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By Carl Wennerlind


The Montréal Review, February 2012


"Casualties of Credit: The English Financial Revolution, 1620-1720" by Carl Wennerlind (Harvard University Press, 2011)


Available at Amazon US and Amazon Canada


"Credit makes the world go around but, as recent events have shown, it can also bring it crashing down. By revealing credit's perilous partners in early modern England, among them alchemy, slavery, and death, Carl Wennerlind's richly documented study boldly revises the cultural history of the Financial Revolution and puts our current calamities into a salutary long-term perspective."

-David Armitage, author of "The Ideological Origins of the British Empire"

"This book provides an elegant, engaging, and highly compelling account of the ways in which credit emerged in the seventeenth and eighteenth centuries as topic of discussion and focus of economic innovation."

-Daniel Carey, National University of Ireland, Galway


In 1696, Sir Isaac Newton left Cambridge for London, putting his scientific and alchemical pursuits temporarily on hold to assume the position of Warden of the Royal Mint. His main responsibility was to investigate and prosecute crimes against the English currency. He was relentless in his pursuit of forgers and counterfeiters and famed for his reluctance to offer pardons, reputedly on the grounds that these "dogs always return to their vomit." His conscientious dedication to fulfilling his responsibility led to many currency criminals dangling from the gallows in order to provide deterrence to other counterfeiters and, perhaps more importantly, to communicate to the general public that the English state was serious about protecting the nation's new currency.

Why was a scientist asked to help out in the safeguarding of the currency? Was there a link between science and finance, or more precisely between the Scientific Revolution and the Financial Revolution? Why was the hangman considered an essential ingredient in the formation of trust? Did violence play a larger role in the creation of the modern culture of credit? These questions, and many more, are explored in Casualties of Credit: The English Financial Revolution, 1620-1720.

Casualties of Credit is an historian's attempt at understanding the culture within which the modern credit system emerged. It focuses on the seventeenth-century English Financial Revolution - England, because it was the first nation to enter financial modernity, and the seventeenth century, because it witnessed the transition from a monetary system based on coin and non-circulating personal credit notes to one that included a generally circulating credit currency, sophisticated markets in both bonds and stocks, and a modern system of public credit.

Most historians explain the Financial Revolution in terms of the process of state-formation/modernization and the growth of world trade generating a massive demand for money that an inflow of silver from abroad could not satisfy. The resulting scarcity of money created a need for a drastic solution, eventually leading to the foundation of the Bank of England in 1694. While some historians suggest that the new financial system was merely an extension of the existing system, others suggest that the Financial Revolution was imported from the Low Countries, calling it Dutch Finance. Contrary to these views, I suggest that the Financial Revolution was truly an historical discontinuity and that it was primarily a domestic phenomenon. I trace the roots of the Financial Revolution to a significant, yet little recognized, transformation in political economic thinking and I explore the political mechanisms that were considered essential for the creation and safeguarding of the new culture of credit. My investigation reveals a number of rather odd and certainly unexpected twists and turns, including a central role played by alchemy in the development of a new discourse on money, the use of the death penalty to promote trust in the new credit currency, and the intensification of the English slave trade to bolster confidence in public credit.

The discourse on money that raised the possibility of creating a generally circulating credit currency was based on a radically new worldview and social imaginary. This new mindset was vigorously promoted by the Hartlib Circle - a London-based pan-European group of social reformers, scientists, and political economists who had gathered around the Prussian émigré Samuel Hartlib. The Hartlibians authored, published, and disseminated advice on how to transcend nature's scarcity by advancing agriculture, horticulture, botany, mechanics, manufacturing, chemistry, fishing, and so on. They hoped to spark a process of infinite improvement that would gradually eliminate all social, economic, and political problems and eventually establish a kingdom of heaven on earth. While they were informed by Sir Francis Bacon's insistence that mankind has the capacity to restore dominion over nature through the pursuit of pragmatic science, they also drew significant inspiration from the alchemists' understanding of nature as a constantly evolving organic process, the speed of which can be hasten by human intervention.

While most of the Hartlibian reform program centered on scientific improvements, they recognized that the infinite improvement process could only be sustained if they could find a way expand the money stock in proportion to the ever-expanding world of goods. Their first solution to this challenge was to launch an ambitious alchemical project whereby they hoped to transmute lead into gold. Drawing on state-of the-art alchemical knowledge, the Hartlib Circle brought together some of the finest practitioners. Yet, despite all their best efforts, the philosopher's stone remained elusive. Immediately after their failure in the laboratory, they launched a campaign for a generally circulating credit currency. Promising some of the same benefits as the philosopher's stone, the Hartlibians proclaimed that their proposed credit-currency could facilitate the infinite improvement process and, as such, its "capacity of inriching this Nation, is in a sort infinite."

