Cloud One
Christopher Carson's posterous |
Antisocial Media |
I'm currently slogging through Macaulay's The History of England from the Accession of James II. Think the title's a bit lengthy? Try reading the book. I can't recommend it in its entirety to anyone who does not geek out on the religious, political, intellectual and moral evolutions of late 17th century Geat Britain.
But in light of current events -- Occupy Wall Street, the continuing economic malaise -- I would like to share a passage from Macaulay about the origins of modern banking, opposition to it, and early plans for the Bank of England. Interestingly, one charlatan suggested mortgaging the entire country to the national bank in return for boatloads of cash. An early form of quantitative easing?
It's all one passage, but I've cut some bits and pointed out some bits in italics. You can read the whole thing round about here.
In the reign of William (1689-1702) old men were still living who could remember the days when there was not a single banking house in the city of London. So late as the time of the Restoration (1660) every trader had his own strong box in his own house, and, when an acceptance was presented to him, told down the crowns and Caroluses on his own counter. But the increase of wealth had produced its natural effect, the subdivision of labour. Before the end of the reign of Charles the Second (1685), a new mode of paying and receiving money had come into fashion among the merchants of the capital. A class of agents arose, whose office was to keep the cash of the commercial houses. This new branch of business naturally fell into the hands of the goldsmiths, who were accustomed to traffic largely in the precious metals, and who had vaults in which great masses of bullion could lie secure from fire and from robbers. It was at the shops of the goldsmiths of Lombard Street that all the payments in coin were made. Other traders gave and received nothing but paper.
This great change did not take place without much opposition and clamour. Oldfashioned merchants complained bitterly that a class of men who, thirty years before, had confined themselves to their proper functions, and had made a fair profit by embossing silver bowls and chargers, by setting jewels for fine ladies, and by selling pistoles and dollars to gentlemen setting out for the Continent, had become the treasurers, and were fast becoming the masters, of the whole City. These usurers, it was said, played at hazard with what had been earned by the industry and hoarded by the thrift of other men. If the dice turned up well, the knave who kept the cash became an alderman; if they turned up ill, the dupe who furnished the cash became a bankrupt. On the other side the conveniences of the modern practice were set forth in animated language. The new system, it was said, saved both labour and money. Two clerks, seated in one counting house, did what, under the old system, must have been done by twenty clerks in twenty different establishments. A goldsmith's note might be transferred ten times in a morning; and thus a hundred guineas, locked in his safe close to the Exchange, did what would formerly have required a thousand guineas, dispersed through many tills, some on Ludgate Hill, some in Austin Friars, and some in Tower Street.
Gradually even those who had been loudest in murmuring against the innovation gave way and conformed to the prevailing usage...
No sooner had banking become a separate and important trade, than men began to discuss with earnestness the question whether it would be expedient to erect a national bank. The general opinion seems to have been decidedly in favour of a national bank; nor can we wonder at this; for few were then aware that trade is in general carried on to much more advantage by individuals than by great societies; and banking really is one of those few trades which can be carried on to as much advantage by a great society as by an individual... After the Revolution the subject was discussed with an animation before unknown. For, under the influence of liberty, the breed of political projectors multiplied exceedingly. A crowd of plans, some of which resemble the fancies of a child or the dreams of a man in a fever, were pressed on the government. Preeminently conspicuous among the political mountebanks, whose busy faces were seen every day in the lobby of the House of Commons, were John Briscoe and Hugh Chamberlayne, two projectors worthy to have been members of that Academy which Gulliver found at Lagado. These men affirmed that the one cure for every distemper of the State was a Land Bank. A Land Bank would work for England miracles such as had never been wrought for Israel, miracles exceeding the heaps of quails and the daily shower of manna. There would be no taxes; and yet the Exchequer would be full to overflowing. There would be no poor rates; for there would be no poor. The income of every landowner would be doubled. The profits of every merchant would be increased. In short, the island would, to use Briscoe's words, be the paradise of the world. The only losers would be the moneyed men, those worst enemies of the nation, who had done more injury to the gentry and yeomanry than an invading army from France would have had the heart to do.
These blessed effects the Land Bank was to produce simply by issuing enormous quantities of notes on landed security. The doctrine of the projectors was that every person who had real property ought to have, besides that property, paper money to the full value of that property. Thus, if his estate was worth two thousand pounds, he ought to have his estate and two thousand pounds in paper money. Both Briscoe and Chamberlayne treated with the greatest contempt the notion that there could be an overissue of paper as long as there was, for every ten pound note, a piece of land in the country worth ten pounds. Nobody, they said, would accuse a goldsmith of overissuing as long as his vaults contained guineas and crowns to the full value of all the notes which bore his signature. Indeed no goldsmith had in his vaults guineas and crowns to the full value of all his paper. And was not a square mile of rich land in Taunton Dean at least as well entitled to be called wealth as a bag of gold or silver? The projectors could not deny that many people had a prejudice in favour of the precious metals, and that therefore, if the Land Bank were bound to cash its notes, it would very soon stop payment. This difficulty they got over by proposing that the notes should be inconvertible, and that every body should be forced to take them.
The speculations of Chamberlayne on the subject of the currency may possibly find admirers even in our own time. But to his other errors he added an error which began and ended with him. He was fool enough to take it for granted, in all his reasonings, that the value of an estate varied directly as the duration. He maintained that if the annual income derived from a manor were a thousand pounds, a grant of that manor for twenty years must be worth twenty thousand pounds, and a grant for a hundred years worth a hundred thousand pounds. If, therefore, the lord of such a manor would pledge it for a hundred years to the Land Bank, the Land Bank might, on that security, instantly issue notes for a hundred thousand pounds. On this subject Chamberlayne was proof to ridicule, to argument, even to arithmetical demonstration. He was reminded that the fee simple of land would not sell for more than twenty years' purchase. To say, therefore, that a term of a hundred years was worth five times as much as a term of twenty years, was to say that a term of a hundred years was worth five times the fee simple; in other words, that a hundred was five times infinity. Those who reasoned thus were refuted by being told that they were usurers; and it should seem that a large number of country gentlemen thought the refutation complete.
[ad]
Smoked all your life and got COPD?
Wake up all night and have to go pee?
If you don't mind the side effects we've got the cure!
Talk to your doctor, if you're really not sure.
[news]
I am the fox with the really good facts
About how much Obama's gonna make you pay tax,
About minor car accidents in Kalamazoo
And sexual perverts in a city near you.
[ad]
Gold is the way in these turbulent times
Of government bailouts and white-collar crimes
To ensure yourself and your family will have enough meat.
Don't trust the banks! Trust Pawnbroker Pete!
[news]
I look like a boy just fresh from communion
But I'll tell you about the State of the Union:
This country is going the way of damnation.
That, my dear friends, is the State of the Nation.
[ad]
Hit by a bus?
Pay no money to us.
Get even, not wroth.
Call Spume, Spill and Froth.
[news]
Eyebrows fresh plucked by my stylist's tweezers,
I'm the boy to break the news to you geezers.
An asteroid's hurtling toward Earth, this very day.
It's the size of the Rose Bowl, so scientists say.
Turning forty-five ain't so bad: It's nifty!
Looked at optimistically you're only halfway to fifty.
As of this writing codgernet.com is still available. You're welcome to it.
Chief Yes Officer (Creative Director and Alpha Male Web Hamster) for Modern Media and The Realtime Report
http://modernmediapartners.com
http://therealtimereport.com
Amateur poet (doggerel)
