Historical Echoes: The “Mississippi Bubble” – When One’s Back Could Be Rented Out as a Writing Desk

Amy Farber

In 1720, the very same year that England was experiencing the “South Sea Bubble” (see our post), France was experiencing a bubble as well—the “Mississippi Bubble.” France’s bubble was brought on by government debt and the advice of the head of the country’s finance ministry, John Law (Scottish mathematician, convicted murderer [a duel], gambler, and financial genius), to create paper money and a bank and to invest in his Mississippi Company. (Indeed, at the height of the trading frenzy for shares of stock in Law’s company, a hunchbacked man rented his back out as a desk in the “Street of Speculators” and earned a considerable sum.) Over a three-year period (1718-20), things went very wrong and too much money was printed (the regent’s decision, not Law’s). The text accompanying this portrait of Law describes him as an:

18th century Scotsman, credited by some historians as being “the father of inflation.” Law turned gambling IOUs into “gold counters,” then state debts into paper money, and finally sold all France down the river on the “Mississippi Bubble.”

Historical Echoes: What Do the New York Fed and Grand Central Terminal Have in Common?

Amy Farber

These two fine old entities—the New York Fed and Grand Central Terminal—have at least three things in common: they are both about 100 years old, they both feature beautiful vaulting in some part of their structure by the same “designer” masons, and they both go very deep into the ground.

Historical Echoes: Fedspeak as a Second Language

Amy Farber

First there was Newspeak (from George Orwell’s book 1984), which intended to bend the thinking of the masses, then there was doublespeak (derived from Newspeak, meaning a deliberate disguising or distortion of meaning, and with its very own achievement award), and then there was Fedspeak (and likely many other “-speaks”).

Historical Echoes: The Invention of the ATM–A Case of Multiple Independent Discovery?

Amy Farber

Amazingly, something resembling a drive-through automated bank teller existed back in 1941 (twenty-six years before the invention of the true ATM, or automated teller machine). It was an ingenious curbside teller’s window, as described in this October 1941 Popular Science article, “Bank Gives Curb Service to Motorists with Novel ‘Teller-Vision’ Cage” (p. 63 for IE7 users).

Historical Echoes: Central Bank and Paper Money Innovator Given Death Sentence for His Efforts

Amy Farber

In 1668, Johan Palmstruch, the head of Stockholm Banco, the precursor to the oldest central bank still operating today—the Swedish Riksbank—was charged and sentenced to death, according to Wikipedia and the Riksbank.

Historical Echoes: I’ll Take “Happy Birthday, Fed!” for $400, Alex

Amy Farber

The Federal Reserve System is getting ready to celebrate its 100^th birthday. The quiz show Jeopardy! recently paid tribute to this milestone by having as one of its “Teen Tournament Jeopardy!” categories “Happy 100th Birthday, Federal Reserve!” Barrett Block, a high-school senior, won the game. You can play the same game the teen contestants played (scroll down to the “Double Jeopardy!” round) on a fan-created site called J! Archive. On the site, which by the way isn’t affiliated with Jeopardy!, you can travel back through the past thirty years and test your knowledge on Jeopardy! questions on specific topics like finance, economics, money, and the Federal Reserve.

Historical Echoes: The Founding and Foundation of the New York Fed

Megan Cohen

On November 17, 1914, the New York Times reported on Treasury Secretary W. G. McAdoo’s involvement in the authorization of the Federal Reserve System’s operations, including a notice to member Banks, telegrams, and new Reserve notes. Appearing with the article is a copy of the receipt for the first Reserve payment.

Historical Echoes: Retirement Timing Discussions with Nary a Mention of Finances

Amy Farber

One would be hard-pressed to find a discussion about the timing of retirement these days that doesn’t mention finances. That makes it more than a little surprising to find two examples from the mid-twentieth century that broach the question of retirement age, yet are entirely silent about financial considerations.

Historical Echoes: Cash or Credit? Payments and Finance in Ancient Rome

Marco Del Negro and Mary Tao

Imagine yourself a Roman citizen in the 1st Century B.C. You’ve gone shopping with your partner, who’s trying to convince you to buy a particular item. The thing’s pretty expensive, and you demur because you’re short of cash. You may think that back then such an excuse would get you off scot-free. What else can you possibly do: Write a check? Well, yes, writes the poet Ovid in his “Ars Amatoria, Book I.” And since your partner knows it, you have no way out (the example below shows some gender bias on Ovid’s part. Fortunately, a few things have changed over the past 2,000 years):

            But when she has her purchase in her eye,
            She hugs thee close, and kisses thee to buy;
            “Tis what I want, and ‘tis a pen’orth too;
            In many years I will not trouble you.”
            If you complain you have no ready coin,
            No matter, ‘tis but writing of a line;
            A little bill, not to be paid at sight:
            (Now curse the time when thou wert taught to write.)
 

Historical Echoes: Bankers Behaving Calculatingly – with Slide Rules

Amy Farber

How do bankers do calculations? Currently, on the computer (or calculator). What about before computers and calculators? If they couldn’t figure things out using pencil, paper, and pre-prepared tables, they used slide rules (and pre-prepared tables; see p. 188 of this 1887 book of tables).