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Tragedy & Hope: A History of the World in Our Time

Tragedy and Hope: A History of the World in Our Time - Carroll Quigley Sometimes you just know that the book you are reading is going to be one of those great reads of a lifetime. That’s what happened when I started reading Tragedy & Hope; it got added to my Top Ten list before I was even half-finished with it. So, does anybody remember that 90’s movie "Shallow Hal", where eponymous Hal is hypnotized to only see the inner beauty of a woman, but his horrified friends can’t get past her hideous exterior? I think that’s what it’s like, loving this book, and I do love it. I want people to see what an amazing book this is, but I’m scared they’ll only see a dry tome on economics. I wrote a very long and detailed review, which was so boring, I almost put myself to sleep, editing it. I don’t think that’s the right approach. Perhaps a short list will be better, and people can expand the parts they think sound interesting. So here's what to love about Tragedy & Hope:1) History told as an analysis of macro-trends.Georgetown University professor Carroll Quigley has been called “the last of the macro historians”, and that seems like a fitting description for his analysis. He’s got this broad, Grand Canyon panoramic view of history, which hardly ever touches down on specific individuals and what they did, but tends to explain everything in terms of broad, centuries-long, or even millennia-long trends. In addition to social movements and technology, Quigley preoccupies himself with the effect of different currency systems on history, and for this I love him unreservedly. The first 200 pages or so contain a riveting analysis of how the material products of a culture transmit technology effectively, but not ideologies, and how this has at times been disastrous. Britain was the first nation to experience the Agricultural Revolution. In the mid 1700’s, farming techniques in England suddenly became far more efficient, when an understanding of the nitrogen cycle was applied to traditional agricultural methods. Suddenly, a piece of land could yield far more produce with far less labor. This freed labor off the farms, and made it available for other things. In Britain, it was a surge of canal building which absorbed a lot of this labor, which made communication and exchange of ideas much more efficient. Within a few decades, steam power, mechanized looms and water power coalesced, giving birth to the Industrial Revolution, which -thanks to the Agricultural Revolution- had ample labor to draw to feed it. Being the first industrial nation in the world is one of the primary factors which allowed the United Kingdom to build her global and astoundingly prosperous empire. Naturally, others wanted in on this. France, Germany and the U.S. fared pretty well, because the Agricultural Revolution had more or less reached them by the time they were actively trying to industrialize. Other nations, like Russia and China experienced a lot of calamity, as they contrived ways to drive peasant farmers off their farms and into cities, to feed massive State industrialization programs, resulting in mass-starvation (30million in Russia) and popular unrest in the rural areas. When financial strategies evolved to capitalize industry (e.g. incorporation, central banking, stock markets), this let loose another wave of progress, whose mechanisms and material artifacts diffused much more rapidly than the ideologies they reflected. Quigley shows how receiving or developing these out of their “natural” order has been catastrophic for most of the undeveloped world. It makes perfect sense, and Tragedy and Hope develops these ideas in much greater detail than I do here. It’s fascinating, and it seems to explain so much. It may not be “the” one, solitary, all-inclusive grand unifying explanation to why things are so fucked up in our world today, but I think it is definitely a part of the puzzle. Oddly, it’s a piece I’d been missing up to now, and I’m glad to have it. If you’re wondering what it’s like to read history laid out in this perspective, I recommend you read Quigley’s overview of French history from 1750-1950 (pp. 500-525). This is some fascinating stuff. He convincingly links the fall of the monarchy and the beginnings of the French Revolution to the political and financial maneuverings of a small but very well-funded coterie of Protestant bankers, recently (within one generation) emigrated from Switzerland, and antagonistic towards the Catholic/Jewish dominated French banking establishment of the 18th century. The French Revolution represented a partial success for the Swiss-Protestants, in that it did not completely overthrow the old money masters, but broke their exclusive hold on French commercial banking. When the Revolution threatened to plunge France into complete anarchy, their financial support of Napoleon re-established order; and when Napoleon’s incessant military campaigns proved too disruptive to commerce, it was partially withdrawal of their support (in conjunction with funding his rivals, and funding rival nations) which brought him down. You can decide for yourself whether you choose to accept Quigley’s interpretations, but I found the text quite convincing. This is just a small taste of the overall book. Quigley examines other countries and other time periods, and patterns emerge which carry on through the ages of Commerce Capitalism (the pre-industrial period, dominated by the trade of raw materials, agricultural and crafted items), Industrial Capitalism (in which labor fabricated goods for trade), Monopoly Capitalism (which was still industrial, but whose character was dramatically altered from the early industrial period, by the rise of monopolistic practices, and the rise of cartels whose dominance over national economies overshadowed the political apparati of countries), and Financial Capitalism (in which the power of management eclipsed the power of ownership, and in which economic competition between nations centered on control of capital than technology, manufacturing capacity or ownership of resources). The real focus of the book is on the twentieth century, which Quigley demonstrates as both reflecting, and being driven by, the conflicts between Monopoly Capitalism and Financial Capitalism for primacy on the world economic stage. 2. Historical analysis framed in terms of currency creation/manipulation.If you are part of the growing minority of people concerned about the failing worth of present-day currencies, and interested in resurrecting a commodity-backed currency, Tragedy & Hope is also relevant, perhaps even indispensable to these questions. It examines the decline and fall of the gold-backed U.S. dollar and British pound, and shows (to my surprise) how the loss of these was at first vigorously opposed by the Anglo-American banking establishment, but then later as enthusiastically embraced by the same. It also sheds light on the currency history of several other nations. For reasons I explore in my Twilight and End the Fed reviews, both nations came off the gold standard in order to pay for World War I. The initial intent of both countries was to pay their war debts and then re-establish the gold standard. They were able to do this, but only with deflation which almost crippled them. Deflating a currency means restoring value… so suddenly $1 can buy more than it could before. This is achieved by the national Treasury purchasing gold. The problems involved with this are many-fold: first, deciding how much gold to buy and how quickly (since the world’s supply of gold is very limited, a massive purchase all at once will send the price per ounce skyrocketing even beyond its fair value… a very bad deal). Secondly, managing deflation can be tricky, because it drives wages and prices down unevenly, and civil unrest may result if workers can‘t afford food and other necessities. Deflation is also a huge problem for people with long-term debt like mortgages. If a currency is deflated too quickly, a large fraction of the population can lose their homes, fueling all sorts of crimes of desperation, and causing the real estate, financial services (i.e. mortgages) and construction sectors to collapse. It also plays havoc with government revenues in the form of annual property taxes, which drop precipitously in these conditions. These are big, complex questions, which Quigley doesn’t completely clarify, but he does a better job than any other author I’ve ever read. These are questions America and Europe may soon need to revisit, if the dollar and Euro continue their long-term downward trends. If we choose not to deflate, Quigley also shows us what we might expect from permanent massive inflation: After World War I, several smaller economies with much higher relative war debts than the US and England were forced to permanently inflate their currencies. That’s why the (pre-”Euro”) Italian Lire and French franc were denominated such that a single US dollar would trade for about 10 Francs, or 1500 Lire. Things weren’t always that way; before WWI, those currencies were all nearly-equally valued with the dollar (i.e. 1:1 ratio). In France and Italy, the decision to permanently inflate caused a massive upheaval in the financial landscape. Investors who held stocks, bonds and real estate did quite well, because those assets were revalued to fit the new currencies. Many more conservative investors, frightened by their respective stock markets’ volatility during the war, got into cash, thinking they’d reinvest when peace and stability returned. Those people were financially devastated, when the Francs and Lire permanently lost 90% (France) or 99.9% (Italy) of their purchasing power.The American Civil War was examined very thoroughly by overseas observers, because it was the first large conflict between industrialized combatants. Prussian Generals were eager to learn how new technologies like trains, telegraph, and standardized weapons would change warfare. Sixty years later, World War I represented no less important a revolution in warfare: a complete change in the way wars were funded. Between the American Civil War and World War I, the big mercantile banks of Europe and America managed to establish central banking in almost every developed nation. Suddenly a nation’s capacity to fund war was no longer a function of its wealth (in the form of gold reserves). With private banks eager to issue new fiat currencies, the nations of Europe were not limited in warfare by what they could pay for, but only by what materials and manpower they could successfully mobilize. Quigley shows convincingly that with old methods of financing, most participants would have had to drop out of World War I sometime between 1915 and 1916. With fiat funding, only Russia needed to sue for peace before 1918. It was a quiet but monumentally important watershed in military history. And something else was new too: the nations involved (victors and defeated alike) all came out of the conflict with more debt (relative to their national wealth) than any other nations in history. This is no small matter, because all the legal and financial wrangling between Britain, France, the U.S., Germany, Italy, Russia, and Japan from 1919 and 1939 is driven more by concerns about how to pay back (each nation’s respective) war debts than any other factor! The only winners were the creditor central banks, and arguably even some of them suffered for this (e.g. the Rothschild-owed Austrian Anstalltsbank overextended itself and ultimately failed). 3. Historical analysis with special attention to the role of financial institutions.Tragedy & Hope delves into the institutional history of several companies which played key roles in the twentieth century. The French iron firm Schneider was able to parlay a fortuitous war contract for cannon balls under Napoleon into such success that it was able to completely dominate the entire French iron industry from 1838 to 1940. Then there’s the German firm I.G. Farben -whose name later became synonymous with corporate complicity in the Holocaust. It started as a loose group of industrial dye companies around Berlin, but grew to become a massive chemicals monopoly which extended beyond Germany and dominated much of Europe. In chapter (~p. 520) ,Quigley demonstrates the somewhat frightening fact that World War I probably couldn’t even have been fought by either side, without the consent and participation of I.G.Farben! That sounds hyperbolic, but read this book and consider what Quigley has to say. It’s not an overstatement to call his analysis amazing. 