Mr. Creosote Gets a Wake-up Call

For no particular reason I chose this week to make my way through God and Gold, Walter Russell Mead's cheerful romp through several hundred years of modern history, mostly dominated by brave, plucky, enterprising Anglo-Americans who, as Mead insists, singly or jointly "have been on the winning side of every major war in which they have participated since the late seventeenth century."  This assertion may require careful construal of terms like "winning side" and "every" and "major" and "war,"  but let that be.  It's a mostly sunny story, glowingly told.

And (why do I remember this just now?) it is amazing how much of the story gets its energy from finance, and in particular, the public debt. Mead zestfully recounts the tale of the creation of the Bank of England, as a device to fight William III's War against Louis XIV; then of the burgeoning--no the bloat--of the British public debt through the 18th Century, to the point where it looked a lot like John Cleese as Mr. Creosote (infra.). He also recounts (oddly, in less detail) the role of Alexander Hamilton in creating an American bank on the same model.  Mead brings the same kind of enthusiasm to the subject of private debt with, inter alia,  his retelling of the tale of A. P. Giannini, "a porter and laborer" (as Mead descibes him) who went on to create an entity that now stands near the top of the banking heap.

Of course it wasn't simply a matter of borrowing tons of money. "Public credit" was part of a whole complex of ideas that drove a dynamic economy: optimism and enterprise, the conviction that things would get better, the will to make them so.  And chiefly, of course, the idea that debts would be paid back, one way or another.  For its advocates, Mead stresses, "the system was essentially moral."  "business was rooted in character and morality, and inconceivable except under free and accountable government."   Here's Mead, summing up the advocates:

Public Credit is a fragile being; the conditions have to be just right for her to emerge and flourish. But where those conditions exist, a stable funding system and a mighty central bank will raise up a power that can defy all its foes. 

It's an idea that was still current in my childhood.  My father was  Taft (really, a Hoover) Republican.   I wasn't terribly clear in those days what a Taft or a Hoover Republican might be.  But I did know that a Republican was someone who paid his debts.   And now, finally, a wafer-thin mint: