Sir Thomas Gresham
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In September 1568 the Huguenot leader, Cardinal Châtillon, fled for safety to England, and Grindal, bishop of London, being unable to comply with the council's request to entertain him at Fulham Palace, Gresham received the cardinal and his suite at Gresham House, to which he conducted him from Gravesend on 12 Sept., accompanied by many distinguished citizens. Gresham proposed to take the cardinal to Osterley, but after a week the cardinal removed by the queen's appointment to Sion House.
At this time (1568) a quarrel was proceeding between the Spanish and English courts on account of the seizure by English merchants of large cargoes of Spanish treasure in English ports. The Duke of Alva, by way of reprisals, placed all Englishmen at Antwerp and elsewhere on Spanish soil under arrest, and in January 1569 sent over an agent named Dassonleville to demand restitution. The agent was committed to the custody of Alderman Bond in Crosby House; he requested to see the Spanish ambassador, who was also under arrest, and Gresham was directed to bring them together. On 22 Feb. 1568-9 an unsuccessful conference took place between Cecil, Sir Walter Mildmay, and Dassonleville at Gresham's house. To prevent the Spanish treasure falling into Alva's hands, Gresham proposed that the money should be coined for the merchants, and then borrowed of them by the government for two or three years on loan. This advice was acted on, and Gresham made the needful arrangements. A final settlement of the dispute was not arrived at till five years later, when it was arranged by Gresham and others to restore to Spain the arrested goods (ib. p. 308). In April 1569 Gresham was requested by foreign protestants to go over with an English merchant fleet then sailing for Hamburg, which from this time took the place of Antwerp as a mercantile centre, and assist to take up a loan in their behalf in that city. The Prince of Orange and his party again sought Gresham's help in the summer of 1569, and asked him to raise a loan of 30,000l. on the queen of Navarre's jewels . The French ambassador, La Mothe, who had prevented any assistance being sent by the queen and her ministers, was alarmed, and saw no means of resisting Gresham's interference. La Mothe states that Gresham also secretly supplied the merchants in London with money, so that the greater part of the value of two cloth fleets sent to Hamburg (estimated at 750,000l.) never returned to this country in specie or merchandise, but remained in Germany to strengthen Elizabeth's credit on the continent. Gresham now advised the council to endeavour to obtain from the London merchants the loans for which they had hitherto depended upon foreign money-lenders. He was accordingly authorised to negotiate with the merchant adventurers, who, after some dilatory excuses, refused to comply. But a sharp letter, written by the council at Gresham's instance, procured in November and December a loan for six months of about 22,000l., in sums of 1,000l. and upwards, subscribed by various aldermen and others. An absolute promise of repayment, with interest at twelve per cent., was made, and bonds were given to each lender in discharge of the Statute of Usury, which forbade higher rate of interest than ten per cent. These loans when due were renewed for another six months, and the operation proved mutually advantageous. In 1570 and 1571 Gresham repeatedly complained, without much success, of the government's unpunctuality in paying off their loans. On 26 May 1570 he advised the raising of a loan of a hundred thousand dollars in Germany. On 7 March following he pointed out that if the queen's credit with the citizens were maintained by greater punctuality in discharging her debts, she could easily obtain 40,000l. or 50,000l. within the city of London. He also proposed that 25,000l. or 30,000l. of the Spanish money that still lay in the Tower should be turned into English coin. Gresham was henceforth compelled by increasing infirmity his leg was still troubling him to leave to agents the transaction of his foreign business. On 3 May 1574 he ceased to be the queen's financial agent. He sold his house at Antwerp on 14 Dec. 1574 for a cargo of cochineal, valued at 624l. 15s. (Relations politiques des Pays-Bas, vii. 386-7, Coll. de Chron. belges in-édites). He was only once again, in 1576, publicly associated with finance, when he was placed on a commission of inquiry into foreign exchanges. He contributed 80l. to the expenses of Frobisher's voyage in 1578 (State Papers, Dom. 1547-80, pp. 615, 621). An investigation into the financial relations between Gresham and the government, made in the light of the pipe and audit office accounts, shows that Gresham incurred