Category: Book Reviews

Reviews of books featuring a summary of the book and links to related material

Mar 22 2011

Book review: The Ascent of Money by Niall Ferguson

TheAscentOfMoneyThis blog post is my review and notes on “The Ascent of Money: A Financial History of the World” by Niall Ferguson. It’s a thematic run through the key elements of our current global finance system which ends with subprime mortgages and the present day.

Money, tokens representing value, started with the clay tablets of Mesopotamia as “promissory notes” for goods some 4000 years ago. For a very long time the basis of all money was precious metals such as gold and silver, it’s only been in the last 40 years or so that the link to gold has been broken for major currencies. The Spanish were burnt by metal coin when they started extensive mining for silver in South America – devaluing the coin in Europe through excess supply.

Fibonacci helped to introduce Hindu-Arabic numerals to Europe in 1202 through his book, Liber Abaci, which contained commercial calculations including currency and interest rates. Many of the early bankers were Jewish, they were legally restricted from taking part in many sorts of commerce and, through usury laws, the Christians were unable to lend but Jews could (their usury laws restricting lending to other Jews). Banking really took off with the Medici family during the 15th century, originally they dealt in foreign currency but diversified and, critically, became big. Size was important, because large size reduces risk.

Banking innovation then moved north from Italy with three innovations: the Amsterdam Exchange Bank (1609) introduced a standard currency, the Stockholm Banco (1657) started lending and then the Bank of England (1694) started issuing notes which meant there was no need for an account with the bank.

This is followed by the issuing of government bonds, these are essentially the way governments raise debt. Bonds have a face value – and an annual percentage return on their face value but the price at which they are sold in the market may vary. They were initially used by governments to raise money for wars. Rothschild bank made it’s money in this way in the early 19th century. Bonds are seen as very secure investments, but governments do default – most recently the Russia government in 1998.

The final innovation was the limited-liability company, a way by which individuals could band together to undertake longer term projects without risking everything (they only risked the value of their shares). The first of these was the Dutch East India Company founded in 1602 – formed to conduct the spice trade with the Far East (a risky and expensive business). In theory the directors and shareholders hold the company to account but in practice the value of the company shares on the stock market is the real control.

The first great stock market bubble was the Mississippi Company in France and was led by a Scotsman, John Law. Along with with control of the company he also exerted considerable control over the Banque Royale – the French national bank. The result was a system of share sales which spiralled completely out of control with the central bank making almost daily changes in its rules to enable the sale of more shares in the Mississippi company or to support their price. Ultimately the whole system crashed in 1720; Ferguson argues that this led in part to the French Revolution since the whole performance put the French off exciting financial innovations which could have lead to a more stable system.

Ferguson identifies five stages to a speculative bubble:

  1. Displacement – something changes which leads to a new economic opportunity.
  2. Euphoria – prices start to spiral upwards.
  3. Mania – first time buyers rush in and fall prey to swindlers.
  4. Distress – insiders realise the game is up and start to leave.
  5. Revulsion – everyone else realises the game is up and try too leave too. The bubble bursts.

The depressing thing is that people have been dutifully following these five steps for nearly 300 years!

Next up is insurance, and scientific developments in statistics make an appearance. Ferguson focuses on the Scottish Widows insurance scheme, set up in 1744, to pay pensions to the widows of Scottish clergymen. Although he introduces a wide range of statistical developments including work by Pascal, Bernoulli’s (Jacob and Daniel), de Moivre and Bayes it seems to me the key development were the mortality tables compiled by John Graunt in 1662.

The presence of numerate scientists should not be seen as a panacea though, the Black-Scholes equation for pricing options looks like a piece of thermodynamics: Merton and Scholes won a Nobel Prize for it (Black missed out having died) nevertheless over-enthusiastic application of this equation lead to a fairly serious crash.

Ferguson comments that we are currently in a second round of globalisation, prior to the First World War financial markets were already fairly globalised although quite often under circumstances of colonisation. The outbreak of war necessitated a substantial increase in government support and intervention in the markets and after the war difficult economic circumstances made it easy to continue with this.

