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Forbes
6 days ago
- Business
- Forbes
Banking Panics In The Past—That Was The Government
Cortelyou shuffled that paper in a not-so-efficient way (Photo by Heritage Art/Heritage Images via ... More Getty Images) We need the Federal Reserve because before we had it, the private banking system had panics all the time. Goodness gracious to we hear this justification for the Fed without surcease. We go over this theme in our new book, Free Money: Bitcoin and the American Monetary Tradition, because the government will not let us not do it. Federal websites to this very day—I'll spare you the URL's; they are in the book—say things like federal banking regulation pre and post the Fed strengthened and stabilized the American banking system, and by virtue of that, the economy. In Free Money, we tested the proposition. We found it wanting in every case. Here's a paradigmatic one, to reinforce a column I wrote on this topic several months ago. There was a big bad banking panic in 1907. It was the one that resulted in the Fed. Everybody went so berserk over this panic that out came the Fed in 1913, and we have had this banking supervisor-in-chief ever since. What was this panic and what caused it? In the fall of 1907, banks throughout the country depleted their reserves as brokers cashed on their accounts to ship the farm harvest—an annual ritual that had been going on for eons—and by October, banks were starting to not pay up to depositors and trim their hours and shut their doors and have managers throw themselves out the window. J.P. Morgan lent some people some money at a profit and the whole thing passed. What caused the panic of 1907? Why capitalism, of course. Right. Wow has our historical consciousness been misled on this one. In Free Money, we followed the crack analysis of inestimable monetary scholar Richard Timberlake (perhaps Milton Friedman's greatest student) in his remarkable book of decades ago, Monetary Policy In the United States: An Intellectual and Institutional History. Timberlake notes that at that time, the major banks in the United States were 'national banks,' so designated by the Federal government, and had to carry a high minimum of federal bonds in their reserves. Problem: the United States was generally running budget surpluses and otherwise shrinking the supply of federal debt instruments outstanding relative to the size of the economy, and therefore the natural size of the banking system. The United States had started the 'national bank' system in the civil war, because the union was issuing debt like crazy, nobody wanted to buy it, and the banks looked like a nice captive customer. Whatever the merits before 1865, by 1907 it was ludicrous for an economy as surpassingly successful as that of the time to have a banking system that had to have a large reserve in federal bonds. There were not enough of them. Wise to this obviousness, Treasury secretary Leslie Shaw kept loosening the rules, shrewdly permitting national banks to have other useful media in addition to federal governments as their base reserves. The man knew what he was doing! No panics through 1906. Then in a cloud of unclarity, Shaw was forced out in favor of gold-ole-boy George Cortelyou, a Knickerbocker buddy of the president TR's. This Mr. Amsterdam was no Leslie Shaw, a humble if canny Iowan. There were extra demands on the banking system because of insurance company losses against the San Francisco earthquake, and Cortelyou reinforced the requirement to base reserves in federal bonds. The harvest came, banks ran short, directors vaulted over the sills, and Morgan cleaned up. Timberlake: 'Some imagination on [Cortelyou's] part might have adjusted the timing and operation of [Treasury's] ordinary housekeeping operation so that it would have complemented rather than conflicted with seasonal monetary policies.' Timberlake found that to Cortelyou, having the controlling hand in whether a general financial crisis develops was not to his taste. He thought the Treasury secretary should be more narrowly focused. Great—then he should have scrapped the relic national bank system that Congress put in place during the war to make a fake market for its bonds. We got the Fed because of this comedy of errors. The whole problem was caused by the government. Design flaw #1: The national bank system requiring reserves in federal bonds was a leftover from the exigencies of 1862. There was no longer any need to encourage ownership of federal bonds because, um, the civil war had been over for two score years and some. Design flaw #2: the country had become ridiculously expert at producing wealth instruments of its own accord over the massive post-1865 industrial revolution, meaning that base reserve assets should have been diversified (as Shaw saw) as a nod to this reality. Design flaw #3: randos at the top of the Treasury (e.g., George Cortelyou) could ruin the whole thing if possessed of a bad idea. What really stopped the panic, more than Morgan's intervention, was the issue on the part of private clearinghouse banks of scrip payable to other members of the banking associations. Banks could use this scrip to settrle their debts, and then could accept that scrip in good cash after the crisis lifted. This scrip was illegal by the national banking acts of the civil war era and should have been banned or taxed at 10 percent or both, by statute. Congress looked the other way. The government caused the crisis, and the private sector solved it—and we got the Fed! How did the Fed do managing incipient crises? We got the worst ever—the Great Depression while the Fed was only a teenager, among other bad embarrassments. So we have the Fed, fine. The shame about it is that its extsitence and just-so history makes us get our heritage wrong. The private banking system performed beautifully back before the Fed. We continue to need the Fed to 'stabilize' our monetary system like we need a hole in the head.
