Living Dangerously: On the Margins in Medieval and Early Modern Europe

6. The Wind Traders: Speculators and Frauds in Northern Europe, 1650-1720

Chapter 6 The Wind Traders Speculators and Frauds in Northern Europe, – MARY LINDEMANN It is curious how often margins and centers intersect, a physical impossibility that is readily apparent in the economic world of the late seventeenth and early eighteenth centuries. Any study of this period of economic history remains unsatisfactory unless it considers the celestial orb of high finance and the crepuscular realm of fishy deals and shady traders. Although the extent to which the two coincided may seem surprising, the overlap characterized the fluid economies of the time, as the career of the Scottish monetary reformer John Law amply demonstrates. Honest brokers and disreputable ones worked cheek by jowl, frequently employed identical economic practices , and often collaborated. In this milieu, speculation could seem very much like fraud, and credit often rested on questionable grounds. Yet both credit and speculation greased the flying wheels of commerce. Those who lived dangerously by speculating or by dealing fast and loose in the burgeoning money markets of pacemaker economies like Amsterdam, Antwerp, and Hamburg, ran the risk of bankruptcy. But not only frauds and speculators went bust; so,too,did reputable firms and prudent businessmen. Moreover , if contemporaries jumped to criticize the dubious economic practices that paved the road to ruin, they just as quickly saw in them threats to the republican heritage these polities shared. While this republicanism remained  ill defined (it was certainly not a coherent or well-articulated political philosophy ), it proved a useful rhetorical device for defining a particular place in the world. By it the good burghers of Amsterdam, Antwerp, and Hamburg meant something more than a vague concept of res publica (in the broad sense of “commonwealth,”“public affairs,”or“public property”). Such republicanism, as Jonathan Israel has persuasively argued, was “plainly not the ideology of a rural elite, aspiring to dominate a national parliament, but rather of city burghers whose interests were commercial and non-agrarian.” It only superficially resembled the “Atlantic” (or rather Anglo-Saxon) republicanism that J.G.A. Pocock and others have described and“which is far and way the leading and presiding tradition in post-Renaissance western republicanism as a whole.”1 Rather, in all these cities, dominated as they were by merchants and bankers (who were,however,not merely economic animals,as Simon Schama reminds us2 ), political and economic virtues tightly entwined, and attacks on suspicious economic actions deployed the same language of disapproval, treachery, and dishonesty that political discourse reserved for traitors and venal officials. But contemporaries only rarely and incompletely separated political virtues and economic ones, and economic practices always bore political implications. The history of speculation and fraud for Amsterdam, Antwerp, and Hamburg has yet to be written. Although early modernists have been fascinated by the great Tulip Craze of –, beguiled by the career of John Law, and intrigued by the economic maelstrom of the Mississippi Scheme and the South Sea Bubble,3 they have virtually ignored the equally important topic of speculation and fraud as part of a political discourse and a civic sensibility that characterized late seventeenth- and early eighteenthcentury urban republics. Scholars have acknowledged corruption in more general terms as a central attribute of political discourses and cultures in these centuries and have addressed the unholy trinity of corruption, luxury, and faction/party in tracing the development of an Anglo-Saxon republican moment. While fraud falls easily within the category of corruption, speculation and speculators are more difficult to site, especially in merchantrepublics like Amsterdam, Antwerp, and Hamburg, because they nestled so uncomfortably near to established business practices, such as the use of bills of exchange. In commenting on the early forms of speculation in Amsterdam , Schama quite perceptively observes that“moralizing aside . . . it was in fact only a more extreme form of the practices which arose naturally in an  Mary Lindemann economy where delivery times were bound to be uncertain and prolonged.”4 Speculators could be frauds, yet the lure of speculation was hard to deny, offering as it did such lovely possibilities of conjuring with pieces of paper. The threads of speculation and even fraud could be difficult to unsnarl because the mercantile ethos, and even the commercial law, of the seventeenth and early eighteenth centuries had not yet decided where legitimate business practice let off and fraud began. Speculation huddled, often hard to discern, in the penumbra cast by the juggernaut of economic change. Fraud and...