Thomas Levenson's Newton and the Counterfeiter is the best kind of work for me, because it succeeds on two levels. On one level it is an historical narrative, and an excellent one at that, telling the story of the transition of money from an agricultural to an industrial age in a short period of British history that has ramifications to the present day. On another level it is a fascinating human interest story of the intertwining progress of two men: Sir Isaac Newton and one William Chaloner.
Toward the end of the 17th century, Britain's currency was in disarray. The silver coinage was being clipped and the metal was fleeing abroad because the government had fixed the price of silver too low (so it was worth more as bullion than as money). In 1688, the average circulating silver coin was 15% underweight because of clipping. By late 1695, over one-half of the circulating coinage had disappeared altogether. People literally had no money, and the result was that “no trade is managed but by trust”. The founding of the Bank of England in 1694 did not help: most of the banknotes being printed were £100, a huge sum, and while some £5 notes were being printed, £5 represented a month's salary for a professional so the notes were useless for everyday commerce.
When there is a financial crisis today, the government turns to investment bankers or celebrities for advice. But back in the day, the secretary of the Treasury, William Lowndes, hit on a different approach. He wrote not only to bankers and businesspersons, but also to Britain's wisest men, including the philosopher John Locke, the architect Christopher Wren and the cleverest man who had (and has) ever lived, Isaac Newton, then the Lucasian Professors or Mathematics at Cambridge University.
Newton knew exactly what was wrong. In Levenson's words, he explained that the currency criminals were “rational actors responding to an uncomplicated set of incentives”. Newton, and others of the wise men, recommended a complete recoinage. The King assented to the “Great Recoinage” in January 1696 and Newton was offered the post of Warden of the MInt, which he happily accepted. He set about revolutionising the productivity of the Mint (which he achieved) and completed the calling in and remounting of the entire silver coinage in a incredibly efficient manner. Which is where Chaloner comes in to the story.
As warden of the Royal Mint, Newton estimated that 20% of the coins taken in during The Great Recoinage were counterfeit. Counterfeiting was high treason, punishable by being hanged, drawn and quartered (although, unlike other treasoners, counterfeiters were not cut down from the gallows until actually dead) yet it was flourishing because of the difficulty in securing convictions. Newton not only revolutionised the minting, he took personal control of the anti-counterfeiter squad, became a Justice of the Peace, set up a network of informants and personally cross-examined suspects.
As Newton began to modernise the processes of money, so Chaloner went on a parallel journey from hand-stamping counterfeit coins to engraving plates to produce counterfeit banknotes (although, interestingly, it was counterfeit lottery tickets that contributed to his downfall). The heart of Levenson's story is the way in which these journeys crossed.
Chaloner was not unique. He was part of one of the many coining gangs that existed, but he was one of the best. He forged French “pistols”, English guineas and other coins and became renowned for the quality of his work. He purchased a large house in the then semi-rural suburb of Knightsbridge and “rode in a carriage”. How's that for flash? Chaloner had chutzpah. He knew, as Newton did, that equipment was being smuggled out of the mint and sold to counterfeiters so he tried to get himself a position at the mint, ostensibly to put a stop to this abuse, but undoubtedly because he actually wanted to observe Newton's new process and equipment at close hand. It was in the guise of an interested member of the general public that he subsequently went “offer his services” to Parliament, an offer that Newton vigorously (and successfully) opposed. His next scheme was for forgeries of the mint's “machine-struck” coins and he set up a gang centred in Egham but one of his co-conspirators was arrested on an unrelated charged and he blew the whistle in a plea bargain. Newton heard about this by accident three months later and cleverly “turned” another of the gang.
The downfall was swift. Amazingly, Chaloner was recognised by Newton by chance on a visit to Parliament and was then arrested and sent to Newgate. By January 1699 Newton was working on a thorough investigation of Chaloner. He used a comprehensive network of spies and informants, taking many statements from all his old contacts. Chaloner was hanged in March.
When the previous holder of the post passed away, also in 1699, Newton became Master of the Mint. In those days, the Master obtained mint seigniorage and so it was a most lucrative position. Newton because a wealthy man and, despite losing a huge amount of money in the South Sea Bubble, lived a comfortable life to the end. By the end of his time as Master, he had moved Britain to a gold standard and “trade and society flourished as never before”.
What a guy. He was a pivotal figure in the transition from ancient to modern money, just as he was in transition from ancient to modern society. By 1698, a watershed year in the history of money, coins were less than half of the money supply in England. The Royal Mint was no longer the dominant source of money and power was passing from the monarch to the London money markets and banks. By the time of his death in 1727, the gold standard he had (albeit accidentally) established in 1717 was a factor in Britain's burgeoning economy and empire.
Anyone with an interest in money, Newton, the story of the British financial services market or the history of London will find the book a marvellous read.
Dave Birch
