Gresham's Law

John Guy

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Thomas Gresham’s place in history is assured by the quotability of Gresham’s Law: “bad money drives out good money”. Except there’s no record of him saying it, he wouldn’t have put it like that and the idea is as old as Aristophanes anyway. There’s no place for woolliness or sloppy thinking in John Guy’s precise, meticulous biography.

Gresham was part of that illustrious group of Elizabeth I’s advisers (Walsingham, Cecil and Dee, to name three more) whose names live on to this day. The son of a wealthy textile merchant and banker, Gresham didn’t work his way up from poverty to the royal court, but Guy leaves his readers in no doubt that he had the intelligence, ambition and ferocious work ethic to have done so. He applied his understanding of international trade and incredible facility for numbers to the task of securing overseas credit for the crown, at the best interest rates, and devising ways to lower England’s considerable debt, a Sisyphean task he carried out for three of the five Tudor monarchs. By his own estimation, he travelled back and forth to Antwerp (then the trading and banking hub of Europe) 120 times, and had to come up with solutions to such problems as the consequences of debased coinage and how to discreetly borrow £200,000 (£200m in today’s money) to arm England for a potential war with France.

Guy has had access to many previously unseen Gresham-related documents, and through the mists of time a picture of the man does emerge. For a financial wizard, his own business records were uncommonly muddled, and there is plenty of evidence to suggest he could be quite tiresome. Knighted in 1599, “he saw himself more grandly as combining the roles of career diplomat and special economic adviser to the queen”. In practice, however, he frequently overestimated his importance and overstepped boundaries, daring to advise Elizabeth about marriage and, on occasion, flying into quite extraordinary strops with her.

Distancing himself from the religious divisions that brought so many to an untimely end, he was devious and crafty, a man who “tended only to befriend those who could profit him sooner or later” and made many promises which were either never honoured or came with a sting in the tail. Gresham wasn’t above tricking his own illegitimate daughter with the wedding present of some nicely profitable land which turned out to be nothing of the kind.

Nevertheless, his chequered legacy includes the Royal Exchange, modelled on his beloved Bourse in Antwerp, and Gresham College. More significantly, when Antwerp collapsed and Hamburg failed to live up to expectations, Gresham targeted the City of London as a source of government borrowing, making him the “harbinger of a world to come; one in which national sovereignty is answerable to the machinations of the market”.

The subject matter is often dry, entailing detailed discussion of interest and exchange rates, but Guy presents it with clarity and authority, and seeing how Gresham trained his ingenuity and cunning on every problem is really something to behold.