Lessons from the past

Oh the relief of quantitative easing! Who could fail to welcome a fiscal laxative guaranteed to loosen the bankers’ constipated hold on credit? But before much more of the mixture is gulped down, it may be salutary to glance at the effect of the purgatives administered to ease economic bowels in the late 17th century.

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Ian Williams

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The credit crunch that afflicted the country in the 1690s produced results with which we are familiar. In the words of Lord Macaulay, ‘the great instrument of exchange became thoroughly deranged, all trade, all industry were smitten as with a palsy’. The crisis was caused by a ruinous foreign war, by the export of silver coins which were worth more abroad than at home, and, as this delightful book makes clear, by an army of counter- feiters whose dud coins drove the good ones out of circulation.

Easily the most ambitious of the forgers was William Chaloner, who not only faked shillings and guineas but a new identity for himself as that apparently modern phenomenon, an economics adviser. Posing as a fiscal conservative, he published a pamphlet in 1694 arguing against higher taxation to fund the government deficit, Reasons Humbly Offered Against Passing an Act for Raising Ten Hundred Thousand Pounds. In this respectable guise, he was consulted by a parliamentary committee on ways to prevent counterfeiting. Today no one would be surprised by the committee’s recommendation that one of Chaloner’s confederates should be appointed to act as quality controller at the Mint. Compared with the economic alchemy that allows the Bank of England to create £175 billion of notional money out of nothing, putting a forger in charge of coin production seems very modest.

Standing in Chaloner’s way, however, was the newly appointed Warden of the Mint, Isaac Newton, and the story of the great scientist’s campaign against the counterfeiter is the theme of Thomas Levenson’s book.