little or no personal risk as a government financier, that his profits were very large, and that his conduct was often open to serious misconstruction (cf. Mr. Hubert Hall's analysis of Gresham's accounts for 1562-3 in his Society in Elizabethan Age, pp. 65-9, App. pp. 161-2). Personal expenses were allowed on a generous scale, and he seems to have been permitted at times to apply government money in his hands to private speculations. When Gresham's employment ceased in 1574, his accounts had not been passed for eleven years. The subsequent audit at the treasury showed that he had received in the last ten years in behalf of the government 677,248l. 4s. 8¾d., and had expended 659,099l. 2s. l½d. Several items of personal expenditure were disallowed or reduced by the official auditor; but certain sums owing to Gresham at the last audit (in 1563) were acknowledged, and he finally found himself about 10,000l. in debt to the government. Gresham tried to wipe off this debt by claiming interest at twelve per cent., and exchange at 22s. 6d. on the sums admitted to be due to him from the previous audit. On this calculation he represented that the crown was in his debt to the large extent of 11,506l. 18s. 0¼d. This exorbitant demand was at once disputed by the commissioners. Gresham promptly obtained a duplicate copy of his accounts, and caused a footnote to be added to the document acknowledging the impudent claim for interest and exchange which had already been practically rejected. With this paper he set out for Kenilworth, where the queen was staying as the guest of Leicester. Through the good offices of her host Elizabeth was induced to allow the claim, and, fortified by the royal endorsement, Gresham obtained the signatures of the commissioners to his duplicate account, with its deceitfully appended note. The evidence is too complete to admit of a favourable construction being placed on this transaction. During 1564 Gresham had suffered a crushing misfortune in the death of his only son, Richard, a young man twenty years old, who was buried in St. Helen's Church, Bishopsgate. This bereavement seems to have disposed him to devote his wealth to schemes for the public benefit. His father had contemplated erecting a bourse or exchange for the London merchants as early as 1537, and on 31 Dec. 1562 Clough had urged him to fulfil this object. But it was not till 4 Jan. 1564-5 that Gresham offered to the court of aldermen, through his servant, Anthony Strynger, to build at his own expense a burse or exchange for the merchants of London, if the city would provide a site. The offer was thankfully accepted, a committee was appointed to consider a site, and Gresham's intention of employing `strangers' in erecting the building was approved. The situation first selected was between Cornhill and Lombard Street, the old meeting-place of the merchants, but this was afterwards rejected in favour of the site occupied by the present structure on the north side of Cornhill. The wardens of the twelve principal livery companies were summoned to meet, and the aid of the merchant adventurers and staplers was also enlisted to raise the necessary funds for the purchase of the land, the latter companies being required to contribute four hundred marks within two months. The total cost of the ground was 3,532l. 17s. 2d., towards which twenty of the principal companies contributed 1,685l. 9s. 7d., subscribed by 738 of their members between March 1565 and October 1566, in sums rising from 10s. to 13l. 6s. 8d. Notice was served in Christmas 1565 upon the occupiers of the property required, and on 9 Feb. Gresham, while at the house of Alderman Ryvers, promised in the presence of many citizens that within a month after the burse should be fully finished he would present it in equal moieties to the city and the Mercers' Company. The foundation-stone of the new burse was laid by Gresham on 7 June 1566, and the timber used in its construction came from Battisford, near his house at Ringshall in Suffolk. The great bulk of the materials required, stone, slate, wainscot, glass, &c., were obtained by Clough at Antwerp, and a Flemish architect, named Henryke, whom Gresham in 1568 recommended to Cecil to build his house at Burleigh, was engaged to design the building and superintend its erection. The statues employed for the decoration of the interior were the work of English artists, with the exception of Queen Elizabeth's,which was procured from Antwerp (ib. pp. 107-21, 500-3). By November 1567 Stow tells us the building was covered with slate, and shortly afterwards fully finished. The building was ready for the use of merchants on 22 Dec. 1568. Two contemporary engravings of the exterior and interior of the structure are reproduced by Burgon (pl. 8 and 9), and exhibit