Thank you Columbia Business School for the latest book, Money & Promises: Seven Deals That Changed the World by Paolo Zannoni. Paolo is the executive deputy chairman of the Board of Prada, president of Prada Holding, and international advisor to the executive office of Goldman Sachs International. The book is available at Columbia University Press and Amazon.
We are all familiar with the expression “don’t judge a book by its cover,” meaning substance over appearance. However, this book is the exception—it excels in both looks and content. It has that sophisticated feel, fitting for a book on banking.
The book has large, vibrant color pictures of old paintings. The page numbers are in gold (ink, not real gold). The paper quality is excellent. Is the ink fancier? Or is that just me? When you put it all together, it’s one of those books that enhance the table it rests on. Plus, it has that fresh, new book smell. If you’re unfamiliar with that, buy the book to experience it for yourself.
I know it’s an unusual way to start a book review, especially one on banking. But the effort in making this book look nice can’t go unnoticed. It’s a good thing Columbia didn’t ask me to review a Playboy mag.
Money & Promises: Seven deals that changed the world lives up to the look. There’s substance. All seven deals are in there: the Republic of Pisa, 17th-century Venice, the early years of the Bank of England, imperial Spain, the Kingdom of Naples, the nascent United States during the American Revolution and Bolshevik Russia in 1917 through 1923. The last two are my favorites.
A lot of work went into this. Imagine if Indiana Jones were into banking—that would be Paolo Zannoni. To write this book, Paolo delved deep into old, dusty vaults, examining historical ledgers that are hundreds of years old. It’s amazing how some of those transaction records survived. Paolo managed to piece together the deals that shaped modern banking. You don’t have to be a banking enthusiast to recognize the fascinating nature of his work.
I understand this is a book on banking and money. It’s niche and nerdy. But it doesn’t read like an academic research paper. The book has history, characters, storytelling, and lots of deals. It’s all real. It’s a historical work that explains how we got to where we are today in banking. We often look at events in history and wonder why leaders took so and so decisions. Very often, what’s not explained or explored, is the behind the scene money stuff, which often influences major historical decisions.
Since last year’s banking crisis, the industry has been frequently in the news. After reading this book, it feels as though history is repeating itself — the credit cycle of booms and busts. Yes, today’s banking is more sophisticated, but it still suffers from the same weaknesses. No matter how solid an institution appears, banks are not designed to handle all the money being withdrawn at once. Banks are built on trust. Trust is the pillar and the foundation. Without it, everything crumbles. Banking is built on promises.
There are important lessons as well. For example, the banking charities of Naples operated over four centuries and survived multiple shocks (war, foreign occupation, revolutions) and various regime changes. Fun fact: The banking charities of Naples merged into the Banco di Napoli, a publicly listed bank. It has since been absorbed into Intesa Sanpaolo (ISP.MIhttps://finance.yahoo.com/quote/ISP.MI/). I find it fascinating that you can own a piece of this bank with over four centuries of history behind it. Banco di Napoli is also known for its impressive historical archives (link to an article).
We all know what banking is. But does anybody understand it? Banks are massively misunderstood. For most people, the bank is where you deposit your paycheck and take out a mortgage. But if you start looking at the inner plumbing of the financial system, at how banks are financed, the assets and liabilities and the risk they take, you will lose your mind. And if you start googling it, it doesn’t take long before you end up down the rabbit hole of conspiracy theories and the illuminati. There’s none of this stuff. Banking doesn’t have to be complicated and Zannoni does a good job explaining it.
Zannoni is someone who understands the inner workings of banking. He grasps how banks could and should function. This book is the answer to how we got to where we are today in banking. It’s also an attempt to describe the complex relationship between banks and states, and to put into historical context the recent experience of turbulence in financial markets and in political institutions and systems. The debts of banks are the currency of nations.
The book is also an effort in correcting misconceptions about banking. A bank is not just a vault with a bunch of cash. The cash the bank lends out, is the bank’s obligations. Modern money is debt, debt backed by debt. It explains why banks are so fragile.
I enjoyed that book. I learned a lot. I will also gift it. And if you are not into banking, buy it for the pictures.
Thank you for reading.
Brian Langis 