VAN NUYS BLOG SUPPLEMENTARY STROKE A

“One touch of alchemy transmutes our Age to Gold
Would you be rich and free, then do as you are told
No man will want for food, nor ditto any wife
All hail the good the pure the regimented life
The Honeymoon of Time, forever I proclaim
The Apex of our Clime, for burgher and for dame…”

— Maxwell Anderson, channeling the dictatorial Peter Stuyvesant, in “Knickerbocker Holiday” (1938)

The Bank of Amsterdam achieved a miracle of modernity when it opened in 1609 by simply paying a salary to a dozen alchemists — Alstublieft mijnheer! We prefer ‘metallurgical assayers!’ They sat in the vault purity-proofing every coin that came over the counter, and reducing every pocketful of gold rubble handed over by a grinning cabin boy just returned from an adventure with pirates on the Spanish Main.

The dwarves with pointy beards gave you a certificate, and took your strongbox away on a little cart down to their fiery realm. There they separated the gold and silver from the dross, and re-coined the precious metals with their own stamp. This defined purity put a demand on Amsterdam’s coins — and more importantly, upon the fully-backed paper that redeemed the deposit after six months’ time, dated on the certificate. You had to come back at least once with your certificate to check in; if not, your deposit was forfeit. Thus you had to stay in Mokum (wat leuk!) or come back soon.

If your strongbox full of Polish zlotys was divined by van Hogendorp or one of his colleagues to be 35% lead and 10% tin, whoever redeemed the note you signed over got free paper or, for a fee, good gold Amsterdam premium coins — BUT, subtracting the 45% discount for the debasement, and a handling fee if the customer insisted on coins and another fee for the B. of A. agio, kind of badge clipped to currency giving an extra unit of value — one guilder plus, like the English guinea, or a baker’s dozen. In other words, your gold God gold really was better than everyone else’s. The Bank gave everybody a reason to turn in bad coins of doubtful value for certificates of good value, simply by being honest, and it worked. For the first time, the whole world had a money standard — nobody ever had to bite an Amsterdam gold piece, or try to stretch a rubber note. However rich or poor you actually were, now you knew it. Oddly, that in itself had value.

If a businessman wanted to avoid cheats and swindles, counterfeiting and clipping, bad debts, forged letters of credit, and fly-by-night pawn brokers styled as bankers, he could do business in Amsterdam, or at least using Bank of A-dam paper. The bank couldn’t fail because it didn’t hold fractional reserves, and it didn’t make high-pressure loans to well-connected friends. This is why the paper deposit slips flew all over Europe as currency, achieving that elusive condition for a sudden ballooning of wealth, that can result from harnessing the velocity of money. Anyone the paper was signed to, had that money, at that date. Therefore a debt-ridden cavalier could pass it right on to his landlady and she to the butcher, etc. The mere presence of the note in the cavalier’s purse as he clomped up the stairs to his garret, allowed all his creditors in the community to relax and mark paid each others’ debts on the spot. One day, sure, one of them in the community would cash the actual note, and the money would be there, so it doesn’t need to be here now. For the most part the actual gold, in stamped bullion and coin, stayed down in the vault.

Essentially the Gold Standard was put in place to eliminate gold from circulation. While the gold was buried safely, its ancient mana, its plenipotentia, was all there in the note, a solemn pledge and Covenant, in plain black and white. Silver was systematically re-packaged for export to Batavia, since the Chinese wouldn’t trade in anything else. This in and of itself helped prop up the price of gold in the West, since it all passed through the Bank.

But gold and silver’s age-old burdens, inconveniences… sins…the emotionalism, the Medieval dragon-ish lusts, the temptation to cutthroats, the awful clink of 30 pieces in Judas’s hand, the schlepping, the buried pirates’ hoard, the confiscation by petty tyrants, the horror of refugees stuffing gold in bodily cavities while fleeing across borders, “bad money driving out good,” “mine mine mine!”— that corruption was buried with it.

In the foggy Dutch dawn of Capitalism — the mirror of Calvinism — the worldly husk of money was purged away. The dross, the base shell of money, was interred, and its value resurrected as spirit. Doubt fell to certainty and the peace that passeth understanding. Ideal potency is yours, in the future. Since money was now a thing that could be shown to be “worth it,” potentially pure and ideal, no hanky-panky, it could now be considered Godly. Nobody was being cheated by the economic order: if you played by the rules you prospered; if you didn’t you were still given some credit, which is better than you deserved. You could have been righteous, you could have controlled your circumstances, you could have been frugal, the Calvinists scolded, as they always do, with only a silent shrug in the street. You could have done business in Amsterdam. You could have coughed up to buy my insurance on that sunken ship full of beaver pelts. You could’ve opened that coffee-house on the Spui, now who can afford it? You could have gone to Leiden University, but you hated to read. Why should God give any of the pure, perfect power of the Tears of the Sun to a slip-shod like you? You could have bought the whole block on the canal at the bottom of the market, and then I would be paying you a fortune in rent for that leaky cold-water garret six floors up in the gable. Predestination: Buy you a drink? If you weren’t so lazy and profligate at the taverns, you would’ve had striving parents who knew the value of a guilder, and been a sober and worthy heir to their righteous fortune, and you wouldn’t be drinking away your misery in a tavern at all.. But you are, Blaise, you are.

This was the Rise of the Gold Standard. Next: the Fall of the Gold Standard. Then, at last Patient Reader, our Balloon Route Tour will take us back to Van Nuys. Betcha can’t wait.