Yahoo
27-05-2025
- General
- Yahoo
What Saint Augustine Can Teach us About Pope Leo XIV
Scenes from the Life of Saint Augustine of Hippo, circa 1490. Credit - Heritage Art—Standing in front of the cascade of crimson curtains on the balcony of Saint Peter's on the evening of May 8, with an emotional crowd undulating below him, the new pope, Leo XIV, gave his first address 'Urbi et Orbi,' to Rome and the world, proclaiming 'I am a son of Saint Augustine.' Pope Leo XIV is an Augustinian friar. What does that mean? The Augustinian order was founded in Italy in the 1200s. But it took its inspiration from the great 5th century African saint, Augustine of Hippo. When he was ordained in 391 CE, Augustine established a monastic community in Hippo (modern Annaba, Algeria), and he lived there until his death in 430 CE. Christianity had only recently become the official religion of the Roman empire, of which North Africa was part, and organized monastic life was at its beginnings. Augustine took care to lay out the fundamental principles for his community, and this became known as the Augustinian Rule. He even wrote a version of this document for his sister, who was the head of a community of nuns nearby. The life of the Augustinian order is grounded in this document, known as "The Rule of Saint Augustine." The Rule is often considered to be a very humane document. It is deeply attuned to the challenges of living in community and all the minor irritations and human difficulties that arise when many people occupy a single space and see each other all the time. The document provides simple, practical directions for maintaining health. But the Rule also reflects personal attention to individual people and their circumstances. Augustine was particularly concerned about the effects of anger in a community, and the need to ask forgiveness. His passionate commitment to Christianity led to a compassionate attention to his fellow human beings, as well as a fearless urge to correct wrongdoing. He tried to see them all as creatures of God and part of a global community of Christian believers—even in the face of different regional interpretations of what Christianity might mean. Augustine was born in North Africa, and he spent most of his life there. He taught rhetoric at Carthage (just north of modern Tunis) and even spent a short spell in Italy as official orator at the emperor's court in Milan. There he converted to Christianity, and, tired of feeling like an outsider in Italy, he returned to North Africa to found a monastery. Pope Leo Makes Plea for Unity and World Peace During Inauguration Mass But the local bishops spotted his talents and he was soon appointed bishop of Hippo, where he turned his rhetorical skills to preaching Christian doctrine and eviscerating heresy. Augustine had returned to Africa with a son name Adeodatus, born to his African companion, and planned that the son would join him in his new life. However, the Adeodatus died soon after his return, in about 389, and the pain of that loss haunted Augustine for the rest of his life. These life experiences gave him compassion and empathy for others. His letters, of which some 300 survive, show this again and again. He wrote to the poor and disregarded. When a deacon of the church died in Carthage, his bereft sister, a young woman called Sapida, sent his tunic to Augustine and wrote to him that it would be a consolation to her if he would wear it. Did Augustine know Sapida? Probably not. But he composed a kind response, telling her that he was wearing her brother's tunic even as he was writing to her. He imagined the way her familiar domestic habits were shattered, now her brother was gone. Her tears, he knew, would sometimes surge up against her will 'like the heart's blood.' Augustine paid personal attention in lesser matters too. He wrote patiently to reassure a minor official in a border town near the Sahara, who was worried about accidentally eating the food that had been offered as a sacrifice to the pagan gods. (After all, said Augustine, we still breathe the air which carries the smoke of sacrifices.) He wrote to explain the finer points of Christian doctrine to the confused or the resistant. He wrote confidingly to friends, asking for their help in difficult situations. He was indeed, as the new pope quoted, a Christian alongside these people, even as he was a bishop for them. But Augustine was also not afraid to write to the powerful when he thought they needed correction. When a close colleague of his was framed, imprisoned, and then summarily