E UROPEAN PAPER MONEY APPARENTLY ORIGINATED IN in the Middle Ages , when travelers, afraid of being robbed on the high-way, deposited their coins with goldsmiths, who issued a paper receipt. This was then accepted instead of real money by various establishments for food and lodgings, rather as credit cards became common in recent years. Apart from the discredited “continental,” paper money was practically unknown in the United States until the Civil War, when Abraham Lincoln ran out of real money with which to pay his troops. He sent some of his advisers to ask Salmon P. Chase, secretary of the treasury, about printing paper money, a suggestion that was rejected by the secretary as unconstitutional. Lincoln wrote back to Chase: “If you take care of the money in the Treasury, I will take care of the Constitution.” And so the “greenback” was born.
Lincoln gave credit to Colonel Edmond Dick Taylor for suggesting the new kind of money, at least according to a letter that appeared in the New York Tribune on December 6, 1891 after the colonel’s death. Lincoln’s solution seems a bit close to “voodoo economics as is being practiced today, and the letter may be worth quoting for other recent parallels involving a president and a colonel, and the way they bypassed the responsible cabinet secretary.. This is what Lincoln is supposed to have. written:
My dear Colonel Dick—I have long determined to make
public the origin of the greenback, and tell the world that
it is of Dick Taylor’s creation. You had always been
friendly to me, and when troubled times fell on us, arid my
shoulders, though broad and willing, were weak, and
myself surrounded by such circumstances and such people that I
knew not whom to trust. Then said I in my extremity, I will
send for Colonel Taylor; he will know what to do. I think it
was in January, 1862, on or about the 16th, that I did so. You
came and I said to you, “What can we do? Said you, “Why,
issue Treasury notes bearing no interest, printed on the best
banking paper. Issue enough to pay off the army expenses
and declare it legal tender.”
Chase thought it a hazardous thing, but we finally accomp-
lished it, and gave to the people of this republic the greatest
blessing they ever had—their own paper to pay their own debts
It is due to you, the father of the present greenback, that the
people should know it, and I take great pleasure in making it
known. How many times have I laughed at you telling me
plainly that I was too lazy to be anything but a lawyer!
The Roman emperor Vespasian is still famous for his saying that money does not smell. Oil billionaire J. Paul Getty, who built the imitation of a Roman emperor’s villa in Malibu, California, was of a different opinion. He said: “Money is like manure . You have to spread it around or it smells.”
I have not found the origin of the phrase stinking rich. But my favorite com-ment about money is Myron Cohen’s quote about a model’s remark to garment maker Al Rosenstein of Roseweb Frocks: “The nicest thing about money is that it never clashes with anything I wear.
Sándor Ferenczi, the Hungarian disciple of Sigmund Freud, once wrote. an article with the title “On the Ontogenesis of the Interest in Money.” Anticipating some of the attitudes of the 1960s, the doctor compared coins with body wastes: “It is nothing but odorless dehydrated filth that has been made to shine.”
EVERY BUSINESS NEEDS ONE
One of Andrew Carnegie’s boyhood playmates was Henry Phipps, who spent the rest of his life working for Carnegie. They were utterly unlike. Phipps had also come of a wretchedly poor background, but he had none of the dash and sparkle of Carnegie. He was the plodder, the bookkeeper, the economizer, the man who had an eye for microscopic details. His abilities consisted mainly in smoothing the ruffled feelings of creditors, in cutting out unnecessary expenditures, and in shaving prices. Carnegie used him to keep the bankers complaisant.
“What we most admired about young Phipps,” a Pittsburgh banker once remarked, “is the way in which he could keep a check in the air for three or four days.”
A wholesale forger of bank notes, whose operations in the middle of the eighteenth century caused nothing less than consternation in the Bank of England, was the notorious Charles Price, commonly called “Old Patch.”
His skill as an engraver was equalled only by his cleverness in putting paper into circulation. As regards manufacture he did everything himself—made his own paper with the proper watermark, engraved his own plates, and manufactured his own ink. His plans for disposing of the forged notes were laid with great astuteness, and he took extraordinary precautions to avoid discovery: he had three homes, with a different name and a different wife at each. He was so expert in disguises that none of his agents or instruments ever saw him in his own person, that of a compact, middle-aged, not-bad-looking man, inclined to stoutness, but erect and active in figure, with a beaky nose, clear gray eyes, and a nutcracker chin. Sometimes he went about with his mouth covered up in red flannel and his gouty legs swathed in bandages. At another, he was an infirm old man wearing a long black camlet cloak with a broad cape fastening close to his chin. He victimized numbers of tradesmen, passing, under various disguises, bank notes of large value for which he would take the change. The lottery offices suffered greatly at his hands. He bought up tickets in large quantities with his forged notes, always requiring change.
When Price’s depredations were at their height, it was supposed that they were the work of a gang, but he really worked single-handedly. His disguise as “Old Patch” was known, and he was frequently advertised as such, without result. For a long time the Bow Street officers were hopelessly ineffectual, and in the end Price was caught only by accident.
One of his many endorsements of a forged note was traced to a pawnbroker, who remembered to have gotten it from one Powel. “Powel” imprudently returned to the pawnbroker’s, was arrested, and was found to be no other than Charles Price. Price was known to the authorities for he had been in trouble before, chiefly for defrauding the famous actor and dramatist Samuel Foote, in a brewery partnership, for which he had been sent to Newgate Prison. Price, immediately after his arrest, smuggled a hasty note to one of his wives with the brief words, “Destroy everything,” which she did, burning his disguises, smashing up the engraving tools, and destroying the copper plates. Still, the case seemed strong against Price: he could not deny his identity, and feeling that all was over, he hanged himself in his cell.
