» Reaction and revolution

[Dave Birch] On 27 June 1693, the French Admiral Tourville’s combined Brest and Toulon squadrons ambushed the Smyrna convoy (a fleet of between 200–400 English and allied merchant vessels travelling under escort to the Mediterranean) as it rounded Cape St Vincent. The English and their allies lost nearly a hundred ships with a value of some 30 million livres, the equivalent of total French military spending on the Navy, tens of billions of euros in today’s money. The City of London judged it the worst financial disaster since the Great Fire, 27 years previously, and the financial sector was thrown into turmoil. The responses to this crisis resonate to this day. On the one hand, the government leapt into action and charged a committee to look into the problem of maintaining English sea trade routes in times of war. In 1696, William III set up a body of eight paid Commissioners “for promoting the trade of our Kingdom and for inspecting and improving our plantations in America and elsewhere”. This body was “The Lords Commissioners of Trade and Foreign Plantations” , commonly known as the Board of Trade, which did not constitute a part of the long standing Privy Council “Committee of Privy Council for Trade and Foreign Plantations”‘ , but was set up as a separate body, because that’s how governments do things. Incidentally, the “The Lords Commissioners of Trade and Foreign Plantations” existed until 1970, when it became part of the Department of Trade and Industry (DTI). In contrast, the private sector formed the Bank of England and the bank issued paper money.

Suppose you worked for a financial institution in 1692. You have accurate charts of the Mediterranean, detailed records of the cargoes moving between England and what is now Turkey, a good working knowledge of English and French naval tonnage and tactics, excellent relationships with local goldsmiths, friends at Court and a keen brain. You would never have predicted the arrival of the five pound note and you would certainly never have predicted that the trade would continue to use five pound notes even when you could no longer go to the bank of England and get five pound in gold for your note.

So here’s my reason for wanting to think about this exercise in paleo-futurism. We’re in the same place again. The credit crisis means that, in essence, the Smyrna fleet has just been sunk again: the financial system is in crisis. I’m sure the G20 will sprout some new committees, but… Someone, somewhere is creating a new institution that will revolutionise money. And it will be a group of private businessmen, coming together to create something big enough to help the state to “reboot” the financial system. Any suggestions?

history money trade

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