Charles W. Calomiris is a professor at Columbia Business School and Columbia's School of International and Public Affairs. Stephen H. Haber is a professor of political science and senior fellow of the Hoover Institution at Stanford University.

Winner of the 2015 PROSE Award in Business, Finance & Management, Association of American Publishers One of The Times Higher Education Supplement's Books of the Year 2014, selected by Sir Howard Davies One of Bloomberg Businessweek's Best Books of 2014, chosen by Mervyn King and Jeffrey M. Lacker One of Financial Times (FT.com) Best Economics Books of 2014, chosen by Martin Wolf Longlisted for the Financial Times and McKinsey Business Book of the Year 2014 "Brilliant... [I]f you are looking for a rich history of banking over the last couple of centuries and the role played by politics in that evolution, there is no better study. It deserves to become a classic."--Liaquat Ahamed, New York Times Book Review "Business economists Calomiris and Haber explain how imperfectly politics and commercial banks intersect, and the consequences for the rest of us... This learned inquiry deserves ample attention from scholars, regulators, and bankers themselves."--Publishers Weekly "Calomiris and Haber offer a thoughtful counter-argument to the current received wisdom."--Howard Davies, Times Higher Education "Readable, erudite, myth-busting... The authors' clear and well-documented discussion of what happened should dissuade anyone of the myth that the economic crisis of 2007-09 was caused by the profit-and-loss system of unfettered capitalism."--Gene Epstein, Barron's "Charles Calomiris and Stephen Haber make the compelling argument that a country's propensity for frequent banking crises is linked to the ability of populist elements to hold the banking sector to ransom."--Louise Bennetts, American Banker "This is a great history of political interference in bank regulation."--James Ferguson, Money Week "One reason why economists did not see the financial crisis coming is that the models most macro and financial economists deal in are free of politics. Fragile by Design offers a much-needed supplement."--Martin Sandbu, Financial Times "Will a next crisis be averted? Perhaps, if our regulators read this book."--Vicky Pryce, The Independent "Fragile by Design ... is a great book... [E]normously illuminating, and contains the most powerful and concise account of the causes of the 2008 crisis that I have seen."--Eric Posner, EricPosner.com "If you have time to read only one book about the causes of the 2008 financial collapse, read this one... Charles W. Calomiris and Stephen H. Haber ... have written an exhaustively researched and readable volume... With great literary sensibility uncommon to economists, Calomiris and Haber have performed a public service by painstakingly identifying these root causes."--Diana Furchtgott-Roth, National Review "Capital markets, regulatory institutions and the behaviour of people employed in the financial sector are neither predetermined nor universal, but rather the product of culture, history, and the political system. That is a perspective developed effectively by Profs Calomiris and Haber."--John Kay, Financial Times "[T]he methodology is universally applicable and obviously raises questions about the nature of these arrangements in a country like France... [T]his work allows us to understand better why ... the alleged remedies and reforms, from 'unconventional measures' major central banks to new regulatory structures, no way affect the old paradigms and therefore merely prepare the next crises."--Phillipe Ries, Mediapart "Exploring the ways in which politics inevitably intrude into banking regulation, Calomiris and Haber clearly describe events leading to the recent financial crisis of 2007-2009... This is an excellent work for understanding the role of credit and how the financial sector evolved in different settings."--Choice "This is a beautifully-written book. Calomiris and Haber are always thoughtful, always clear, and they have an eye for the telling metaphor and the thought provoking fact. More importantly, the book reflects the authors' mastery of a vast amount of material on the history of banking... Fragile by Design is a must-read for economic historians, a book to be put on the shelf with ... similar classics."--Hugh Rockoff, EH.Net "[I]f you want a methodology for drawing conclusions about the genesis of crises and an explanation for the differing experiences among countries, Fragile by the Design is the winner hands-down."--Vern McKinley, Cato Journal "Charles Calomiris and Stephen Haber's Fragile by Design is a magnificent study of the economics and politics of banking."--Mervyn King, Bloomberg Businessweek "Hands down the best single book for understanding the historical journey that laid the groundwork for the financial crisis."--Jeffrey Lacker, Bloomberg Businessweek "Fragile by Design is a call to action for people to seize the moment to resist crony capitalism."--Jay Weiser, Weekly Standard "One cannot help but admire Calomiris and Haber's ambition to write one of the most accessible and sophisticated books on the linkage between political institutions and national financial systems."--Caner Bakir, Public Administration "By any yardstick, Fragile by Design is a remarkable achievement and an important contribution to our understanding of the roots of the banking crises."--Grant Bishop & Anita Anand, Banking & Finance Law Review