executed at Carthage, he wrote a furious letter to the Roman official he blamed for the situation. Augustine only had the power of his bishopric to protect him. It may have been more prudent to stay quiet in the face of flagrant injustice; but he could not. Pope Leo's Style of American Leadership Is a Hopeful Opportunity North Africa was part of the Roman Empire during Augustine's lifetime, but it was also a place with its own distinct traditions and history. That meant that he could look at Rome and Roman power as both an insider and an outsider. He had spent time at the court of the Roman emperor, but he was also at home among the people who worked in the olive groves and wheat fields in the African countryside. His famous work, The City of God, was written after Rome was sacked by the Goths in 410 CE. The aristocrats of Rome, many of whom fled to Africa, were shocked and angry; their sense of Roman exceptionalism had been shaken. In response, Augustine boldly retold Roman history as just a small and fallible part of God's overall plan for the world. Rome, which had been the center of empire for centuries, was not an 'eternal city' after all. What was important was the people, not the houses and the palaces. And the people remained as a living community. In fact, Augustine developed the idea of the 'city of God' as a global network of wandering people. They would only come to their real home with God, after death. Augustine's attention to wanderers and migrants was formed in part by his own sense of displacement when he had been in Italy as well as his experiences in Africa. He ministered to a wide range of people in the port city of Hippo: great Roman landholders but also the African people who worked on their estates; traders coming and going from all parts of the Mediterranean; and the workers who loaded and unloaded their ships. He lived to see the borders of the Roman empire crumbling, and he saw that a world in which one region claims to be superior to another was neither inevitable nor unchanging. These are some of the views that Pope Leo XIV has inherited: to see the world as endlessly changing and endlessly contingent on God's plan. No nation or region will remain dominant forever; the historical past deeply informs the present, but the story can be retold and, hence, reshaped. We have yet to see the directions in which Pope Leo XIV will lead the Catholic Church today. But as an Augustinian, he carries within him these two great legacies of Saint Augustine of Hippo: the care for individuals, even those whom others think are insignificant, and for how they come together in community; and the ability that Augustine gained from his African home to see the powerful of the world from the point of view both of an insider and—most importantly—an outsider. It matters that the new pope, Leo XIV, is a son of Saint Augustine. Catherine Conybeare is a Leslie Clark Professor in the Humanities at Bryn Mawr College, a philologist and an authority on Augustine of Hippo. Made by History takes readers beyond the headlines with articles written and edited by professional historians. Learn more about Made by History at TIME here. Opinions expressed do not necessarily reflect the views of TIME editors. Write to Made by History at madebyhistory@
New Statesman
22-05-2025
- Politics
- New Statesman
Subscriber of the week: Ilse Pospischil
Photo by Heritage Art/Heritage Images via Getty Images What do you do? Retired. Where do you live? Havant. Do you vote? No. Yonks. What made you start? A family member recommended it. Is the NS bug in the family? Yes, everyone reads it. What pages do you flick to first? I quickly flip though the lot and then go back to the beginning. Subscribe to The New Statesman today from only £8.99 per month Subscribe How do you read yours? I read all the articles I'm most interested in and skip the others. What would you like to see more of in the NS? International news. Who are your favourite NS writers? Megan Gibson. Who would you put on the cover of the NS? Jürgen Klopp. With which political figure would you least like to be stuck in a lift? Starmer. What's he done for us pensioners? All-time favourite NS article? No one article comes to mind but every week I do enjoy the Books section. The New Statesman is… very interesting and entertaining. [See also: Gertrude Stein's quest for fame] Related This article appears in the 21 May 2025 issue of the New Statesman, Britain's Child Poverty Epidemic
Forbes
31-03-2025
- General
- Forbes
Inheritance And Consanguinity: Who Really Gets Your Estate?
