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A History of Interest Rates
A History of Interest Rates presents a very readable account of interest rate trends and lending practices over four millennia of economic history. Despite the paucity of data prior to the Industrial Revolution, authors Homer and Sylla provide a highly detailed analysis of money markets and borrowing practices in major economies. Underlying the analysis is their assertion that "the free market long-term rates of interest for any industrial nation, properly charted, provide a sort of fever chart of the economic and political health of that nation." Given the enormous volatility of rates in the 20th century, this implies we're living in age of political and economic excesses that are reflected in massive interest rate swings. Gain more insight into this assertion by ordering a copy of this book today.
736 pages, Hardcover
First published January 1, 1977
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Displaying 1 - 10 of 10 reviews
December 25, 2012
Have finally, finally plodded through this book. 'A History' is dry and reads like a reference text; there a lots of tables and some charts, and each chapter and section begins with an overview and brief analysis that is often the best part. Otherwise this is largely simply data -- good to know its there for retrieval if necessary, but otherwise skimmable. A financial classic it may be, but the chief benefit I have obtained from getting through it appears for now to be able to say that I have.
The structure is chronological and starts from ancient Mesopotamian times, running through to Roman and then medieval times. IMO one can begin at chapter 10, which is when the chapters on 15-16th century European finance (Italian banking, etc) begin. There is also good analysis of Dutch and then English finance as being the cornerstones of the credit markets as we know them today -- Holland being the originator of long term sovereign debt and England being where modern deposit taking banks were started. The history moves on to the US for the 19th century, and the chapters on 20th century US finance are unsurprisingly the longest. There are brief (relatively) chapters on 20th century British, then European finance. Following which is a section on non European finance -- Japan, Russia, China, Latin America -- which is somewhat interesting. Perhaps more pertinent (or at least less abstract, since it is more recent) is the final chapter, added for the 4th edition, a review of 1990-2005 bond market history.
The book is note worthy for its methodology -- the data gathering efforts are certainly admirable, and there are interesting and thought provoking caveats about how centuries long yield charts were constructed -- given the multiple changes in financial and political systems, let alone maturation and variety of instruments -- and whether or not they are comparable. Generally long term prime rates are used: prior to the 19th century this was often not sovereign but corporate (merchant traders) credit; earlier on, in agricultural times/societies, credit was often extended as inter-personal consumption loans.
The chief question I am left with is why bond yields declined during WWII in the US as well as in the UK, compared to all previous military episodes during which bond yields rose as the warring nations (or feadual princes) were financially stretched.
The structure is chronological and starts from ancient Mesopotamian times, running through to Roman and then medieval times. IMO one can begin at chapter 10, which is when the chapters on 15-16th century European finance (Italian banking, etc) begin. There is also good analysis of Dutch and then English finance as being the cornerstones of the credit markets as we know them today -- Holland being the originator of long term sovereign debt and England being where modern deposit taking banks were started. The history moves on to the US for the 19th century, and the chapters on 20th century US finance are unsurprisingly the longest. There are brief (relatively) chapters on 20th century British, then European finance. Following which is a section on non European finance -- Japan, Russia, China, Latin America -- which is somewhat interesting. Perhaps more pertinent (or at least less abstract, since it is more recent) is the final chapter, added for the 4th edition, a review of 1990-2005 bond market history.
The book is note worthy for its methodology -- the data gathering efforts are certainly admirable, and there are interesting and thought provoking caveats about how centuries long yield charts were constructed -- given the multiple changes in financial and political systems, let alone maturation and variety of instruments -- and whether or not they are comparable. Generally long term prime rates are used: prior to the 19th century this was often not sovereign but corporate (merchant traders) credit; earlier on, in agricultural times/societies, credit was often extended as inter-personal consumption loans.
The chief question I am left with is why bond yields declined during WWII in the US as well as in the UK, compared to all previous military episodes during which bond yields rose as the warring nations (or feadual princes) were financially stretched.
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June 24, 2019Given the book covers more than four centuries worth of history, it seems like the most comprehensive place to look for answers.
With large parts of the developed world experiencing negative interest rates, I was looking for a time in history when there was negative interest rates but sadly I couldn’t find any.
The closest period was in the US during the early 1940s. Even then short term interest rates seemed to bottomed at zero while long term interest rates hovered around 2-3%.
So if you were planning to read this to find some kind of precedent then my hope is this review can save you the trouble.