• Preface ix SECTION ONE No Banks without States, and No States without Banks 1 If Stable and Effi cient Banks Are Such a Good Idea, Why Are They So Rare? 3 2 The Game of Bank Bargains 27 3 Tools of Conquest and Survival: Why States Need Banks 60 4 Privileges with Burdens: War, Empire, and the Monopoly Structure of English Banking 84 5 Banks and Democracy: Britain in the Nineteenth and Twentieth Centuries 105 SECTION TWO The Cost of Banker-Populist Alliances: The United States versus Canada 6 Crippled by Populism: U.S. Banking from Colonial Times to 1990 153 7 The New U.S. Bank Bargain: Megabanks, Urban Activists, and the Erosion of Mortgage Standards 203 8 Leverage, Regulatory Failure, and the Subprime Crisis 256 9 Durable Partners: Politics and Banking in Canada 283 SECTION THREE Authoritarianism, Democratic Transitions, and the Game of Bank Bargains 10 Mexico: Chaos Makes Cronyism Look Good 331 11 When Autocracy Fails: Banking and Politics in Mexico since 1982 366 12 Infl ation Machines: Banking and State Finance in Imperial Brazil 390 13 The Democratic Consequences of Infl ation-Tax Banking in Brazil 415 SECTION FOUR Going beyond Structural Narratives 14 Traveling to Other Places: Is Our Sample Representative? 451 15 Reality Is a Plague on Many Houses 479 References 507 Index 549

Charles W. Calomiris is a professor at Columbia Business School and Columbia's School of International and Public Affairs. Stephen H. Haber is a professor of political science and senior fellow of the Hoover Institution at Stanford University.

Winner of the 2015 PROSE Award in Business, Finance & Management, Association of American Publishers One of The Times Higher Education Supplement's Books of the Year 2014, selected by Sir Howard Davies One of Bloomberg Businessweek's Best Books of 2014, chosen by Mervyn King and Jeffrey M. Lacker One of Financial Times (FT.com) Best Economics Books of 2014, chosen by Martin Wolf Longlisted for the Financial Times and McKinsey Business Book of the Year 2014 "Brilliant... [I]f you are looking for a rich history of banking over the last couple of centuries and the role played by politics in that evolution, there is no better study. It deserves to become a classic."--Liaquat Ahamed, New York Times Book Review "Business economists Calomiris and Haber explain how imperfectly politics and commercial banks intersect, and the consequences for the rest of us... This learned inquiry deserves ample attention from scholars, regulators, and bankers themselves."--Publishers Weekly "Calomiris and Haber offer a thoughtful counter-argument to the current received wisdom."--Howard Davies, Times Higher Education "Readable, erudite, myth-busting... The authors' clear and well-documented discussion of what happened should dissuade anyone of the myth that the economic crisis of 2007-09 was caused by the profit-and-loss system of unfettered capitalism."--Gene Epstein, Barron's "Charles Calomiris and Stephen Haber make the compelling argument that a country's propensity for frequent banking crises is linked to the ability of populist elements to hold the banking sector to ransom."--Louise Bennetts, American Banker "This is a great history of political interference in bank regulation."--James Ferguson, Money Week "One reason why economists did not see the financial crisis coming is that the models most macro and financial economists deal in are free of politics. Fragile by Design offers a much-needed supplement."--Martin Sandbu, Financial Times "Will a next crisis be averted? Perhaps, if our regulators read this book."--Vicky Pryce, The Independent "Fragile by Design ... is a great book... [E]normously illuminating, and contains the most powerful and concise account of the causes of the 2008 crisis that I have seen."--Eric Posner, EricPosner.com "If you have time to read only one book about the causes of the 2008 financial collapse, read this one... Charles W. Calomiris and Stephen H. Haber ... have written an exhaustively researched and readable volume... With great literary sensibility uncommon to economists, Calomiris and Haber have performed a public service by painstakingly identifying these root causes."--Diana Furchtgott-Roth, National Review "Capital markets, regulatory institutions and the behaviour of people employed in the financial sector are neither predetermined nor universal, but rather the product of culture, history, and the political system. That is a perspective developed effectively by Profs Calomiris and Haber."--John Kay, Financial Times "[T]he methodology is universally applicable and obviously raises questions about the nature of these arrangements in a country like France... [T]his work allows us to understand better why ... the alleged remedies and reforms, from 'unconventional measures' major central banks to new regulatory structures, no way affect the old paradigms and therefore merely prepare the next crises."--Phillipe Ries, Mediapart "Exploring the ways in which politics inevitably intrude into banking regulation, Calomiris and Haber clearly describe events leading to the recent financial crisis of 2007-2009... This is an excellent work for understanding the role of credit and how the financial sector evolved in different settings."--Choice "This is a beautifully-written book. Calomiris and Haber are always thoughtful, always clear, and they have an eye for the telling metaphor and the thought provoking fact. More importantly, the book reflects the authors' mastery of a vast amount of material on the history of banking... Fragile by Design is a must-read for economic historians, a book to be put on the shelf with ... similar classics."--Hugh Rockoff, EH.Net "[I]f you want a methodology for drawing conclusions about the genesis of crises and an explanation for the differing experiences among countries, Fragile by the Design is the winner hands-down."--Vern McKinley, Cato Journal "Charles Calomiris and Stephen Haber's Fragile by Design is a magnificent study of the economics and politics of banking."--Mervyn King, Bloomberg Businessweek "Hands down the best single book for understanding the historical journey that laid the groundwork for the financial crisis."--Jeffrey Lacker, Bloomberg Businessweek "Fragile by Design is a call to action for people to seize the moment to resist crony capitalism."--Jay Weiser, Weekly Standard "One cannot help but admire Calomiris and Haber's ambition to write one of the most accessible and sophisticated books on the linkage between political institutions and national financial systems."--Caner Bakir, Public Administration "By any yardstick, Fragile by Design is a remarkable achievement and an important contribution to our understanding of the roots of the banking crises."--Grant Bishop & Anita Anand, Banking & Finance Law Review