a striking likeness to the burse at Antwerp. It was built, like Gresham's own house in Bishopsgate Street, over piazzas supported by marble pillars, and forming covered walks opening into an open square inner court. On the first story there were also covered walks (known as the 'pawn'), lined by a hundred small shops, from the rents of which Gresham proposed to reimburse himself for the cost of the erection. A square tower rose beside the south entrance, containing the bell which summoned the merchants to their meetings at noon and at six o'clock in the evening. Outside the north entrance was also a lofty Corinthian column. On each of these towers and above each corner of the building was the crest of the founder, a huge grasshopper, and the statues already mentioned, including one of Gresham himself, adorned the covered walks. According to Fuller, Clough contributed to the expense of building the burse to the extent of some thousands of pounds; but his provision of the building materials from Antwerp on Gresham's behalf may have been mistaken by the writer for a personal outlay. For more than two years the shops remained, according to Stow, 'in a manner empty;' but when Elizabeth signified to Gresham her intention of visiting him, and of personally inspecting and naming his edifice, Gresham busied himself to improve its appearance for the occasion. By personal visits to the shopkeepers in the upper `pawn,' he persuaded them to take additional shops at a reduced rent, and to furnish them with attractive wares and with wax lights. On 23 Jan. 1570-1, says Stow, the queen, attended by her nobility, made her progress through the city from Somerset House to Bishopsgate Street, where she dined with, Gresham. Afterwards returning through Cornhill, Elizabeth entered the burse, and having viewed every part, especially the 'pawn,' which was richly furnished with all the finest wares of the city, 'she caused the same burse by an herralde and a trompet to be proclaimed the Royal Exchange, and so to be called from thenceforth, and not otherwise' (Survey, ed. 1598, p. 194). Contemporary notices of this event occur in the accounts of the churchwardens of various London parishes. In those of St. Margaret's, Westminster, payments are recorded to the bell-ringers 'for ringing when the Queen's Majesty went to the burse' (cf. Nichols, Illustrations, &c., 1797). The ceremony forms the subject of a Latin play (Tanner MSS., Bodleian Library, No. 207), in five acts, entitled 'Byrsa Basilica, seu Regale Excambium a Sereniss. Regina Elizabetha in Persona sua sic Insignitum, &c.' The characters are twenty in number. The first on the list, `Rialto,' is intended for Sir Thomas Gresham ; Mercury pronounces the prologue and epilogue. The piece appears to be of contemporary date, and is signed I. Rickets. Another play, written by Thomas Heywood, describes the building of the burse. It is in two parts, entitled respectively, 'If you know not me, you know nobody, or the Troubles of Queen Elizabeth,' 4to, 1606 ; and `The second part of Queen Elizabeth's Troubles. Doctor Paries treasons: The building of the Royall Exchange, and the famous victory in ann. 1588,' 4to, 1609. The play is full of fabulous stories of Gresham, including the tale of his drinking the queen's health in a cup of wine in which a costly pearl had been dissolved. Another scene, for which there is probably more foundation, describes a quarrel between Gresham and Alderman Sir Thomas Ramsay, and their reconciliation by Dean Nowell (Gent. Mag. 1826, pt. i. pp. 219-21). The exchange soon became a fashionable lounge for citizens of all classes, and the shops in the upper walk or pawn fetched high rents, and were regarded as one of the sights of London. A record exists in the Inquest Book of Cornhill ward of the `presentment' of the exchange in 1574 for the disturbance occasioned there on 'Sondaies and holy daies' by the `shoutinge and hollowinge' of young rogues, that honest citizens cannot quietly walk or hear themselves speak (Burgon, ii. 355). Gresham's exchange was destroyed in the fire of 1666. Gresham also contributed from his vast fortune to other public objects. At the close of 1574 or the beginning of 1575 he announced the intention, which he had long entertained, of founding a college in London for the gratuitous instruction of all who chose to attend the lectures. This roused the jealousy of his own university of Cambridge, and Richard Bridgewater,the public orator, wrote to Gresham on 14 March 1574-5, to remind him of a promise to present 500l. to his alma mater, either for the support of one of the old colleges, or the erection of a new one. This was followed by another letter on the 25th, with one of the same date to Lady Burghley (whose husband was chancellor of their