4. You want me to be unbiased? Okay, here are a few criticisms…So far I‘ve been gushing on Quigley, and I do give this book five stars, but there are some areas where I don‘t think I agree with him. One area which seems dubious is Quigley’s ideas about supra-national government. He develops a thesis that with a greater degree of international cooperation, the Great Depression might have been ended in the early 1930’s, and Hitler effectively opposed. Of course there was a League of Nations at the time, but it was disorganized, and had no ability to enforce its policies. Quigley spends a lot of time deriding nation-states as an antiquated and ineffective unit for global policy and economic activity. To support this, he explores the differing perspectives between France, England, Italy, Japan and the United States towards Germany, and how these differences gave Hitler the opportunity to become a threat. France, having suffered the greatest casualties at German hands in World War I, was primarily concerned with preventing future German aggression, and did everything it could to weaken German military strength. Britain, on the other hand, saw Germany as the primary bulwark against the tide of Bolshevism in the East, and wanted an economically and militarily strong Germany to oppose it. (Naturally Quigley fills in a lot of interesting details here, which make for fascinating reading.) This goes a long way toward explaining British policies of appeasement. On one hand, maybe a supra-national agency like a United Nations-controlled military force might have struck Hitler down earlier… but I don’t think I buy that. Whether they were acting as nation states or just representatives to a larger organization, I’m pretty sure the French and British would have had those opposing views of Germany. More importantly, it strikes me as very naïve to think that any supra-national organization would somehow act in a more enlightened or humane way than nations have in the past. More importantly, organization of peoples into nation-states (as opposed to one giant world government) has a very important advantage: the creation of compartments similar to the compartments which prevent fires from spreading in a building, or which contain leaks in a ship. As I watch the nightly news, I see how a debt crisis in Greece threatens the economic health of the entire European Union, and endangers the integrity of the Euro as a viable currency. Why? Because in an interconnected world without borders, it is difficult to contain problems of any kind, be it mismanagement, corruption, or plain old bad luck. This applies to political mishaps as well as economic: if the world sat under the control of single political structure, there’s nothing to guarantee it wouldn’t fall into corrupt or malevolent hands. In a world of nation-states, you at least have some firewalls to contain the spread of authoritarian rule. To me, the idea of a “world government” makes about as much sense as an ocean liner without any compartments: one iceberg and the whole thing goes down. There are also some sweeping cultural generalizations which might almost be called racist, and some simple explanations for very complicated and nuanced phenomena, which I think might be just a bit too pat. One of my favorites is his analysis of the German “national character”. First of all, the whole idea of there being a “national character” is a bit dubious. Nations with tens, maybe hundreds of millions of people are perhaps too complex to be pigeonholed in this way. But let’s go with the premise for a while, to see where it leads… Quigley posits that the German national character has been ripe for takeover by a dictator since the days of the Germanic tribes waging guerilla warfare on the Roman legions. Hiding in the forests, making ineffectual assaults on the Southern invaders, Teutonic warriors were in complete awe of the effectiveness, regimentation, and blinding efficiency of the ordered Roman rank and file. They longed for such organization among their own decentralized peoples, but fate and circumstances always seemed to conspire against it. German city states and small fiefdoms watched in envy as France and England evolved into nation-states with clout and prestige on the world stage. Only with Bismarck in the late 1800’s did Germany eventually manage to congeal into a country of its own… but even then, the administration of it always seemed too haphazard. Prussians wanted to go this way; Bavarians wanted to go that; the Westphalians… well, who knows what they were up to! Where oh where was the Great Leader (hint, hint) who could direct Germanic efforts in sweet, unified harmony towards a bright and focused future?? …and “cut”. I just don’t think people sit around thinking like this. I mean, I’m sure thoughts like this may have passed through some Germans’ minds, as they no doubt pass through non-Germans’ minds… but I don’t think this is the stuff which makes one nation ripe for dictatorship more than other countries around it.Quigley’s assessment of the Spanish national character is a variation on this theme of oversimplifying and entire people. He sees the Spanish as being particularly less tolerant than other nations (scarred by the Moorish invasion and 700 year occupation of Spain’s southern half). I also question the idea that Spanish are less accepting of authority than any other European peoples, or that Spanish men are more proud by nature than other men. There may be slivers of the truth in there, I don’t know as much about Spain, but these seem like sweeping generalizations.(CONTINUED BELOW)