[Dave Birch] When I was pottering about in Barclays Bank’s splendid skyscraper in Canary Wharf recently I came across an interesting artifact. In a glass display case is a ring given by Sir Thomas Gresham, one the most important people in the history of money. In his wonderful and indispensable “A History of Money: From Ancient Times to the Present Day” , Glyn Davies (sadly no longer with us, but who very kindly spoke at the first ever Digital Money Forum) tells how Thomas learned about borrowing, lending and foreign exchange while living in Antwerp. In 1587, he “cornered” bills of exchange drawn on Genoan banks so effectively that he was able to disrupt the build-up of resources for Phillip II’s Great Armada , demonstrating how sophisticated economic warfare had become by the 1580s. (For Christmas reading, why not try Neil Hanson’s “The Confident Hope of A Miracle: The True History of the Spanish Armada”, which I thoroughly recommend.)

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Here’s the ring in question…

Greshamring

Sir Thomas is best known in e-money circles for the eponymous maxim, “bad money drives out good” (although it should be noted that he was far from the first person to understand the principle). In other words, rational actors will attempt to trade away debased and worthless coinage in return for goods and services but will keep the good stuff under the mattress. Thus, over time, the money in the marketplace goes bad. It might be more accurately expressed, of course, as “bad money drives out good money at fixed exchange rates”, since at floating exchange rates the market will simply adjust: thus, 1 Zimbabwean dollar (Zim$) is currently worth considerably less then 1 World of Warcraft gold piece (GP). If an economically illiterate dicator (in Zimbabwe, for example) were to fix the exchange rate between Zim$ and GP at 1:1, then I would offload all of my Zim$ for worthless trinkets as soon as possible while hanging on to my GP. This is because even though the rate is 1:1, I (as a rational consumer) don’t believe that a Zim$ is really worth a GP so I don’t want to make the my store of value.

What’s Sir Thomas’ ring got to do with Barclays? He was a pioneer of lending and borrowing money in England and became the greatest of the London merchants. In fact, he is seen as the Father of English Banking. He served Henry VIII; Edward VI; Mary I and Elizabeth I and founded his own bank — at the sign of the grasshopper (from his crest) in Lombard Street — which eventually became Martins Bank. This, via a series of mergers including that of the Liverpool Bank in 1918, ended up as the only major U.K. bank with headquarters outside London. Martins was at the forefront of banking advances and in 1967 unveiled the first ‘automatic cashier’ in the north of England, in Church Street, Liverpool.

Meanwhile, Barclays Bank had been incorporated as a joint stock bank in 1896 by the amalgamation of 20 private banks, based mainly in East Anglia and the home counties. Further important amalgamations followed, with the United Counties Bank in 1916 and the London Provincial and South Western Bank in 1918, and in 1919 controlling interests were purchased in the British Linen Bank and the Union Bank of Manchester, complete amalgamation with the latter being effected in 1940. In 1969, Martins Bank was merged into Barclays Bank. Hence the chain from Sir Thomas to Canary Wharf and the display of the ring on the 30th floor.

His role in the City of London was of lasting consequence: he founded the Royal Exchange…

Sir Thomas Gresham, an opulent merchant of London, actuated by a laudable desire to facilitate commercial transactions, made a noble offer to the corporation, of erecting, at his own expence, a convenient bourse or exchange, for the accommodation of merchants, to meet and negociate their business in; if a proper situation was provided for him. The city accordingly purchased fourscore houses, which composed two alleys leading out of Cornhill into Threadneedle-street, called new St. Christopher’s, and Swan alleys, for 3532 pounds. They sold the materials of these houses for 478 pounds and Sir Thomas Gresham, with some of the aldermen, laid the first bricks of the new building, June 7, 1566, each alderman laying one, with a piece of gold for the workmen: and the work was pursued with such alacrity, as to be roofed in by the month of November, in the following year. The queen would not have it called, as in other countries, the Bourse; but, when it was finished, came and dined with the founder, and with the heralds at arms, by found of trumpets, proclaimed it by the name, of the Royal Exchange.

Sir Thomas is reputed to have died of apoplexy — which I fear may be my fate if I continue to listen to the Today programme in the morning!

My opinions are my own (I think) and are presented solely in my capacity as an interested member of the general public. [posted with ecto]

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