university), asking her to use her influence with Gresham to prevent the establishment of a rival university in London. But Gresham did not change his plans. His town residence, Gresham House, was bequeathed to the college upon the death of Lady Gresham (cf. Gresham's will, dated 5 July 1575). The rents of the Royal Exchange were, with Gresham House, to be vested in the hands of the corporation of London and of the Mercers' Company, who were to appoint seven lecturers. The lecturers' salaries were fixed at 50l. per annum, and they were to lecture successively on the sciences of divinity, astronomy, geometry, music, law, medicine, and rhetoric. The professors were required to be unmarried men, and each was to be provided with a separate suite of apartments. The college did not prove very successful. Lady Gresham sought to divert its endowment after Gresham's death. In 1647 complaints of its management appeared (cf. Sir T. Gresham's Ghost, a whimsical tract). The fire of London, which destroyed the Royal Exchange, deprived it of its source of revenue; but the college escaped destruction, and there the corporation and other public bodies took temporary refuge. It was the first home of the Royal Society. In 1707 complaints of its management were renewed, and in 1767 the building, then in a ruinous condition, was sold under an act of parliament to the government for an excise office, for the small annuity of 500l. The Gresham lectures were thenceforth delivered at the Royal Exchange, till in 1841 the present Gresham College was erected at the corner of Gresham and Basinghall Streets. Gresham also built during his lifetime eight almshouses immediately behind his mansion, for the inmates of which he provided liberally in his will. In June 1569 Gresham was entrusted with the custody of Lady Mary, sister of Lady Jane Grey [see Keys, Lady Mary], who had offended the queen by an imprudent marriage, in August 1565, with Martin Keys, the serjeant-porter, and had been in the custody since that date first of Mr. Hawtrey of Chequers, Buckinghamshire, and afterwards of the Duchess of Suffolk. Gresham, the lady's third gaoler, performed his duties strictly. He even asked Cecil's permission to allow his prisoner to put on mourning on the occasion of her husband's death. The restraint thus imposed on his movements and those of his wife became very irksome, and Gresham begged the queen to relieve him of the charge. He repeatedly requested Cecil or the Earl of Leicester to bear in mind his (and his wife's) 'sewte for the removing of my Lady Marie Grey.' On 15 Sept. 1570 he pleads that his wife `would gladly ride into Norfolk to see her old mother, who was ninety years old, and very weak, not like to live long.' His appeals cease in 1573, when it may be presumed that he obtained the sought-for relief (cf. Gresham's letter to the Earl of Leicester, 29 April 1572, Notes and Queries, 4th ser. x. 71). Clough died at Hamburg in the summer of 1570, and left two wills. By the second he bequeathed to his master, Sir Thomas Gresham, all his movable goods, to discharge his conscience of certain gains which he had acquired when in his service. It is satisfactory to find that Gresham did not take advantage of this bequest, but that an earlier will was proved by which the property was left to Clough's relations. Queen Elizabeth visited Gresham in August 1573 at his house at Mayfield. About May 1575 Gresham entertained her again at his house at Osterley. For her entertainment he exhibited a play and pageant written by his friend and Antwerp comrade, Thomas Churchyard (Churchyard, The Devises of Warre, and a play at Awsterley: her Highness being at Sir Thomas Gresham's), Fuller relates a well-known anecdote in connection with this visit. The queen 'found fault with the court of the house as being too great,' affirming that it would 'be more handsome if divided with a wall in the middle.' Thereupon Gresham sent at night for workmen from London, who worked so quickly and silently during the night that 'the next morning discovered that court double, which the night had left single before' (Worthies, ii. 35). During the queen's visit four 'miscreants' were committed to the Marshalsea for burning Sir Thomas's park pale. One of Gresham's latest acts was to receive Casimir, prince palatine of the Rhine, on his visit to this country on 22 Jan. 1578-9. Stow describes his reception at the Tower by a party of noblemen and others, who conducted him, by the light of cressets and torches, to Gresham House. Gresham welcomed him with 'sounding of trumpets, drums, fifes, and other instruments,' and here he was lodged and feasted for three days. Gresham died suddenly on 21 Nov. 1579, apparently from a fit of apoplexy, as he returned from the afternoon meeting of the merchants at