The farthest branches of your family tree may become relevant if you die intestate. Pictured here, ... More the family tree of Hedvig Eleonora, Queen of Sweden, 1704. Creator: Eric Utterhielm. (Photo by Heritage Art/Heritage Images via Getty Images) Few things can complicate the otherwise straightforward matter of death quite like family and the possibility of inheritance. More specifically, few things can turn a well-intentioned estate plan into an unexpected legal circus quite like consanguinity—the fancy legal term for blood relations. For most people, the idea of passing on their worldly goods to family seems intuitive. But estate planning attorneys know better. Blood, as it turns out, is not always thicker than a well-drafted trust. Consanguinity is both the backbone of estate law and, quite often, its Achilles' heel. In estate law, consanguinity determines who gets what, who is left weeping in the wings, and who must accept their fate with a forced smile at the reading of the will (which, incidentally, is not a real thing and only happens in movies). Most inheritance laws are rooted in a ladder of blood relationships, ranking heirs from the closest (children, parents) to the most distant (third cousins you didn't know existed until they showed up with a lawyer). The general rule of thumb is: the closer the blood tie, the stronger the inheritance claim. But just because a person has a high rank on the consanguinity chart doesn't mean they are automatically favored. After all, there's a reason estate planning attorneys exist—they help people bypass that chart entirely when necessary. Historically, inheritance laws have prioritized keeping wealth within the family. This worked well in eras when property and titles were the primary markers of wealth, and a well-placed marriage could consolidate power (hello, European aristocracy). However, in modern times, familial closeness is measured less by genetic markers and more by holiday dinner invitations. Just because someone shares your DNA does not mean they share your values—or your competence in managing wealth. Countless horror stories exist of squandered inheritances, bitter legal battles, and feuds that last generations over a single ceramic rooster that Grandma apparently promised to multiple grandchildren. Estate planning allows people to make rational decisions about their assets, free from the iron grip of bloodline expectations. Of course, rationality is often in short supply when discussing money and mortality. For those who wish to exclude a family member from their estate plan, there are both delicate and dramatic ways to do so. The most common method is simply drafting a will that allocates assets elsewhere. However, some people opt for the more entertaining approach: leaving a relative a pittance—say, $10—just to prove they were not 'forgotten.' But beware: in some states, even this token amount may grant the recipient certain rights as a beneficiary, potentially entitling them to more information than you intended, rather than cutting them off entirely. Another tactic is the use of trusts, which can provide for certain relatives while ensuring that they do not, in a fit of financial irresponsibility, purchase a pet tiger or invest in a doomed cryptocurrency scheme. Trusts allow for a degree of control from beyond the grave, ensuring that wealth does not evaporate within a single generation. For those who fear posthumous backlash, the 'no-contest clause' can be a strategic addition to an estate plan. This provision ensures that any beneficiary who challenges the will risks losing whatever inheritance they might have received. It's a polite way of saying, 'Take what I left you and be grateful, or walk away with nothing.' Dying without a will (or 'intestate,' as lawyers like to call it) means that the laws of consanguinity take over. In many jurisdictions, this means your assets will trickle down a predefined family tree, starting with children and spouses, then moving outward like a particularly unexciting family reunion. If no close relatives exist, state law may dig up increasingly distant kin, and in extreme cases, your estate may even escheat to the state (which is a lawyerly way of saying the government gets it). If you've ever wanted to see long-lost cousins emerge from the woodwork, failing to draft a will is an excellent way to accomplish that. Even more amusing is the phenomenon of previously indifferent relatives suddenly remembering their deep and abiding affection for the deceased once an estate is at stake. While consanguinity still plays a dominant role in inheritance law, modern estate planning offers a plethora of ways to override default family-based distribution. At its core, estate planning—the process of determining who receives an inheritance from your estate—is about balancing personal wishes with legal realities. Consanguinity is a helpful legal framework, but it should never be mistaken for a moral obligation. For those looking to ensure their estate is distributed according to their actual wishes rather than an outdated family tree, the best move is to consult a competent estate planning attorney (preferably one with a sense of humor about the whole thing). After all, while you may not be around to witness the aftermath, you can at least have the satisfaction of knowing that your estate plan was airtight, your legacy secure, and your least favorite relative appropriately baffled by your final decisions. In the end, estate planning is an art—one that blends legal strategy with personal history, practical considerations with emotional realities. Whether you choose to distribute your wealth among family, friends, charities, or a particularly pampered pet, the key is ensuring that your wishes are honored, your assets are protected, and your departure—while inevitable—does not create chaos in its wake.
Atlantic
17-02-2025
- Entertainment
- Atlantic
Domestic
Illustration by The Atlantic. Sources: Heritage Art / Getty; channarongsds / Getty February 17, 2025, 12 PM ET This poem is from Rachel Richardson's new book, Smother . When you buy a book using a link on this page, we receive a commission. Thank you for supporting The Atlantic.