With large parts of the developed world experiencing negative interest rates, I was looking for a time in history when there was negative interest rates but sadly I couldn’t find any.
The closest period was in the US during the early 1940s. Even then short term interest rates seemed to bottomed at zero while long term interest rates hovered around 2-3%.
So if you were planning to read this to find some kind of precedent then my hope is this review can save you the trouble.
November 6, 2023
Exactly as advertised.
Dry as a bone but neatern hell.
The early chapters about the historical developments of certain credit instruments were worth the later slog of rates and ranges.
A bit like reading a phone book at times. I imagine it's very useful as a reference.
This book was an albatross around my neck for months and I'm relieved to be rid of it.
Should have spent $90 on the physical version.
Dry as a bone but neatern hell.
The early chapters about the historical developments of certain credit instruments were worth the later slog of rates and ranges.
A bit like reading a phone book at times. I imagine it's very useful as a reference.
This book was an albatross around my neck for months and I'm relieved to be rid of it.
Should have spent $90 on the physical version.
May 22, 2016
This book should be required reading for all investors. Not just bond investors but all investors. Mr. Homer pioneered the thoughtful study of bonds and interest rates. This book is his Magnum Opus, covering interest rates from early Mesopotamia to this death in the 1990s.
Interest rates are at the core of the capital markets and as such represent the core of the all the major movements in the world's financial markets, as trends propogate out from the less risky tranches of the bond market, to those with more risk, and finally to the equity market. In my career I have learned that truth most often resides in the bond market rather than the equity market. As such this book is the root of any real study in bonds. This is where to begin.
Mr. Homer was a child of two artists and it shows. He makes the bond market come alive with an approachable narrative and with absolutely comprehensive data. Want to know the shape of the U.S. Treasury yield curve in 1937? Got that. Want to hear a concise narrative of events leading up to the last peak of the secular bull market in interest rates in 1946? This too is waiting to be discovered in Mr. Homer's book.
Far too often, investors are burdened with the baggage of what they THINK happened in the past or other alluring but wrong presumptions. How precious is it to have a source to which you can turn for what actually happened? This book is a classic that will retain its status 100 years from now. Everyone with capital at risk in the market would benefit from the thoughtful study of this masterpiece.
Interest rates are at the core of the capital markets and as such represent the core of the all the major movements in the world's financial markets, as trends propogate out from the less risky tranches of the bond market, to those with more risk, and finally to the equity market. In my career I have learned that truth most often resides in the bond market rather than the equity market. As such this book is the root of any real study in bonds. This is where to begin.
Mr. Homer was a child of two artists and it shows. He makes the bond market come alive with an approachable narrative and with absolutely comprehensive data. Want to know the shape of the U.S. Treasury yield curve in 1937? Got that. Want to hear a concise narrative of events leading up to the last peak of the secular bull market in interest rates in 1946? This too is waiting to be discovered in Mr. Homer's book.
Far too often, investors are burdened with the baggage of what they THINK happened in the past or other alluring but wrong presumptions. How precious is it to have a source to which you can turn for what actually happened? This book is a classic that will retain its status 100 years from now. Everyone with capital at risk in the market would benefit from the thoughtful study of this masterpiece.
November 24, 2015
It took me several months to really go over this book. Many readers might think it is dry since there are so many numbers and details in the book. But that's indeed the biggest contribution made by this work. If you get patient and journey through the narratives with your own questions, then you probably find it intriguing.
April 2, 2019
Note: This review is for the third edition, from 1991.
Previously I reviewed Ryan North's How to Invent Everything, which I characterized as a history of the world through the lens of technology. I consider this book, Homer and Sylla's "A History of Interest Rates", to be a history of the world through the lens of interest rates.
The book was dry but informative. It touched on many historical topics, including usury policy in different jurisdictions over the past few millennia, how war and peace and international commerce and monetary policy affected interest rates, rentes/consols/the gold standard, and the author's analysis of the previous world-leading nations as revealed by lowest prevailing interest rates. Many of the charts in the book support the idea that civilizations had progressively lower interest rates as they rose in international prominence. As the civilization peaked, the rates bottomed out, then rose as the civilization declined. The book was written in the shadow of the high inflation rates of the late 1970s and 1980s, during which it was unclear if higher rates in the West were temporary or permanent. As it turns out, they were temporary!
