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Friday, December 15, 2017

Friday Feature Book Review: Empire : How Britain Made The Modern World: by Niall Ferguson 英国は近代的な世界を作った方法: ニーアル・ファーガソン

How did Britain, a small island nation come to run a global empire with 25% of the world under its control? How could this happen with a small population? It did so by adapting to various opportunities. It was a focused mind set. This is another well researched effort by Niall Ferguson, that brings together great sequences of financial history and global trade. The tale of how this all happened, is well described. It all fits together perfectly like a bespoke suit.

We learn that in the beginning, the UK was little more than a pirate nation attacking Spain. After taking over the island of Jamaica, they grew sugar, the new white gold needed in consumer markets. From this point on, the government coffers began to fill. Luckily, instead of spending, they reinvested much of the profits, and tried to expand well beyond the borders of Europe.

This is a wonderful collection of detail on how the British economy grew. For example, it looked at Holland, and its central and stock exchange, and then merged financial systems under William of Orange. This allowed the government to pay for a navy with private low cost bonds from the public. This even included Nathan Rothschild one of as its key investors. This growth pattern is also how the UK took over India. Despite its 400 million+ population, and a large standing Indian army that defeated the French for world trade domination, the UK prevailed. The author makes clear that business and trade decisions need to be financed. If you don't have that financing, you can't get those deals done. They are 2 sides of the same Empire's coin.

In contrast, if you only follow a king like France, a king that reneges on his debts from time to time, you pay higher interest rates. Higher rates that impact trade decisions France cannot afford. A nation's power is connected to its finances. Cecil Rhodes, famous for his Rhodes scholarship, uses cheap capital from the UK to build railroads in Southern Africa. In many ways, he can be seen as a private mercenary for the UK.  He had no small ego, and was a kind of land pirate if you will, wanting to take over the entire continent of Africa. By bringing the best weapons that money can pay for, and grabbing all real estate possible via military means for private investors, it worked. Much of Africa was taken over as colonies. He even created his own country named after himself, Rhodesia. 


The Top 3 Takeaways from this book that impact any reader are:

1) Never be late with your state finances. The interest rate of a nation allows a country to grow and expand with trade. A high interest rate limits future growth.
2) A great observation by the UK on many new concepts was often followed up with quick action. Dutch financial innovation was quickly observed and emulated.
3) Winning and losing is very black and white. If you have the cash to pay for power, then use it. Much of English speaking Africa was due to this power play by the UK and its banking strength. Cash ultimately pays for the bullets.

There are many amazing stories like this across the history of the UK and its trade. They tie together well, and form a very interesting pattern. It shows why the world trades in the way it does, across many borders, especially using the English language. It all started by the UK, and recently extended by the USA. If Global Macro concepts interest you as much as myself, this will delight your mind. Given its color and clear approach to finance and history, this book is Highly Recommended!

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