January 27, 2020
The headlines of The Washington Post screamed through the past week of corruption, politicking and political malfeasance, and again, corruption. All that emerged from the start of the impeachment trial. Depending on your political habits, it will be over too soon, or not soon enough.
If you’ve paid attention you’ve heard both sides malign each other, going back months. The impeachment story is ready for syndication even with the proceedings still underway. Both sides understand one thing: Americans knew Trump was corrupt when they elected him. The millions who voted Republican in 2016 sought neither integrity, nor character, nor even success in business in their candidate. They got what they voted for. So here we are. We may feel many things about our public life right now, but we should not feel surprise.
Yet we do admire integrity, devotion to work, a commitment to the collective good—qualities that provide balance to the flaws of every human person. I thought about that when a few days ago I finished James Grant’s eloquent biography of Walter Bagehot (Badge-it), entitled Bagehot: The Life and Times of the Greatest Victorian.
Bagehot, not the first but the most revered editor of The Economist, which started publishing in 1843, may not strike a familiar chord with all Americans. Those who pay attention to the science of money know him as the 19th century’s keenest observer of nearly everything to do with business and finance. Grant’s diamond-hard prose documents Bagehot’s mastery of not only the English language but also the nuances of finance and banking theory, which he both reported and, to a large degree, helped create.
As a Unitarian, Bagehot was not welcome at Oxford or Cambridge; he earned his law degrees at University College London, only to abandon the law for banking and then for journalism.
Grant, editor of Grant’s Interest Rate Observer and himself a trailblazer in financial journalism, appraises Bagehot as both brilliant and curmudgeonly. The amazingly prolific Bagehot opposed giving women important work in business and predicted a Confederate victory in the American Civil War.
At times wrong, he never retreated or apologized. He stood for election to Parliament three times and lost three times. In his The English Constitution, he explained his distrust of commoners; in Physics and Politics he offered suppositions on the evolution of civilized society. He warned bankers who sought recklessly to lend money to Honduras, Peru, Egypt, and other unstable places. His words proved prescient.
The “greatest Victorian” embodied the prudential habits of mind and manner nearly unknown in business and politics today. “Victorian” now seems a quaint pejorative, suggesting dull, puritanical, uncreative. In truth, it alludes to qualities we hope our leaders represent or strive for: industry, discipline, and unassailable honesty. Grant cites the words of G.M. Young, writing of Bagehot in The Spectator in 1937: “He was in and of his age and who could have been of no other: a man with sympathy to share, and genius to judge, its sentiments and movements.”
In his great work, Lombard Street, published four years before he died in 1877 at 51, Bagehot said he wished to deal with “concrete realities.” Grant reports that he urged the adoption of monetary policies suitable for times of “apprehension.” He defended the gold standard and free trade. He dissected the banking practices that emerged from Britain’s Reform Act of 1867 which, Grant writes, made the new structure of English commerce “democratic.” Bagehot criticized the “new men” who flashed more credit than money in their hurry to get rich. “They rely on cheapness, and rely successfully,” he warned. Shades of our present day.
In Lombard Street Bagehot writes: “All people are most credulous when they are most happy; and when much money has just been made … there is a happy opportunity for ingenious mendacity. Almost anything will be believed for a little while, and long before discovery the worst and most adroit deceivers are geographically or legally beyond the reach of punishment.”
Grant tells us that Bagehot wrote the still-accepted prescription for stopping a run on banks: “Faced with a crisis, a central bank should lend freely at a high rate of interest against good banking collateral.” Those words, the author says, are invoked to this day with the part about high interest rates left out. They were cited repeatedly during our banking upheaval of 2008.
Bagehot, the peerless giant of financial writing of his day, did not own The Economist. Although he lived among Britain’s political and financial elite, he did not become rich. Aware of his own precarious health, he hired an assistant in 1868. He died at his home in Langport, where he was born. Upon his death, he was eulogized by Irish journalist E.D.J. Wilson: “… the most illustrious of the statesmen who thus consulted a journalist … would be the first to acknowledge how much they owed to the ‘white light’ of his pure and clear intelligence.”
Mrs. Russell Barrington, Bagehot’s sister-in-law, in 1915 published The Works and Life of Walter Bagehot. In her Preface she cites Bagehot’s letter to her sister Eliza before the couple married: “I do not think I write well, but I write, as I speak in the way (I think) that is natural to me, and the only chance in literature, as in life, is to be yourself. If you try to be more you will be less. But do not take up any extravagant notions of my abilities or you will be disappointed when you find out your mistake …”
Bagehot’s devotion to probity and prudence in finance would leave him shuddering at the promiscuous fiscal practices of the U.S. today. Grant, in his commentary in Grant’s (Jan. 10) asks, after President Trump, in December, signed into law a $1.4 trillion omnibus spending bill, “who … has much to say about today’s gross public debt of $23.18 trillion?” He adds, “It had taken 192 years to amass the first trillion dollars of government IOUs. And then it took just five months, from Aug. 1—this past Aug. 1—to tack on the newest trillion.”
Bagehot would have something to say. His life and work offer a path to sound public policy by means of sheer intellectual firepower and a heartfelt devotion to the common good. Instead, in 2020, we have in Washington, D.C.—we know what we have.