It’s interesting to note that the idea of the property owning democracy grew out of the New Deal in the US in the 1930’s prior to that time only 40% of householders in the US were homeowners – the figure now approaches 70%. The same has happened in the UK, although somewhat later with fewer than half of people homeowners in 1970 and a level of approximately 70% now. In a sense the subprime mortgage lending that led to the recent recession is the final playing out of this policy. Ferguson is clearly not too enamoured of the property-owning democracy – seeing it as an over-concentration on a single asset class.

I found this a nice background to understanding economics, it shows how various financial innovations were introduced and how they can contribute to a successful economy. It also highlights how the misuse of such innovations can lead to financial disaster, and does so with depressing frequency. The chronology through the book is not very clear, I suspect he expands on particular instances that best illustrate his point rather focusing on first introduction. Although it has extensive notes and indexes, it could do with a glossary.

Mar 08 2011

Book review: Doomsday Men by P.D. Smith

DoomsdayMenMy next book review is on Doomsday Men: The Real Dr Strangelove and the Dream of the Superweapon by P.D. Smith. I arrived at this book via the comments on my earlier post about the Manhattan Project, the Allied project to develop the atomic bombs dropped on Hiroshima and Nagasaki at the end of the Second World War. I also wrote about science fiction, which is relevant to this book too.

Doomsday Men brings context to the Manhattan Project, it shows the early imagining of what radioactivity could bring in terms of weapons of war, it shows science fiction writers foreseeing the applications, politicians considering the practical use of weapons of mass destruction and scientists working towards them. Alongside atomic weapons the potential for war from the air had been well considered before it was implemented.

The book starts with the conception of a genuine doomsday superweapon, that’s to say one that would wipe out all life on earth. This had been a theme of science fiction in the past, but in the early 1950’s it became plausible. Essentially the trick is to set off a fusion explosion in the presence of a large quantity of a particular element, cobalt, which would pick up neutrons becoming intensely radioactive whilst being vapourised and cast up into the atmosphere to settle the world over providing a lethal dose of radiation. The amount of cobalt required is about 10,000 tonnes which is only a cube with sides 10 metres long. There’s an open question as to whether the dust would be distributed uniformly enough to wipe out all life.

Leo Szilard is a central character through the book, along with fellow Hungarians John Von Neumann, Eugene Wigner and Edward Teller, known collectively as the Hungarian Quartet. They arrived in the US, fleeing anti-Semitism in Europe and were to play an important part in the development of nuclear weapons. It’s very striking the number of European Jews who migrated to the US in the period after the First World War, including Albert Einstein and Enrico Fermi. In the first instance many of them were keen to help in the development of nuclear weapons as a response to Hitler’s rise in Germany: a state they believed had both the technical ability to make such weapons and, with Hitler, the will to use them in war. Towards the end of the Second World War many of them felt less enthusiastic about their use against the Japanese, despite Japan’s hideous development and use of biological weapons against the Chinese in the 1930’s. Following the war, Von Neumann and particularly Teller continued to be involved in further developments now driven by anti-Communism sentiments.

The route to the doomsday weapon started with the discovery of radioactivity towards the end of the 19th century, and in particular the discovery of radium by Pierre and Marie Curie at the turn of the century. Around 1902 Frederick Soddy and Sir William Crookes both highlighted the huge amounts of energy was bound up in matter. Crookes saying: “one gram could raise the entire fleet of the British Navy several thousand fleet in the sky”. By 1913 H.G. Wells had very explicitly written about a nuclear weapon in “A World Set Free”. The use of chemical weapons, tanks and aeroplanes in war had all been imagined well before they were used too. Clearly there are big technical issues to address in going from a science fiction idea to a real system in battle, but the point here is that these ideas had serious public currency well before they were realised: there could be no “we’ll keep this quiet and no-one will think of it”. In a sense the key theme of the book is the interweaving of fiction with fact through the first half of the 20th century.