Clint Murchison, one of the Texan oil magnates, said that he calculated a man’s real worth about twice what he owned.
ASK ME ANOTHER
“How can I ever repay your troubles?” asked a client of Clarence Darrow, after he won her case.
“Madam,” replied the attorney, “ever since the ancient Phoenicians invented money, there has been an easy answer to that question.
THE IMPORTANCE OF BEING SEEN
Around the turn of the century a speculator by the name of Charles Flint got into financial difficulties. He had a slight acquaintance with J. P. Morgan, Sr., and decided to touch him for a loan. Morgan asked him to come for a stroll around the Battery in lower Manhattan. The two men discussed the weather in some detail, and other pressing matters, when finally, after about an hour or so, the exasperated Flint burst out: “But Mr. Morgan, how about the million dollars I need to borrow?”
Morgan held out his hand to say goodbye: “Oh, I don’t think you’ll have any trouble getting it now that we have been seen together.”
Arsène Houssaye, director of the Comédie Française in the middle of the nineteenth century, told this story about Baron Rothschild being approached for a loan by one of his acquaintances. The man needed 2,000 francs until the end of the month.
“Here it is,” said the baron, ‘ “but remember: as a rule I only lend to crowned heads.” M. de Rothschild never dreamed of seeing his money again, but at the end of the month, the borrower returned with the whole sum. The baron could scarcely believe his eyes, but he also sensed that this would not be the end of their relationship . Sure enough, a month later, the acquaintance reappeared, asking this time for a loan of 4,000 francs.
“No, no, my friend,” the baron declined ingeniously, “you have disappointed me once already when you repaid me that last sum. I do not wish to be disappointed again.”
A moneylender complained to Baron Rothschild that he had lent 10,000 francs to a man who had gone off to Constantinople without a written acknowledgment of his debt.
“Write to him and demand back 50,000 francs,” advised the baron. “But he only owes me 10,000,” said the moneylender.
“Exactly, and he will write and tell you so in a hurry. And that’s how you will have acknowledgment of his debt.”
AND ANOTHER STORY TO DRINK TO IS ABOUT THE PAINTER ----- JAMES MCNEIL WHISTLER, who treated his creditors with the utmost gen-iality . One of them was at Whistler’s home to discuss a long-outstanding bill when the artist offered him a glass of champagne.
“How could you afford champagne,” asked the outraged tradesman, “when you cannot even pay my bill?”
“My dear man, let me assure you,” said the painter with champagne in hand, 1 haven’t paid for this either.”
THE GREATEST INVENTION
Sam Bronfman was once asked what he considered the most significant invention the human mind.
“Interest,” replied the founder of the House of Seagram without a moment’s hesitation.
Insight runs in the family. Edgar Bronfman, who now controls the largest liquor company in the world, once remarked: “To turn $100 into $110 is work . But to turn $100 million into $110 million is inevitable.”
Few things affect so many of us as the cost of money: the interest charged when we borrow, or paid to us when we lend. Here are some highlights in the brief history of interest rates, culled from various antiquarian sources:
In the thirteenth century the Lomhards (in Italy) frequently demanded 20 percent for the use of money . About 1200 the countess of Flanders was obliged to borrow money in order to pay her husband’s ransom. She procured the necessary sum from Italian and Jewish merchants. The lowest interest she paid was 20 percent, and some lenders exacted 30. In the beginning of the fourteenth century, Philip IV fixed the legal rate to be used at the fairs of Champagne at 20 percent: James I of Spain lowered it to 18. As late as the year 1400 it appears that the interest rate in Placentia was at the rate of 40 percent. This is the more extraordinary because at that time the commerce of Italian states was considerable.
THE FIRST PAWNSHOP
As Venice became the world center for trade and banking during the thirteenth century, the cities of the Lombard League began to deposit their money with Venetian bankers. They also got some interesting collaterals deposited, such as the Crown of Thorns, reputed to have been worn by Christ on the cross (it was estimated to be worth about $35,000 in a 1933 book), while the last Latin emperor of Constantinople pawned his son.
Thirty years before Columbus sailed for the New World, a Franciscan friar of Peru-gia by the name of Bernardino de Feltre won exemption for a charitable institution that allowed a needy person to borrow money by leaving a valuable object as collat-eral. In redeeming the article, an additional 15 percent was tacked on toward the expense of running the service. This public pawnshop became a venerable instit-ution that continues to flourish half a millennium later, under the name of Banco di Credito e Pegno (Bank of Credit and Pledge). It is thought to be the oldest contin-uous banking service still in operation.
HOW TO PLEASE A CUSTOMER
Child’s Bank was one of London’s oldest and most distinguished financial houses, going back to the seventeenth century, until it was absorbed about sixty years ago. It made money for itself in a way that has become time-honored: during most of its existence, Child’s never paid any interest for money on deposit. According to a story, a wealthy customer in the early nineteenth century went around shopping to various banks. They were all anxious to accommodate him by offering competitive rates of interest. But the reply at Child’s was, “We shall be happy to take care of your money for you, but we shall not give you any interest at all upon it,” and this reply seems to have pleased this customer so thoroughly that he opened an account immediately, and all his descendants continued to bank at Child’s well into this century.
George Eastman was planning to build a large theater for the city of Rochester, where Kodak has its headquarters. He was going over the blueprints for the 6,000-seat house.
“We could probably get another two seats into the orchestra here,” he told the architect, who was surprised that Eastman would be bothered with such detail.
“Let’s say that each seat would bring in 30 cents per performance,” the businessman replied, “or 60 cents for the two. With six performances that would come to $3.60 a week. In a year that might amount to $187.20—which, by the way, is the interest on $3,120 for a year.”
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