Power of Paper [Hardcover]

It is nearly twenty years since Christopher Ondaatje sold Pagurian, a group of fantastically profitable companies that grew out of a minor Canadian publishing imprint. Back in the 1960s, while others pitted their wits against book publishing’s twin demons of cash flow and distribution, Ondaatje carefully plotted his way through these hazards. Without ever borrowing a penny, he amassed a colossal personal fortune through stealth, acuity, and sheer hard work.
The Power of Paper is the story of how Ondaatje generated this wealth, but it is not an autobiography, and those looking for one will be disappointed. While he might be the main character in the book, Ondaatje writes exclusively about the origins of money, how it works, and how it is ultimately dangerous in its abstract form. The subtitle-A History, A Financial Adventure, and a Warning-lays out the concerns of this compulsively readable book from an author more recently associated with geographical exploration. It may be that ambitious financiers will comb through The Power of Paper in search of clues that might help advance their career. This would be a shame because the additional depth the story gains from its well-researched history of finance, reaching back some six millennia, means that there is more to The Power of Paper than a mere a tale of corporate success.
What made Ondaatje different from the entrepreneurs that now strew our television sets with reality game shows, is that he was in pursuit of neither easy money nor celebrity. As a financier his aims were much higher- to restore his family’s name and pride. The young Ondaatje suffered a monumental blow when he was forced to leave school prematurely because his alcoholic father went bankrupt. Mortified, he vowed that this would never happen to his family again, and in his bid to set wrongs aright, the virtually penniless young man from Ceylon, after a brief stint in the City, headed west to Canada. This was no whim: by the time he left London, he had already decided on how the emerging Canadian economy might work for him.
Most rely on some vague idea to make their fortune. By contrast, Ondaatje meticulously planned his own route to success, even as he was starving in a downtown basement, pilfering milk and jamming on his guitar. It is easy to say now with hindsight that success was inevitable, but there were daring, counter-intuitive moves that most security-conscious businessmen would never have allowed themselves to make. Ondaatje was prepared to take calculated risks and absorb setbacks, provided they gave him an ‘unfair advantage’.
It is possible that his first advantage was a talent for sport. He represented Canada in the 1964 Olympic games as a bobsledder. This gave him confidence in the business world and encouraged him to publish Pagurian’s first book. The Prime Ministers of Canada started out with a modest print run, but ended up on the school syllabus and went on to sell over 600,000 copies. By keeping Pagurian’s headcount to a minimum, watching his cash flow like a hawk, and by meticulously researching his market, Ondaatje developed a formula that eventually led to enormous success. There would be no speculations on untried novelists. Cookery books sold, so he published cook books. Successful young families wanted art prints to decorate their stylish new homes. He was happy to be the one to provide them.
The money that Pagurian went on to make over 20-odd years was the result of an economic system that evolved over millennia. The earliest known inscriptions relating to finance are on clay tablets from the 4th millennium BC. Loan contracts written on papyrus in Egypt are from the 3rd century AD. Ondaatje tracks down and explains the significance of these early instruments of finance before unleashing a blizzard of technical details about how modern finance works on paper. There are preference shares, junk bonds, Eurobonds, derivatives, gilts, hedge funds, and so on. For the financially illiterate this section of the book has a bewitching attribute all of its own, a metalanguage that is intricate and fascinating. It’s complicated, he is telling us, so you better know what you’re doing. This understanding was the bedrock of Pagurian’s success. As Ondaatje became more interested in finance, book publishing became less relevant to his strategy. The power of paper had seized his imagination.
But it worried him as well. It was for Ondaatje a lonely existence, and he didn’t want the word ‘financier’ “emblazoned on [his] gravestone.” He also had a terrible foreboding of global economic disaster. In his final apocalyptic chapter, he forecasts the collapse of the global economic order: too much money is owed by too many people to be sustainable; we’re heading for meltdown. But it’s not the fault of paper, says Ondaatje. He blames human weakness for a world the 18th-century poet Alexander Pope described as being “sunk in Lucre’s sordid charms.”
This nightmarish vision of how it might all end caused Ondaatje to withdraw completely from the world of finance by the early 1990s. Instead, he turned to writing, serious exploration, and he became involved in the world of philanthropy. By this point his family’s fortune and honour were more than restored, and, having “made more money than [he] had ever dreamed possible,” he called it a day. Where once he hacked his way through the jungles of corporate finance, Ondaatje was now hacking through real jungles, searching for the source of the Nile, meeting people who live on less than a dollar a day, and looking for leopards.
After I had read The Power of Paper I bumped into Christopher Ondaatje at the Royal Geographical Society where he told me that he had edited out great chunks of the book at the last minute. I wondered if these cuts were of financial technical detail that might alienate the non-specialist, but he told me they were in fact the more autobiographical passages. He said that he thought they detracted from the subject, which is of course finance. Many will feel that in making these excisions Ondaatje has short-changed the reader. But his life was never the point of this truly educational book. The extraordinary man behind the money really is another story.
Nick Smith (Books in Canada)
-- Books in Canada