the exchange. He was buried on 15 Dec. in the church of St. Helen, Bishopsgate, beneath a tomb which he had prepared for himself during his lifetime. According to the directions of his will his body was followed to the grave by two hundred poor men and women clothed in black gowns. His funeral was conducted on a scale of unusual splendour, the expenses amounting to 800l. His altar-shaped tomb of alabaster, with a top slab of black marble, is in the east corner of the church. Until 1736 it bore no inscription, but the following entry in the burial register was then cut into the top of the tomb: ` Sr Thomas Gresham, Knight, buryd Decembr the 15th 1579.' A large stained-glass window close by contains his arms and those of the Company of Mercers. Gresham's character exhibits shrewdness, self-reliance, foresight, and tenacity of purpose, qualities which, coupled with great diligence and an inborn love of commerce, account for his success as a merchant and financial agent. Sir Thomas Chaloner describes him as 'a Jewell for trust, wit, and diligent endeavour' (Haynes, State Papers, 1740. p. 236). His conciliatory disposition is proved by the confidence reposed in him by ministers of state, and by his successful dealings with the Antwerp capitalists. His patriotism and benevolence are attested by his disposition of his property. As we have seen, he was not over-scrupulous in his commercial dealings. He profited by the financial embarrassments of his sovereign, and with the connivance, sometimes by the direct authority, of his own government made it his practice to corrupt the servants and break the laws of the friendly power with which he transacted his chief business. Gresham's culture and taste are displayed in the architecture of the exchange and of his private residences, and in his intimacy with the learned. Hugh Goughe dedicated to him, about 1570, his `Ofspring of the House of Ottomano,' and Richard Rowlands his translation of 'The Post for divers Parts for the World' in 1576. Gresham was author of 'Memorials' to Edward VI and Queen Mary, a manuscript journal quoted by Ward (Gresham Professors; Notes and Queries, 2nd ser. vii. 416), and his letters are numerous. He also left a manuscript containing musical lessons and songs in English and Italian (Millington, Bibliotheca Massoviana, 1687, p. 63). In person he seems to have been above the middle height, and grave and courteous in his deportment. Gresham married in 1544 Anne, the daughter of William Ferneley of West Creting, Suffolk, and widow of William Read, also of Suffolk, and a citizen and mercer of London. Read, who had died but a few months before, had been intimate with Sir Richard Gresham, whom he made overseer of his will. By his marriage Gresham became closely related, to the Bacons, his wife's younger sister Jane having married Sir Nicholas Bacon [q. v.], the lord keeper. Gresham's only son, Richard, was baptised on 6 Sept. 1544 at St. Lawrence Jewry, and died unmarried in 1564. In a letter from Antwerp, dated 18 Jan. 1553-4, Gresham mentions his 'powre wiffe and children,' but, with the exception of a natural daughter Anne, the name of no other child has been recorded. This daughter, whose mother is said to have been a native of Bruges, was well educated by Gresham, and brought up in his family, being afterwards married to Sir Nathaniel Bacon, Gresham's wife's nephew. Lady Gresham, who, according to Fuller, was not on very amicable terms with her husband, died at Osterley House on 23 Nov. 1596. She was buried with unusual pomp at St. Helen's, Bishopsgate, on 14 Dec., the heralds who attended receiving 40l. as their fee. Gresham's wills, dated 4 and 5 July 1575, were proved in the P. C. C. on 26 Nov. 1579, and are printed in Leveson-Gower's 'Genealogy of the Greshams' (pp. 80-5). He bequeathed Gresham House and the rents arising from his shops in the exchange to Lady Gresham during her life, and after her death to the corporation of London and the Mercers' Company in equal moieties for the support of his college. Besides provision for his almshouses, he also left 10l. a year to relieve poor debtors in each of the six London prisons, 100l. annually to the Mercers' Company for four quarterly feasts, and 10l. yearly to each of the four royal hospitals. Lady Gresham was left with a large annual income of 2,388l. 10s. 6½d., but she did her best to thwart her husband's intentions as to the subsequent disposition of his property. She refused to build a steeple for St. Helen's Church, which he had promised the parishioners, and twice attempted to saddle the rents of the exchange with charges for the benefit of her heirs. The following are among the extant portraits of Gresham: 1. A full-length, traditionally ascribed to Holbein, but assigned by Scharf to Girolamo da Treviso. It was painted on the occasion of Gresham's marriage, and is inscribed with his age, his own and his wife's initials, and the date. Formerly in possession of the Thruston family, since presented to Gresham College, and preserved in the court-room of the Mercers' Company (Archæologia, xxxix. 