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.
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. Historically it is a minuscule episode, lasting barely 18 months, and the original account, a paper delivered to the Royal Society in 1963, covers slightly more than a dozen pages. But Levenson expands the story with the brio of a born narrator, sidestepping into the underworld and the workings of the Mint, and connecting his two protagonists through Newton’s obsessive character. His description of Newton’s driven, sexless, sociopathic addiction to discovery is both lucid and exciting. Precisely the same qualities that uncovered the laws of motion, and thus of gravity, were applied to the procedures that were expected to turn base metal into gold:
[first] a black powder that Newton described as ‘our Pluto, ye Godd of Wealth or Saturn who beholds himself in the looking glass’; then later in the sequence, the ‘Chaos . . . that is ye hollow oak’; and later still ‘the blood of the Green Lyon.’ Each step, each chemical product carefully concealed behind this fantastic imagery took Newton closer to his actual goal, the transformation of matter from one form into another.
Finding such a miraculous agent, Newton believed, would provide evidence of a miracle-working God in the otherwise mechanistic world his physics had created. But, as Levenson shrewdly observes, ‘alchemy looked an awful lot like counterfeiting to the uninitiated’. This is a brilliant conceit, and the implication that the need to protect the authenticity of his own research underlay Newton’s ruthless campaign against the counterfeiters — over £500 spent on informers, 200 arrests and interviews, and more than 100 visits to the prison at Newgate — gives the tale a satisfying unity.
It might be objected that Newton had a less personal interest in Chaloner than Levenson suggests, that the economic sophistication of the day was greater than he supposes — a glance at the theories of William Petty and Josiah Childs would have been useful — and that the book should have acknowledged the prior scholarship of John Craig’s 1963 paper. But these are minor quibbles compared to the pleasure of the whole.
In the end, Chaloner and scores of other counterfeiters were tried and executed, and Newton had the Mint churning out a torrent of machined coins with milled edges to make them harder to forge — hence the motto decus et tutamen, ‘decoration and safeguard’, on the rim of the £1 coin. The sudden gush of sound money should have restored confidence and resolved the crisis, but in fact it had little effect. Silver continued to flow abroad, almost as rapidly as today’s quantitative easing is being trousered by bankers anxious to recoup past squanderings. Enjoyable though it is, this is not a book to inspire confidence in the future.
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