• Preface ix SECTION ONE No Banks without States, and No States without Banks 1 If Stable and Effi cient Banks Are Such a Good Idea, Why Are They So Rare? 3 2 The Game of Bank Bargains 27 3 Tools of Conquest and Survival: Why States Need Banks 60 4 Privileges with Burdens: War, Empire, and the Monopoly Structure of English Banking 84 5 Banks and Democracy: Britain in the Nineteenth and Twentieth Centuries 105 SECTION TWO The Cost of Banker-Populist Alliances: The United States versus Canada 6 Crippled by Populism: U.S. Banking from Colonial Times to 1990 153 7 The New U.S. Bank Bargain: Megabanks, Urban Activists, and the Erosion of Mortgage Standards 203 8 Leverage, Regulatory Failure, and the Subprime Crisis 256 9 Durable Partners: Politics and Banking in Canada 283 SECTION THREE Authoritarianism, Democratic Transitions, and the Game of Bank Bargains 10 Mexico: Chaos Makes Cronyism Look Good 331 11 When Autocracy Fails: Banking and Politics in Mexico since 1982 366 12 Infl ation Machines: Banking and State Finance in Imperial Brazil 390 13 The Democratic Consequences of Infl ation-Tax Banking in Brazil 415 SECTION FOUR Going beyond Structural Narratives 14 Traveling to Other Places: Is Our Sample Representative? 451 15 Reality Is a Plague on Many Houses 479 References 507 Index 549

Charles W. Calomiris is a professor at Columbia Business School and Columbia's School of International and Public Affairs. Stephen H. Haber is a professor of political science and senior fellow of the Hoover Institution at Stanford University.

