Virtue, Fortune, and Faith: A Genealogy of Finance

2. Mastering Lady Credit

21 2 Mastering฀Lady฀Credit With฀what฀rimes฀and฀what฀verses฀shall฀I฀sing฀of฀the฀kingdom฀of฀Fortune฀ and฀of฀her฀chances฀favorable฀and฀adverse?฀.฀.฀. She฀often฀keeps฀the฀good฀beneath฀her฀feet;฀the฀wicked฀she฀raises฀up;฀and฀ if฀ever฀she฀promises฀you฀anything,฀never฀does฀she฀keep฀her฀promise฀.฀.฀. This฀unstable฀goddess฀and฀fickle฀deity฀often฀sets฀the฀undeserving฀on฀a฀ throne฀to฀which฀the฀deserving฀never฀attains. She฀times฀events฀as฀suits฀her;฀she฀raises฀up,฀she฀puts฀us฀down฀without฀ pity,฀without฀law฀or฀right฀.฀.฀. Usury฀and฀fraud฀enjoy฀themselves฀with฀their฀crew,฀powerful฀and฀rich. niccolò฀machiavelli,฀฀฀ THE฀VIOLENT฀HISTORY฀OF฀EARLY฀MODERN฀CREDIT I have argued that the representation of financial history as a legend , in which the use of shells, the minting of coin, the invention of paper money, and the creation of credit are seen as logical subsequent steps in monetary evolution, abstracts modern financial instruments from their political, and often violent, histories. Instead, it has to be recognized that the history of modern credit practices is inextricably bound up with the violent histories of European state formation, colonial conquest, and slave trading. Susan Strange has argued that the international economy as we now understand it consists of the unique combination of “a political system based on territorial states” and an “economic system based on markets and 22฀ ฀ ·฀ ฀ mastering฀lady฀credit profit” (1999, 347; see also Germain 1999, 76–77; Langley 2002, 41–42). So defined, the invention of national debt in seventeenthcentury Britain can be regarded as monetary transformations that inaugurated modern finance. “The big breakthrough for states,” Strange argues, “came at the turn of the [seventeenth] century with the introduction of a new kind of money—state promises-to-pay. Two Scots, John Law and William Paterson, both saw that by this means money could be created with which to replenish the resources of the state by issuing pieces of paper carrying the ‘guarantee’ of the monarch” (1999, 347).1 The historical importance of the connection between state formation and modern money is expressed in one of the most enduring tropes for money, that of currency. Today’s official definition of national money supplies in terms of different liquidities, referring to the ease with which one monetary form or instrument can be interchanged with another, is based on the historical imagination of money and credit as the blood฀of the national economy. One of the earliest articulations can be found in Thomas Hobbes’s Leviathan, who made it clear that the blood flowing through his envisioned “Body Politic” was money. “Money [is] the blood of a commonwealth,” Hobbes wrote, money “passeth from man to man, within the commonwealth; and goes round about, nourishing, as it passeth, every part thereof; in so much as this concoction, is as it were the sanguification of the commonwealth: for natural blood is in like manner made of the fruits of the earth; and circulating, nourisheth by the way every member of the body of man” (1962 [1651], 188–89; see Foucault 1994, 179). According to Hobbes, this nutritive and vital role of gold and silver originated from their intrinsic value (“their value from the matter itself”), rather from value produced in exchange (189). Still, Hobbes offered a powerful and enduring trope by arguing that money passing through the heart of the body politic, “the public coffers,” enabled the survival of the state (189). “And in this also, the artificial man [the commonwealth ] maintains his resemblance with the natural,” Hobbes concludes , “whose veins receiving the blood from the several parts of the body, carry it to the heart; where being made vital, the heart by the arteries sends it out again, to enliven, and enable for motion all the members of the same” (1962, 189–90). In conjunction with Hobbes’s articulation of the sovereign state through the body politic mastering฀lady฀credit฀ ฀ ·฀ ฀ 23 discourse (Campbell 1992, 61–68), then, we find here one of the first imaginations of a national฀financial฀system. What was new about the credit money that emerged in Western Europe from the sixteenth century onward, Ingham argues, was that it was a form of “depersonalised debt,” that departed from commodity money and “laid bare the essential property of money in general as constituted by social฀relations” (2001, 305, emphasis in original; see also Ingham 1999). When in the early seventeenth century the Dutch East India Company (the...