For many years, I offered a graduate seminar in “Financial History” at the University of Illinois. The course always began with an overview of the most recent financial difficulties confronting the international economy. The first time I offered the course, I worked backwards from the present and ended as far back as student interest or my knowledge base allowed. It soon became clear, however, that instead of re-tracing a supposed evolutionary trail of financial development and disorders, I should skip back to “how it all began,” and then take the narrative arc forward to the present. But how far back was it necessary to go? That question was answered at first in terms of my limited knowledge. When I became fascinated by the events of 1720 with the Mississippi and South Sea bubbles in Paris, London, and Amsterdam, that was where I would begin the rest of the course.

When I took these ideas to the graduate students at the London School of Economics in 2006, there was definitely an air of triumphalism about the “Great Moderation” and the ongoing globalization of finance, but this changed rapidly over the course of the next five years as the “Great Recession” began in 2007 and kept unfolding. Increasingly, I had to explain how difficult it was to get different national financial systems coordinated effectively while financial innovations occurred. While trying valiantly to keep up the morale of the students, who increasingly came from the corps of continuing layoffs in the financial sector, I also had to go farther and farther back to begin a new, more nuanced, and much longer “narrative arc” for the material. The variety of international backgrounds and experiences of the LSE students, reflected in their research papers, helped greatly to expand my knowledge base back in time. To date, it only goes back to Babylon based on the ongoing work of ancient archaeologists. The intervening millennia suffer from lack of surviving written documentation comparable to clay tablets and bullae until the parchment records of medieval Europe appear. Even so, there are enough examples of successful financial innovations in the past to restore my faith that this crisis, too, shall pass.