Winner of the 2015 PROSE Award in Business, Finance & Management, Association of American Publishers One of The Times Higher Education Supplement's Books of the Year 2014, selected by Sir Howard Davies One of Bloomberg Businessweek's Best Books of 2014, chosen by Mervyn King and Jeffrey M. Lacker One of Financial Times (FT.com) Best Economics Books of 2014, chosen by Martin Wolf Longlisted for the Financial Times and McKinsey Business Book of the Year 2014 "Brilliant... [I]f you are looking for a rich history of banking over the last couple of centuries and the role played by politics in that evolution, there is no better study. It deserves to become a classic."--Liaquat Ahamed, New York Times Book Review "Business economists Calomiris and Haber explain how imperfectly politics and commercial banks intersect, and the consequences for the rest of us... This learned inquiry deserves ample attention from scholars, regulators, and bankers themselves."--Publishers Weekly "Calomiris and Haber offer a thoughtful counter-argument to the current received wisdom."--Howard Davies, Times Higher Education "Readable, erudite, myth-busting... The authors' clear and well-documented discussion of what happened should dissuade anyone of the myth that the economic crisis of 2007-09 was caused by the profit-and-loss system of unfettered capitalism."--Gene Epstein, Barron's "Charles Calomiris and Stephen Haber make the compelling argument that a country's propensity for frequent banking crises is linked to the ability of populist elements to hold the banking sector to ransom."--Louise Bennetts, American Banker "This is a great history of political interference in bank regulation."--James Ferguson, Money Week "One reason why economists did not see the financial crisis coming is that the models most macro and financial economists deal in are free of politics. Fragile by Design offers a much-needed supplement."--Martin Sandbu, Financial Times "Will a next crisis be averted? Perhaps, if our regulators read this book."--Vicky Pryce, The Independent "Fragile by Design ... is a great book... [E]normously illuminating, and contains the most powerful and concise account of the causes of the 2008 crisis that I have seen."--Eric Posner, EricPosner.com "If you have time to read only one book about the causes of the 2008 financial collapse, read this one... Charles W. Calomiris and Stephen H. Haber ... have written an exhaustively researched and readable volume... With great literary sensibility uncommon to economists, Calomiris and Haber have performed a public service by painstakingly identifying these root causes."--Diana Furchtgott-Roth, National Review "Capital markets, regulatory institutions and the behaviour of people employed in the financial sector are neither predetermined nor universal, but rather the product of culture, history, and the political system. That is a perspective developed effectively by Profs Calomiris and Haber."--John Kay, Financial Times "[T]he methodology is universally applicable and obviously raises questions about the nature of these arrangements in a country like France... [T]his work allows us to understand better why ... the alleged remedies and reforms, from 'unconventional measures' major central banks to new regulatory structures, no way affect the old paradigms and therefore merely prepare the next crises."--Phillipe Ries, Mediapart "Exploring the ways in which politics inevitably intrude into banking regulation, Calomiris and Haber clearly describe events leading to the recent financial crisis of 2007-2009... This is an excellent work for understanding the role of credit and how the financial sector evolved in different settings."--Choice "This is a beautifully-written book. Calomiris and Haber are always thoughtful, always clear, and they have an eye for the telling metaphor and the thought provoking fact. More importantly, the book reflects the authors' mastery of a vast amount of material on the history of banking... Fragile by Design is a must-read for economic historians, a book to be put on the shelf with ... similar classics."--Hugh Rockoff, EH.Net "[I]f you want a methodology for drawing conclusions about the genesis of crises and an explanation for the differing experiences among countries, Fragile by the Design is the winner hands-down."--Vern McKinley, Cato Journal "Charles Calomiris and Stephen Haber's Fragile by Design is a magnificent study of the economics and politics of banking."--Mervyn King, Bloomberg Businessweek "Hands down the best single book for understanding the historical journey that laid the groundwork for the financial crisis."--Jeffrey Lacker, Bloomberg Businessweek "Fragile by Design is a call to action for people to seize the moment to resist crony capitalism."--Jay Weiser, Weekly Standard "One cannot help but admire Calomiris and Haber's ambition to write one of the most accessible and sophisticated books on the linkage between political institutions and national financial systems."--Caner Bakir, Public Administration "By any yardstick, Fragile by Design is a remarkable achievement and an important contribution to our understanding of the roots of the banking crises."--Grant Bishop & Anita Anand, Banking & Finance Law Review

• Preface ix SECTION ONE No Banks without States, and No States without Banks 1 If Stable and Effi cient Banks Are Such a Good Idea, Why Are They So Rare? 3 2 The Game of Bank Bargains 27 3 Tools of Conquest and Survival: Why States Need Banks 60 4 Privileges with Burdens: War, Empire, and the Monopoly Structure of English Banking 84 5 Banks and Democracy: Britain in the Nineteenth and Twentieth Centuries 105 SECTION TWO The Cost of Banker-Populist Alliances: The United States versus Canada 6 Crippled by Populism: U.S. Banking from Colonial Times to 1990 153 7 The New U.S. Bank Bargain: Megabanks, Urban Activists, and the Erosion of Mortgage Standards 203 8 Leverage, Regulatory Failure, and the Subprime Crisis 256 9 Durable Partners: Politics and Banking in Canada 283 SECTION THREE Authoritarianism, Democratic Transitions, and the Game of Bank Bargains 10 Mexico: Chaos Makes Cronyism Look Good 331 11 When Autocracy Fails: Banking and Politics in Mexico since 1982 366 12 Infl ation Machines: Banking and State Finance in Imperial Brazil 390 13 The Democratic Consequences of Infl ation-Tax Banking in Brazil 415 SECTION FOUR Going beyond Structural Narratives 14 Traveling to Other Places: Is Our Sample Representative? 451 15 Reality Is a Plague on Many Houses 479 References 507 Index 549