One of the surprises I got from this book is how weird the interest rates of the 20th century were. My intuition before reading the book was that humanity collectively gets wiser and over time smooths out the odd bumps of war, natural disasters, pandemics, etc. In turn I expected interest rates to be noisy long ago and gradually less volatile as we look closer to today. Certainly my intuition wouldn't have expected World War II to have some of the lowest interest rates ever in the United States, and likewise my intuition wouldn't have foreseen the oil shock of the late 1970s which caused high peacetime interest rates across the Western world.
I haven't focused much on this in my review, but "A History of Interest Rates" is full of data, charts, and discussion of interest rates in most of the populated world, especially Europe and the United States. The author explains that this focus is because at the time of writing, the rest of the world had little to no historical data, or their financial markets were heavily influenced by colonial powers. I found especially interesting the parts of the book explaining the development of interest rate products and markets, and if such markets developed independently elsewhere in the world, that would have been interesting to read about.
Another criticism: Perhaps when the book was written back in 1991, tables and graphs in printed books were the best way to share data and analysis. But now that the internet is ascendant, much of the data of the book would be better expressed in downloadable files so that enterprising academics and analysts could do their own research. Maybe this data repository exists somewhere online, but a brief search did not find it.
Previously I reviewed Ryan North's How to Invent Everything, which I characterized as a history of the world through the lens of technology. I consider this book, Homer and Sylla's "A History of Interest Rates", to be a history of the world through the lens of interest rates.
The book was dry but informative. It touched on many historical topics, including usury policy in different jurisdictions over the past few millennia, how war and peace and international commerce and monetary policy affected interest rates, rentes/consols/the gold standard, and the author's analysis of the previous world-leading nations as revealed by lowest prevailing interest rates. Many of the charts in the book support the idea that civilizations had progressively lower interest rates as they rose in international prominence. As the civilization peaked, the rates bottomed out, then rose as the civilization declined. The book was written in the shadow of the high inflation rates of the late 1970s and 1980s, during which it was unclear if higher rates in the West were temporary or permanent. As it turns out, they were temporary!
One of the surprises I got from this book is how weird the interest rates of the 20th century were. My intuition before reading the book was that humanity collectively gets wiser and over time smooths out the odd bumps of war, natural disasters, pandemics, etc. In turn I expected interest rates to be noisy long ago and gradually less volatile as we look closer to today. Certainly my intuition wouldn't have expected World War II to have some of the lowest interest rates ever in the United States, and likewise my intuition wouldn't have foreseen the oil shock of the late 1970s which caused high peacetime interest rates across the Western world.
I haven't focused much on this in my review, but "A History of Interest Rates" is full of data, charts, and discussion of interest rates in most of the populated world, especially Europe and the United States. The author explains that this focus is because at the time of writing, the rest of the world had little to no historical data, or their financial markets were heavily influenced by colonial powers. I found especially interesting the parts of the book explaining the development of interest rate products and markets, and if such markets developed independently elsewhere in the world, that would have been interesting to read about.
Another criticism: Perhaps when the book was written back in 1991, tables and graphs in printed books were the best way to share data and analysis. But now that the internet is ascendant, much of the data of the book would be better expressed in downloadable files so that enterprising academics and analysts could do their own research. Maybe this data repository exists somewhere online, but a brief search did not find it.
May 16, 2017
I used this book to help facilitate my first Finance class. It was helpful. It was very informative.
Want to read
December 25, 201910Mb
November 10, 2020
终于啃完了，对我这个外行来说太枯燥了，只建立了一点概念。
February 1, 2021
What my ratings mean:
5 – I felt this book was an exemplar in its genre/field. That does not mean I agree with everything it says (or the moral of the story). It is likely to be a book that will change my thinking about a topic.
4 – A very impressive book for its genre/field. It probably didn’t change me or my thinking though.
3 – An enjoyable way to spend the time reading it.
2 – This was a pain to read. It was probably difficult to finish.
1 – Life’s too short and/or I’m not smart enough to get the point of this book.
5 – I felt this book was an exemplar in its genre/field. That does not mean I agree with everything it says (or the moral of the story). It is likely to be a book that will change my thinking about a topic.
4 – A very impressive book for its genre/field. It probably didn’t change me or my thinking though.
3 – An enjoyable way to spend the time reading it.
2 – This was a pain to read. It was probably difficult to finish.
1 – Life’s too short and/or I’m not smart enough to get the point of this book.
Displaying 1 - 10 of 10 reviews