It was during the First World War that “scientific” superweapons started to be used, and the importance of science in waging war started to be recognised explicitly. Fritz Haber, a chemist, Nobel prize-winner for his commercial synthesis of ammonia, contemporary of Einstein, was instrumental in bringing chemical weapons to war, he was a German nationalist and felt the development of such weapons a duty to his country. He seemed quite enthusiastic about his work, writing:

“Chlorine: easy to liquefy, disastrous to the human organism, very cheap, mind you! Phosgene: ten times as strong as chlorine. Mustard gas: the best fighting gas of all”.

Once the Germans had used chemical weapons the British and French quickly developed their own. Research and manufacture of chemical weapons was to involve up to 75,000 people by the end of the war – this is about half the number involved in the Manhattan Project. A minority of scientists considered chemical warfare as a blessing compared to the conventional equivalent, for many others it was utterly abhorrent. The military had mixed feelings. Chemical weapons were banned by a variety of treaties, practically they seemed something of a double-edged sword with the first British use of chlorine at Loos causing 2000 casualties on their own side which perhaps explains why they’ve been so rarely used since. With the rise of Nazism Haber, a Jew, was to flee Germany and die shortly thereafter.

The First World War also saw the foundation of the British Board of Invention and Research in 1916, tasked with finding science to fight wars – it sought ideas from the public, one of the which was to train cormorants to peck out the mortar between bricks!

Biological weapons were to be developed by the Japanese whilst at war in China during the 1930’s and the Second World War, in an effort led by Shiro Ishii. During this period thousands were to die through his work, many in a range of human experiments to match those carried out by the Nazi doctors. Following the Second World War Ishii was given immunity from prosecution in order that the US could obtain information on biological weapons from him.

So chemistry and biology produced rather unpleasant weapons but they could not be described as decisive: for that you need physicists.

Szilard was first to realise (in 1933) that an atomic bomb might be made via a chain reaction: the fission of an atomic nucleus producing two or more neutrons which would drive further fission. He made some effort to keep the idea secret, at least from the Germans, via a patent held by the British Admirality. This was a very unusual move for a scientist in an area of pure science. In 1939 he was to visit Roosevelt with Einstein to warn him of the potential for an atomic bomb and the possibility that the Germans would make one. Ultimately this contact led to the Manhattan Project and the bombs dropped on Hiroshima and Nagasaki: killing at least 200,000 people.

One of the recurring themes in fiction was the idea of a scientist discovering the doomsday weapon and then holding the world to ransom for peace with the new “system of the world”: a world government led by scientists and technocrats. This sort of idea is better described as left-wing rather than right-wing. And I can say, as a scientist, that it has a certain appeal! Perhaps this explains something of why scientists are more often perceived as left-wing rather than right-wing.

Doomsday Men ends with the story of Stanley Kubrick’s 1964 film “Dr Strangelove: or How I stopped worrying and learned to love the Bomb”. The title character appears to have been based on a combination of Teller, von Neumann and perhaps Werner von Braun – the German rocket scientist captured by the Americans who went on to found the US space programme.

Overall a rather good read: providing good context to the Manhattan Project and the Cold War, and the importance of science fiction in seeing into the future.

Footnote: one of the drawbacks of reading on a Kindle: I reached the end rather unexpectedly since the footnotes, bibliography, and index take up a third of the book!

Feb 14 2011

Book Review: For all the tea in China by Sarah Rose

ForAllTeaChinaBookI’ve been on a bit of a reading spree: next up is “For all the tea in China” by Sarah Rose. This is the story of Robert Fortune and his trips to China in the mid-nineteenth century to obtain tea plants and the secret of tea manufacture for the East India Company to use in India.

