If you haven’t read Richard Cantillon’s An Essay on Economic Theory, I highly recommend it. It’s really remarkable for its insights, especially considering when it was written. I have about twenty bookmarks, each of which probably merit their own post, but it was this one little aside on metal ratios that truly blew me away:
It is true that the coinage in England might equally have been adjusted to the market price and ratio by diminishing the nominal value of gold coins. This was the policy adopted by Sir Isaac Newton in his report, and by the Parliament in response to this report. But, as I shall explain, it was the least natural and the most disadvantageous policy…. Newton told me in answer to this objection that according to the fundamental laws of the Kingdom, silver was the true and only monetary standard, and that as such, it could not be altered.
Can you imagine being a party to that conversation? Listening to one of Man’s greatest economic minds in history criticizing the currency policy of what may have been Man’s greatest mind in history would have been an unparalleled privilege. Even if it was only an exchange of letters, it is still amazing to be offered this glimpse into such a fascinating interaction, however brief it may have been.
It also shows how government interventions were having materially deleterious effects on the economy long before Keynes and Marx produced their fallacious justifications for deeper and more pernicious interventions.
And now the punchline. I was reading this in between sets at the gym, and, being understandably overcome by the excitement of the passage, told the story to a junior Swiss diplomat who often works out at the same time I do. He’s a sharp, well-educated guy in impressive condition. He nodded appreciatively, (or so I thought), then said: “so do you know these guys?”
I am 95 percent sure that he thought the conversation took place at Davos….