54-5). Exhibited at Royal Academy (Cat. of Old Masters, 1880, 165). 2. A three-quarter length standing figure in Mercers' Hall, engraved by Delaram and others (cf. Lodge, Portraits). 3. By Sir Antonio More, engraved by Thew in 1792, now belonging to Mr. Leveson-Gower. 4. The Houghton portrait, also painted by More, and described by Horace Walpole as `a very good portrait.' It was engraved by Michel in 1779. The original is now in the Hermitage Gallery, St. Petersburg. 5. Similar to 3. From the Bedingfield Collection, now in the National Portrait Gallery. 6. In the possession of Sir John Neeld, and engraved in Burgon's 'Life of Gresham.' He is represented standing and holding in his left hand a pomander. 7. A small head and bust portrait in Mercers' Hall. 8. A half-length at Baynards, the seat of Mr. T. Lyon Thurlow. Exhibited at the Tudor Exhibition, 1890. 9. A small cabinet portrait at Audley End belonging to Lord Braybrooke, considered by some to represent Sir John Gresham, brother of Sir Thomas. 10. The Osterley picture, belonging to the Earl of Jersey, is said by Mr. Leveson-Gower not to be a portrait of Sir Thomas Gresham. 11-12. Two other portraits, belonging to Mr. Gower, are preserved at Titsey Place. 13. A small half-length, formerly belonging to Mr. Gresham, high bailiff of Southwark. Nos. 2, 3, and 4 are engraved in Leveson-Gower's 'Genealogy of the Family of Gresham.' There are full-length figures of Gresham in the stained-glass windows at the east end of Guildhall, in the Guildhall Library, and at Mercers' Hall. Lists of the engraved portraits of Gresham are given in Evans's 'Catalogue,' Nos. 4648-54, and in Granger's 'Biographical History,' i. 298. They include prints by Vertue (in Ward's 'Gresham Professors'), Faber, Hollar (in a view of the exchange), Benoist, Stent, Overtoil, J. T. Smith. Woodward, Picart, and a large number of smaller engravings, mostly taken from the Mercers' portrait. Besides the statue by Behnes in the tower of the Royal Exchange, and another at Mercers' Hall, there is a bust of Gresham, with an inscription, in the temple of British worthies at Stowe. A bust of Gresham occupies the obverse of the medal struck by W. Wyon in 1844 on the occasion of the opening of the third Royal Exchange. Gresham's steelyard, bearing his arms, is preserved by Mr. T. Lyon Thurlow at Baynards. Dictionary of National Biography, Errata (1904), p.142 N.B.— f.e. stands for from end and l.l. for last line |
The Royal Exchange
Sir Thomas laid the foundation stone for the new building on the 7th June 1566 and it was officially opened by Queen Elizabeth I four years later. Prior to this, London's merchants met in the open air!
A statue of this famous gentleman can still be seen today at the Exchange in Cornhill in the City of London, on the same site as the original building. The famous Gresham crest bears a grasshopper.
Legend has it that Sir Thomas was a foundling whose life was saved by the chirping of a grasshopper and thus he adopted the insect for his crest. This story, however romantic, is totally untrue!
A grasshopper still sits atop the Royal Exchange to remind us of the man who was its founder. The Gresham will appeal to the discerning traveler, tourist and business person alike - any one who looks for quality and, at the same time value for money.
The careful restoration of these listed buildings has resulted in a hotel of inimitable style.
The stylish bedrooms of Gresham Hotel are decorated to the highest standards using carefully selected designer fabrics. Each floor has its own unique and individual character.
A statue of this famous gentleman can still be seen today at the Exchange in Cornhill in the City of London, on the same site as the original building. The famous Gresham crest bears a grasshopper.
Legend has it that Sir Thomas was a foundling whose life was saved by the chirping of a grasshopper and thus he adopted the insect for his crest. This story, however romantic, is totally untrue!
A grasshopper still sits atop the Royal Exchange to remind us of the man who was its founder. The Gresham will appeal to the discerning traveler, tourist and business person alike - any one who looks for quality and, at the same time value for money.
The careful restoration of these listed buildings has resulted in a hotel of inimitable style.
The stylish bedrooms of Gresham Hotel are decorated to the highest standards using carefully selected designer fabrics. Each floor has its own unique and individual character.