Robert Fortune (1812-1880) was a botanist with a modest background. Starting his working life at the Royal Botanic Garden Edinburgh, he later became Curator of the Chelsea Physic Garden. These were relatively poorly paid posts, however there were few such positions to support a professional botanist without their own means of support. He made several substantial visits to the Far East, funded by the Horticultural Society of London and the British East India Company. He died a wealthy man in large part through the wide range of plant introductions he had made, as well as through sales of artefacts he had acquired in the Far East. The list of introductions is well worth a skim through for the modern gardener:

The East India Company had been given a monopoly of trade to the Far East in 1600, through this monopoly they had built a lucrative trade in silk and tea from China, as well as effectively running India. The trades from China were matched with trades into China of opium from India, by the middle of the 19th century addiction to opium was a significant problem in China. The volume of trade it brought made the East India Company a very significant contributor to British government income (of order 10%). Although there are now many global corporations, the East India Company was one of the first and in many ways most powerful. The company was ultimately to lose its dominance following the Indian Mutiny in 1858, and was finally wound up in 1874. The mutiny was likely the cumulation of a long process since the monopoly that the East India Company enjoyed was not popular with free-marketeers who were starting to come to the fore.

At the time of Fortune’s first trip to China in 1845 the English had long been drinking tea imported from China, in exchange for opium grown in India. The English drank both green and black teas, although unlike the Chinese they added milk and sugar (obtained from another British colonial outpost). The Chinese were keen to keep the secret of both the tea plant, and its manufacture into tea leaves for making tea. Whilst the British, in particular the East India Company were keen to get these secrets believing (correctly) that tea would grow well in Himalayan India and would make a good profit. Some tea was already being grown in the Assam district of India but is was derived from inferior Chinese plants. The tea plant is Camellia sinensis a close relative of the decorative camellias of which Fortune also introduced some species.

Before Fortune’s first visit to China it had not even been established that black tea and green tea came from the same plant, but were processed differently. His trips required considerable subterfuge: Westerners had only recently been allowed into anywhere other than a limited number of ports in China, as a result of the first Opium War and Fortune’s activities went considerably beyond what was allowed even under these revised regulations. One of Fortune’s discoveries was that green tea had been coloured by the Chinese for the export market using Prussian Blue (which is toxic) and gypsum. Following a couple of false starts he was eventually able to transport a large number of highest quality tea plant seedlings to Darjeeling in India, as well as providing skilled tea makers and extensive notes on the tea making process.

The key to Fortune’s success in shipping out tea plants from China were Wardian cases, these are essentially sealed glass environments containing soil and some water. Plants, or more importantly, troublesome seeds could be sealed into these containers and as long as they remained sealed, and given some light there would be a good chance of their biological cargo surviving a lengthy sea journey through a range of climates. Prior to this discovery long distance transplantations were tricky. Nowadays we see Kew Gardens as largely a place of leisure, but in the 19th century it was very much at the heart of the Empire in terms of facilitating the movement of plants around the world for commercial reasons. This type of activity was also an early interest of the Royal Society.

It’s difficult not to draw parallels between the state sanctioned opium trade which the United Kingdom used to support, and its current attitude to drug smuggling. Nor between the industrial espionage of the East India Company in the 19th century, and the current issues with the Chinese approach to intellectual property.

I found the sections of the book reporting Fortune’s travels a bit unfulfilling: they seemed to be a sequence of travel anecdotes involving the mischief caused by his Chinese servants – this style does affect other parts of the books. However, more generally the book made me curious to know more about the East India Company, the Opium Wars and so forth and I felt I’d learnt something about the introduction of tea to India.

I’m tempted by Fortune’s book: Three years’ wanderings in the Northern Provinces of China 

Feb 10 2011

Book review: The Immortal Life of Henrietta Lacks by Rebecca Skloot

HenriettaLacksThe Immortal Life of Henrietta Lacks by Rebecca Skloot is an unusual book. It is part cell biology: the story of cell-lines kept alive perpetually in the laboratory; it is part story of Henrietta Lacks and her family from whom the first of these cell-lines (called HeLa) was derived; it is the story of how medical ethics has evolved over the last 60 years and it is part story of the story.

Henrietta Lacks’ cells were taken at the Johns Hopkins Hospital in Baltimore in 1951 and cultured by George Gey during her treatment for an aggressive cervical cancer from which she subsequently died at the age of thirty-one, later that year. Gey, with the help of Lacks’ cells, was the first person to successfully maintain a cell-line. The cells cultured are cancer cells rather than normal cells. Following his work a wide range of other cell-lines were cultured from a variety of organs and species, however it subsequently turned out that many of these were actually the HeLa cell-line which turned out to be particularly pernicious. Researchers would start with a culture of different cells, but they would die to be replaced by HeLa cell “contaminants”.