The key to making a credit currency viable was to figure out how people would be able to trust it. In debating the best design, political economists were fortunate to have access to a concurrently emerging epistemological transition, the probabilistic revolution, which centered on the development of knowledge claims under uncertainty. As part of the Scientific Revolution, philosophers had come to recognize that in most areas of life it is impossible to operate on the basis of demonstrative, axiomatic, or mathematical certainty. Instead, they had begun to develop criteria for forming stable opinions. The principles for such probabilistic reasoning lent themselves particularly well to the question of how to best generate trust in credit.

Along with good security backing credit instruments, transparent institutional designs, and honest and reputable directors, the seventeenth-century consensus was that harsh penalties were necessary for anyone who over-issued credit notes, forged or counterfeited notes, or committed any other type of manipulation that undermined trust in the new currency. While some people suggested facial disfiguration and transportation to the colonies as the appropriate punishments, the choice fell on letting the hang-man do the job. The debates surrounding the use of the death penalty engaged some of the period's finest intellectuals, including John Locke and Christopher Wren, and the actual practice of detecting, prosecuting, and executing counterfeiters during the monetary crisis of 1694-6 involved the already prominent scientists Isaac Newton. Casualties of Credit tells the fascinating story of how the Scientific Revolution - its ideas and practitioners - contributed to the Financial Revolution.

Soon after the Financial Revolution had weathered its first storm in the 1690s, it was soon again threatened by a new crisis, that in many ways is comparable to the kind of debt crisis currently experienced throughout much of Europe and the US. The financial system developed towards the end of the seventeenth century enabled England to borrow on a massive scale, which contributed greatly to its success in the twenty-year long military conflict against a more populous, resource-rich, and battle weary France. But by 1710, the national debt had ballooned out of control and the new system of finance was stretched to its limit. Much like today, the ruling political party's capacity to survive in office depended on its capacity to come up with a restructuring plan for the national debt that the bond market would find satisfactory. The key then, as now, was to restore investor confidence in the likelihood that the debt would be adequately serviced and eventually paid off in some distant theoretical future.

Recognizing that mere palliatives would not suffice, the Tory Prime Minster Robert Harley launched the South Sea Company in the spring of 1711. The new company was given the right to create a capital stock of £10 million, which it would issue to the public in return for the deeply discounted unsecured government bonds in circulation. To make this public-for-private, debt-for-equity swap attractive to bond holders, Harley committed a set of future tax receipt to pay interest on the debt the company absorbed, but most importantly awarded the company England's monopoly rights to provide Spanish America with African slaves - a contract obtained as a spoil of victory in the war against France. Harley hoped that the investors' imagination of great profits from the Atlantic slave trade would entice them to give up their bonds and accept stocks in the South Sea Company.

Harley's Tories and the Whig opposition clearly recognized the importance of a favorable imagination of the slave trade for the South Sea scheme to work. To move the public opinion in the right direction, each side employed a series of writers to author propaganda journalism. While the Whig-writers sought to undermine confidence in the scheme, Harley's hired scribblers, which included the soon-to-be-famous novelists Daniel Defoe and Jonathan Swift, extolled the plan's virtues and promises. Defoe, for example, jubilantly stated that "Mr. Harley's Proposal, of providing effectually for the payment of the Publick Debts of the Nation, and of Establishing a Trade to the South-Sea of America, hath fill'd the Hearts of all good Subjects with Joy." Swift added that Harley's innovation, if properly managed, had the capacity of becoming "the greatest Restoration and Establishment of the Kingdom's Credit." Unsurprisingly, not a word of caution was raised about the fact that England's credit would be restored on the foundation of the death and suffering of African captives.

Defoe's and Swift's propagandistic projections succeeded in creating a favorable imaginary of the Atlantic slave trade, which contributed to the success of the South Sea Company in restoring confidence in the nation's financial system. Through a process of time/space compression, credit was able to transfer wealth from the future to the present and from the Atlantic world to London. Hence, even though the English financial system was centered on a rather small geographical area - Exchange Alley and its surroundings - the fact that the new financial instruments were based on the imagination and expectations of future value meant that England's culture of credit forged a close connection between the urban milieu of London, the slave forts on the African coast, and the colonial towns of Spanish America.

In recognizing the role played by the death penalty, slavery, the public sphere, and the birth of party politics in the English Financial Revolution, Casualties of Credit adds a number of political dimensions to the conventional narrative of the formation of the modern culture of credit. By exploring these additional political dimensions, as well as reflecting on the importance of the intellectual/scientific context of the Financial Revolution, Casualties of Credit hopes to contribute to a fuller understanding of credit as a cultural phenomenon.


Carl Wennerlind is an associate professor at Barnard College, Columbia University. He is the co-editor of David Hume's Political Economy and the soon-to-be-published Rethinking Mercantilism. Currently, he is working on a monograph on the conceptual history of scarcity.



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