Gresham's Law
“Bad Money Drives Out Good”
by Charles Adams, December 2003 (Posted March 31, 2004) This is what has been called Gresham’s Law. It was formulated by Sir Thomas Gresham to explain to Queen Elizabeth I what was happening to the English shilling. Her father, Henry VIII, had been adulterating the English shilling, the basic coin of the realm, by replacing 40 percent of the silver in the coin with base metals — a clever way, so he thought, to increase the government’s income without raising taxes. It was, in short, a sneaky devaluation device; hopefully the people wouldn’t notice. Of course it was discovered and this “bad money” drove out the pure silver shillings then in circulation. Astute English merchants and even ordinary subjects would save the good shillings and circulate the bad ones; hence, as Gresham observed, the bad money (Henry’s adulterated coinage) would be used whenever possible, and the good coinage would be saved and disappear from circulation. Queen Elizabeth realized that Gresham was right and formulated a bold plan to restore the shilling with pure silver. She called in all the adulterated shillings her father had minted, melted them down, removed all the base metal, and minted pure silver shillings to replace the “bad money.” The English shilling became the most sought-after coinage in international commerce and put Britain on the road to become the superpower of the world for centuries to come. For the next 300 years it was the basis for long-term prosperity, economic stability, the expansion of trade and industry, the development of natural resources, and the founding of a colonial empire stretching over the globe — so that the sun never set on the British Empire — until, of course, the British revenue authorities in the 20th century emulated Henry VIII and ignored the wisdom of his daughter. Elizabeth’s fiscal policy did not come easy, for she had to replace the pot metal with pure silver. To carry out her plan to restore the currency, she had to borrow heavily from the City of Antwerp to finance the cost of the new shillings. She also felt it necessary to increase the number of shillings in a pound sterling, since her father had pulled off an international rip-off — reducing the number of shillings in a pound on his foreign debts. Her policy of sound money was not new; it was first brought to the attention of the world 2,000 years before by the ancient Greeks. Gresham had more than a thousand years of fiscal history to observe this phenomenon. The commerce of the ancient Greeks was based on a pure silver drachma, and they passed stringent laws protecting the coin, which the Romans took over. They too started their rise to superpower status with trade based on the pure silver drachma. But the Romans, like Henry VIII, started putting copper in the once-pure drachma, now called a denarius. It was so easy, but, again, the Roman fiscal authorities — like all fiscal authorities since the beginning of time — did not fool anybody with their debased coinage. (Today, of course, the whiz kids in the U.S. government have debased U.S. coinage and currency far beyond anything Henry VIII had done in England, and the frightening thing is that no one has said a word.) |
To give the reader some idea of what happened in Roman times, consider the cost of a bushel of wheat as the Roman fiscus started adulterating the money, bit by bit over a few centuries. In A.D. 100, when the drachma was pure, it took 3 drachmas to buy a bushel of wheat. In A.D. 200, as the coinage was adulterated with some copper, it took 10 drachmas to buy a bushel of wheat. But the adulteration kept accelerating, and by A.D. 270 it took 200 drachmas to buy a bushel of wheat; by A.D. 314 it took 10,000 of the debased drachmas to buy a bushel of wheat. But it took a few centuries for this to take place, and in the end the Roman government had to go back to gold and mint a new gold denarius.
Since then, gold has remained the basis for all sound revenue systems, and, despite arguments to the contrary, most governments today have pursued a policy of minting phony coinage or printing worthless paper. No longer do Americans have gold certificates, or even silver certificates, redeemable at the U.S. Treasury, as they once did. If history is any guide, these stacks of fiscal cards will collapse and nations will be forced to return to pure gold and silver coinage once again. The United States has been on a policy of phony money for only 70 years; it took the Romans a few hundred years for their fiscal stack of cards to collapse, so we can anticipate a long decline in value until the inevitable collapse, maybe two or even three centuries hence. When I was young, American coinage was silver, and it felt nice to handle, unlike the pot metal coinage we have today. But now, the good money — the silver dollars, 50-cent pieces, quarters, and dimes — has all disappeared as the bad money has driven out the good, as Gresham’s law predicted. Up until the early 1930s, gold was the coin of the realm. But the U.S. government, using the police power of the state, repudiated all debts and obligations based on gold and even prohibited Americans, with threatened prison sentences, from owning gold. Not even Henry the VIII was that brazen. To prove that gold was of no real value except for jewelry, 30 years ago the U.S. Treasury started selling gold in Fort Knox at about $150 an ounce. Guess who bought the gold at that price? The Swiss bankers — not so dumb as to believe the U.S. fiscal authorities that gold had no monetary use. As it turned out, the Swiss remained true to the monetary value of gold by requiring that all Swiss francs be backed by a certain percentage of gold. No runaway printing-press francs for the gnomes of Zurich. Right now, the Swiss have made a bundle on the monetary antics of the U.S. Treasury and the Federal Reserve. Well, at least Henry VIII would be proud of U.S. officials, and his wise daughter Elizabeth would be shaking her head in disbelief that anyone could be so dumb. Of course, she had a brilliant Sir Thomas Gresham to advise her; and Americans have the officials at the Fed playing fiscal games with our money, neo–Henry VIII style. Charles Adams is the author of For Good and Evil: The Impact of Taxes on the Course of Civilization. |