps Levenson is more comfortable writing about science. Overall this is a book well-worth reading.<br />Disclosure: I received a complimentary copy of this book via Netgalley for review purposes.

This was an interesting financial history volume that located the South Sea Bubble within its historical context adjacent to the scientific revolution, which soon led to imperfect applications to the world of manmade political and economic systems. My main quibble with the book is that its central theme exploring the interplay between science and political economy bookended the narrative but lost the thread at times in the middle. But overall, this was an insightful volume with plenty of useful takeaways about the nature of financial innovation, speculative panic, and the interplay between financial markets and the aims and needs of governments.<br /><br />The story begins with Newton's annus mirabilus following the Black Death, and the revolutions in thinking about the world this unleashed. Newton himself was soon tempted out of his quiet academic life into the world of the contemporary economy to become master of the mint, where he engaged in substantive policy debate around the monetary system. Around this time, natural philosophy was growing alongside scientific progress, as thinkers sought to apply scientific empiricism and observation of the world to problems around them: including William Petty and his ventures into Irish land valuation, and Edmund Halley (of comet fame) exploring life expectancy and the foundations of insurance. In the process, the idea of money was transformed from a fixed quantity that can purchase goods to a means of linking promises around the future to the present.<br /><br />The political context of this time set the tone: following the ascension of William and Mary, the English Crown had plenty more wars to fight, while devolution of some powers to Parliament limited the ability of the Crown to borrow in the same way it had. Financial experiments rushed in to fill this gap - from lottery annuity schemes to tontine structures, designed to help the Crown borrow and rewarding investors in new ways. Meanwhile the popularity of joint stock companies grew following the Phipps treasure discovery (major companies to date were the East India Company and the Bank of England), as the idea of money evolved to make the investing public more comfortable with owning an abstract idea of a thing rather than a physical thing itself. This coincided with the rise of the radical informality of coffeehouse culture as Jonathan's introduced the country to Turkish coffee - coffeehouses were initially meeting places for groups like the Royal Society, then became the home of 'stock jobbers' who were unwelcome in more formal venues. A stock market was born and became a true market thanks to the work of Castaing to aggregate and distribute price information. This market created transferability of debt for the first time, bringing in a wider investor base and helping the Crown to borrow more easily.<br /><br />Around this time Newton wrote a defense of the idea of credit, which reads like a precursor to theories of fiscal policy (though Levenson notes that economic science had not yet evolved and Newton's ideas can't be said to have originated future theories - but he was onto something). The concept that nations could build debts based on promises of future activity was an important step towards various forms of economic progress.<br /><br />The Crown soon found itself in a precarious position, needing to borrow more but unable to pay off certain floating rate, unsecured debt. The latest financial innovation to be attempted was the debt/equity swap: investors in floating rate debt would be incentivized to swap this debt for equity in a company, the government would pay a lower rate of interest to the company, and the company would receive a base of capital. The South Sea Company was formed in this vein - and its commercial prospects weren't all that promising, given it was based around a monopoly on trade with Spain (without Spanish consent to engage in this trade). It therefore evolved largely as a vehicle for financial bookkeeping, with all of its activity centered around selling stock and handling payments from the Crown. It grew further in this manner through a debt restructuring led by Robert Walpole (itself premised on scientific ideas) following a bidding war against the BoE for the right to participate in this debt/equity swap. This phase of growth was purely a game of enriching insiders, as the structure of the swap let the company sell new shares in a way that would boost the holdings of existing shareholders. Various forms of bribery, market manipulation (insiders buying shares to boost market), and leverage (issuing of credit to encourage buying of more shares) ensued. Daniel Defoe stands in as a sort of contemporary chorus in this telling, and his logic echoed that of the time: this whole process of financial engineering was reasonable, and logically extended from the rules of political economy that derived from scientific knowledge. Some scientifically derived skepticism followed as well, notably from Archibald Hutcheson who introduced some simple concepts of valuation: an asset's value relates to the income it can provide (so stocks and bonds can be compared to land), and at present prices the amount of activity the South Sea Company would need to perform to justify investing was simply nonsensical. Many from different walks of life - parliamentarians, royalty, Newton - were drawn into the bubble, and a few honest fortunes were made along the way, primarily by those whose correspondence suggests they followed Hutcheson's logic of walking away when the moves no longer made sense to them.<br /><br />The aftermath of the bubble's inevitable collapse laid the foundation for much of English history that would follow. Importantly, the bubble worked to transform and make sustainable the national debt, so that the resources of the future could again be called upon to improve the present (and a precedent of rule of law was applied when appeals to reverse the exchange of now worthless South Sea Shares for government debt were refused). Robert Walpole grew in stature in the aftermath and became effectively the country's first prime minister. Interestingly, while France lived through its own contemporaneous bubble (the Mississippi Bubble of John Law), and engaged in some new experiments (e.g. creating fiat currency), the French monarchy largely returned to the old status quo of privatized tax collection and splintered national finances. Meanwhile, England moved forward with a confidence in financial ingenuity, a tendency that enabled England to vastly outperform its expected population-based outcomes in the century of war to follow: England was not richer than France but was more skilled at mobilizing its resources. This logic extended across the Atlantic to new United States, where further innovations (such as popularization of LLCs over partnerships) enabled new risk-taking ventures that helped the country to grow. Alexis de Tocqueville observed this culture with admiration, noting that this capitalist spirit practically made crises inevitable, but that these would likely be way-stations on a prosperous road.

A rare book of economic history that pulls one along like a Ludlum novel! The focus is the South Sea Bubble. The author starts with Newton, not just his usual achievements in calculus and physics, but as the Master of the Mint, and finishes with Walpole laying the foundations of modern British sovereign fundraising’ midst the wreckage of the bubble bursting in 1720. Tedious history leaps into vivid, enthralling action. Brilliant book!!!

Interesting book, but not the page turner some advertised it to be. If this sort of book (a description of Britain's "South Sea Bubble" of the 1820s) is intended for a broad audience of readers, it should be written by a journalist, not an academic. Don't get me wrong. Thomas Levenson is a good writer who manages many a good turn of phrase, but if you're expecting something along the lines of "Bad Blood," "Money for Nothing" will disappoint. It's better suited as reading for Economics 307, The History of Money and Banking, than my book club. We'll discuss "Money for Nothing" next week. I'll wager not everyone finished it.

I had heard of the South Sea Bubble previously (mostly how one of the world's smartest people - Isaac Newton - got caught up in it), but reading Levenson's work on it really brings it home. The way he lays out the economic, cultural, and political context that allowed the South Sea Company to "thrive" was excellent.<br /><br />Some of the financial concepts are a bit technical and required a couple of re-reads, but it was doable. Levenson is a great science writer, so the mathematical concepts are well-laid out for the reader.

South Sea Bubble. If you are inventing financial derivatives to line your own pockets and enable your nation's military war spending, it helps to bribe parliament. The author writes documentaries, with little scenes and character introductions and narrated voiceovers pulling us through the history. But I really expected more comparative analysis, and when given the chance (offering brief comparison to France's similarities in that period, and 2008) fails to connect.