Once Gey had started the cell-line he gave them away freely to other researchers, however it was not very long before the HeLa cells were being sold commercially. An early application of the HeLa cell-line was in testing the newly developed Salk vaccine for polio, the first of many, many applications. More dubiously Chester Southam injected the cancerous cells into prisoners, and subsequently into many patients. This was with the view to seeing if they developed within the body, the problem was that the patients were not informed that the cells were cancerous. This practice ended when three young Jewish doctors aware of the Nuremburg Code, proposed as a result of post-war trials of Nazi doctors responsible for horrific human experimentation, refused to take part in the experiments.

To my mind the unique part of the book is the in depth coverage of Henrietta Lacks’ family through to the present day. Rebecca Skloot tells in detail the long persistent trail to talk to them, an African-American family who certainly have good reason to be suspicious of white people asking about Henrietta. The Lacks’ were never a model family but then there is no reason for them so to be. Race and medicine have a poor history in the US. The Tuskagee Syphilis experiments perhaps being the lowest point, in which African-Americans were denied effective treatment for the disease so the full course of its symptoms could be observed. Other racism is less direct, as relatively poor Americans the Lacks family have reduced access to the treatments arising from the cells of their ancestor. If she were a white child, Elsie Lacks, Henrietta’s mentally disabled daughter would not have died at the Crownsville State Hospital, certainly not in such terrible circumstances.

In 2011 the cell lines derived from Henrietta Lacks would not have been called HeLa. Possibly her cells would not have been collected at all, requiring full informed consent. Her name would have become known to all including the family. The family would not have learned of the gruesome details of her death at the “hands” of an aggressive cervical cancer via a book whose author had been given Henrietta Lacks medical records.

To my mind the real shortcomings of the scientists were not in what they did in the first instance but how they failed to support the Lacks’ not with money but with information. Until Skloot and Christoph Lengauer showed them and spoke to them, no-one had explained exactly what cells had been taken, what had been done with them, the significance of Henrietta Lacks to science or the specific knowledge of her condition did or did not have to their health in terms which they could understand; giving them a book on cell biology was not enough.

Skloot relates three stories of discoveries arising from a specific persons’ cells: the Lacks story and those of Ted Slavin and John Moore. Slavin was born a haemophiliac and as a result of the blood transfusions that he had to receive as a result of his condition he contracted Hepatitis B, however he did not succumb to this disease, he was immune. His doctor told him that this made him special, and that his blood was valuable and he subsequently profited from this knowledge by selling samples of his blood. John Moore, on the other hand, had hairy-cell leukemia and only discovered his blood was valuable after his doctor had patented his cell-line, he was subsequently involved in lengthy legal action to regain some control of his cells.

As a scientist whose work once touched, peripherally on human tissue culture and who recently had surgery from which such tissue was taken this is a somewhat uncomfortable story. In the project I worked on a postdoc was tasked with organising consent forms for, I think, blood vessels removed during a procedure i.e. they were a by-product. In this instance the specifics of the cells were not important – they were destined for frequently unsuccessful experiments. From our point of view the best possible outcome would been that the materials we had synthesised proved to be a congenial home for blood vessel wall cells. In this case nothing of monetary value is derived directly from the donors cells.

For my own part: I have no problem with researchers using my medical offcuts, I do feel unhappy with the idea that my specific cells might be valuable and that I might not get a proportion of that value.

Feb 06 2011

Book review: Lives of the Engineers by Samuel Smiles

blucher_killingworth_1814Reading the biography of Isambard Kingdom Brunel got me interested in engineers; Rolt, the author of the Brunel biography, mentioned the biographical writings of Samuel Smiles: in particular his “Lives of the Engineers”. This post is about one part of the full work: ”The Locomotive. George and Robert Stephenson” this edition was published in 1879 although the original was written in the years following George Stephenson’s death, around 1860. The title describes its contents. George Stephenson, although not the inventor of the first locomotive, was instrumental in making it a workable proposition and his son (Robert) continued in his fathers line of work, although died quite young.

