My life is my own!

Via The great liquidity crisis – 94 years ago, Niall Ferguson provides an instructive review of Lords of Finance: 1929, The Great Depression, and the Bankers who Broke the World:

By the summer of 1931, however, it was dawning even on Norman that the world economy was falling off a cliff. With massive bank failures on both sides of the Atlantic, it became clear that the Lords of Finance had bungled things. “Unless drastic measures are taken to save it,” he wrote to Moreau’s successor at the Banque de France, “the capitalist system throughout the civilised world will be wrecked within a year.” (With a characteristic flourish, he went on: “I should like this prediction to be filed for future reference.”)

Such apocalyptic fears were not new. As early as November 1918 Strong had warned Norman of a coming “period of economic barbarism which will menace our prosperity”. The irony was that their favoured prophylactics had, in combination, made the apocalypse more likely. By 1931 the capitalist system was on its knees, and democracy with it. Schacht was soon flirting with the rising star of the German right, Adolf Hitler; he later served as his economics minister.

I would be delighted to be wrong, but it seems to me that the Lords of Finance have bungled things spectacularly once again. When it comes to the management of the currency, I am ever more inclined to agree with Richard Cobden:

I hold all idea of regulating the currency to be an absurdity; the very terms of regulating the currency and managing the currency I look upon to be an absurdity; the currency should regulate itself; it must be regulated by the trade and commerce of the world; I would neither allow the Bank of England nor any private banks to have what is called the management of the currency…

I should never contemplate any remedial measure, which left to the discretion of individuals to regulate the amount of currency by any principle or standard whatever… I should be sorry to trust the Bank of England again, having violated their principle [the Palmer rule]; for I never trust the same parties twice on an affair of such magnitude

I too should be sorry to trust the Bank of England again, particularly as they seem to have catastrophically misled entrepreneurs into making investment decisions which were justified only by artificially low interest rates. Central bankers’ actions have had calamitous results. The sooner money escapes their grasp, the better.

Toby Baxendale

Brian Micklethwait on my colleague, Cobden Centre Chairman, Toby Baxendale:

…You don’t get from seventy grand in debt at the age of twenty one to running a company that turns over a hundred million quid a year before you are even properly middle aged without having something about you.

…

The thing I find particularly intriguing about Toby is how his thinking in the academic sense and his business and social thinking are so deeply intertwined, which is sadly not true of far too many businessmen.  His early acquaintance with the economic facts of life, due to his parents divorcing early and him being raised by his single mother, meant that he came to the study of economics with a well developed sense of how the economy worked and how wealth gets created, and regular economics didn’t add up.  Too abstract.  Simply: not right.  He paid for much of this education by himself working, first by part-owning and running a night club, then by buying food for a restaurant that he part-owned, the latter activity being the basis of his later business success…

Toby is a remarkable man and I am proud to have been instrumental in establishing the educational charity he founded to promote honest money, free trade and peace in the tradition of that great statesman, Richard Cobden.

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