George Stephenson (1781-1848) was born and grew up around Newcastle-upon Tyne, at the time the area was riddled with coal workings. His father was employed as a fireman working on the pumping engine at Wylam colliery.

George is described as an inquisitive child very interested in nature, and constructing models of the machines he saw around him. He started working with the engines at the colliery as a child progressing to ever more responsible jobs at a range of collieries. Alongside this he did various bits of other work, such as shoe-last making and clock and watch repairs to bring more money in; paying to be taught to read and do arithmetic as he entered his late teens. I can’t help making a parallel with Joseph Banks who benefited from a more prosperous upbringing. It’s worth noting here that Samuel Smiles also wrote a book called “Self-help”, it’s clear he’s very much taken with George Stephenson as a self-made man, he is also very much taken with the entirely private nature of the enterprises he undertook.

Steam engines had been used to pump water out of mineworkings since around 1710 with the invention of the steam engine by Thomas Newcomen. These were large, inefficient engines. The first attempts at making a traveling engine seemed to take place around 1769 by Cugnot in France with the first practical moving steam engines due to Richard Trevithick around the turn of the century (1800). In the meantime various miner owners were experimenting with modified roadways to ease the movement of large amounts of heavy stuff (ores, coal) from mine-head to waterway for onward transport. This started with the laying down of wooden roads, followed by metal plates (1738) and finally rails (1776). It’s intriguing to see how the coalescence of these elements around mineworkings led naturally to the invention of the locomotive. For the early railroads, such as the Manchester-Liverpool there was a very real question as to whether locomotives or horses should be used as moving force.

The Manchester-Liverpool line really is key here: it was built out of desperate need for better commercial communication between Liverpool (port) and Manchester (manufacturing centre). In common with many lines there was enormous opposition on the ground from landowners and canal owners. It is also here that the modern locomotive comes into being in the form of the “Rocket”, reliability and commercial viability being absolutely key. In common with Brunel, Stephenson also faced parliamentary committees scrutinising the appropriate railway bill. In early discussions Stephenson argued that the locomotives would not exceed a speed of 12 miles an hour, so as not to scare the parliamentarians. Early railway lines were built with goods in mind, but turned out to be immensely, surprisingly popular for the carrying of passengers. The alternative being slower, less comfortable horse-drawn carriages of much lower capacity. George Stephenson was also responsible for at least some of the initial surveying of routes.

The rate at which the rail network came into being is truly astounding. The Manchester–Liverpool was opened in late 1830 by 1843 there were lines linking London to Birmingham, Southampton, Bristol, Brighton and Dover. There were also lines from Liverpool to Manchester and Leeds and onwards to York and Middlesborough, there was also a line between Newcastle and Carlisle. Follow this there was a wild burst of speculative activity, with several hundred proposals to parliament for new lines in 1845 (maps here).

Also covered in this book is Robert Stephenson (1803-1859), George Stephenson’s son. George gave Robert the education that he wished for himself. Although Robert started his engineering career working in the Stephensons’ locomotive workshop, set up in Newcastle, prior to the building of the Manchester-Liverpool he went on to be involved in the surveying and planning of new railway lines. Most notably bridges such as the Britannia Bridge across the Menai Straits, the Victoria Bridge across the Lawrence Seaway and the High Level Bridge in Newcastle. These first two were both originally “tube” design but were modified in the case of the Victoria bridge to a trestle design and the Britannia bridge was destroyed by fire in 1970. The building of the railways necessitated a huge expansion in bridge building: big, strong, well-built bridges.

Overall an enjoyable read although I suspect Samuel Smiles does not comply with modern historical best practice, with his enthusiasm for self-help, and anecdotes shining through in a number of places. Nevertheless, I feel motivated to read some more of his biographical work of the engineers of the 18th and 19th century.

References

Full text of a number of Samuel Smiles books available here.