Economics & Finance

Book Review — Levenson — Newton and the Counterfeiter

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Levenson, Thomas, Newton and the Counterfeiter: The Unknown Detective Career of the World’s Greatest Scientist, Houghton Mifflin Harcourt, New York, 2009, 318pp.

The publisher kindly provided a copy of this book for review.

This book was recommended during a Holiday 2009 Book Roundup on chicagoboyz here.

Fans of fiction author Neal Stephenson (The Diamond Age and Anathem were reviewed for chicagoboyz) may recall that one of the most intriguing episodes in his mammoth Baroque Cycle trilogy was Isaac Newton’s use of the Royal Mint to further his interests in the alchemy of gold. In the course of taking on Mint responsibilities, Newton also inherited the responsibility for halting widespread coin tampering and counterfeiting.

Now we have a non-fiction title by a distinguished American science writer focused on the same subject. Newton’s actions as Warden, then Master, of the Mint were less glamourous than his revolutionary contributions to science and industry, but no less critical to the rapid transformation of England into an industrial giant. The real story behind Isaac Newton’s efforts to rescue England’s silver currency from impending disaster, and to revitalize the Royal Mint, is rather unexpected. And Newton’s methodical (and rather fearsome) efforts to hunt down and hang the country’s counterfeiters turn out to be just as fascinating, and just as strange, as Neal Stephenson’s fictional tale of Newton’s derring-do. Stephenson’s blurb on the back-cover of this book confirms as much.

Levenson’s book is built around two dramatic themes.

Firstly, the “fish out of water” transition of Isaac Newton from nerdy reclusive Cambridge savant, obsessed with his privacy, to senior government functionary … comfortable in parliamentary committees, Law Courts, and in the Royal Mint’s interrogation cells.

Secondly, Newton’s multi-year game of “cat and mouse” with a notorious counterfeiter (William Chaloner) that constantly risked Newton’s professional career, and Chaloner’s life. Chaloner actively sought to have Newton pilloried as incompetent, a thief, and anti-government conspirator, and Newton did his best to see Chaloner hung, drawn, and quartered … counterfeiting being a treasonous offense.

The author first builds contrasting biographies of the scholar and the criminal, providing a snapshot of criminal London in the late 17th century. The woeful state of English silver coinage brings Newton to London where he was soon to begin an education entirely unlike anything available in Cambridge University.

SPOILER ALERT: If you’d prefer to learn the story of Newton and the counterfeiter on your own, by reading this book, please skip down to my general comments in the Section titled General Impressions where I’ve tried not to give too much of the tale away.

EYESTRAIN ALERT: This review runs about 10,500 words. Some readers may prefer to print it out.

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A Small Victory

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About a month ago, I wrote about a provision in the “finance reform” bill that had the potential to do great harm to venture capital and angel investing, and hence to America’s economic growth and productivity. I’m happy to note that this provision has now been removed from the Senate bill.

I refer to this as a small victory, despite its importance, because this is only a single win against the flood of virtually insane regulatory and tax policy that threatens to engulf the entire American economy. As the WSJ article notes:

“…the fact that such a destructive provision made it that far shows how little the Members and staff now running Congress understand about wealth creation and the sources of American prosperity.”

Even more disturbing than the lack of understanding of the economy is the lack of understanding of their own limitations. Indeed, this Congress and Administration seem to me like someone who holds an administrative job at an airline–establishing flight schedules and ordering the in-flight meals, let’s say–who decides that his executive title gives him the right to fly a 777 with passengers. Or a political appointee at the Department of Transportation who goes out to the Potomac Approach facility, sits down at a radar screen, and starts directing traffic.

There appears to be no limit to the arrogance of those now dominating our political process.

The Laffer Curve, as Explained in 1377

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Ibn Khaldun:

It should be known that at the beginning of the dynasty, taxation yields a large revenue from small assessments. At the end of the dynasty, taxation yields a small revenue from large assessments.

The reason for this is that when the dynasty follows the ways (sunan) of the religion, it imposes only such taxes as are stipulated by the religious law, such as charity taxes, the land tax, and the poll tax. They mean small assessments, because, as everyone knows, the charity tax on property is low. The same applies to the charity tax on grain and cattle, and also to the poll tax, the land tax, and all other taxes required by the religious law. They have fixed limits that cannot be overstepped.

When the dynasty follows the ways of group feeling and (political) superiority, it necessarily has at first a desert attitude, as has been mentioned before. The desert attitude requires kindness, reverence, humility, respect for the property of other people, and disinclination to appropriate it, except in rare instances. Therefore, the individual imposts and assessments, which together constitute the tax revenue, are low. When tax assessments and imposts upon the subjects are low, the latter have the energy and desire to do things. Cultural enterprises grow and increase, because the low taxes bring satisfaction. When cultural enterprises grow, the number of individual imposts and assessments mounts. In consequence, the tax revenue, which is the sum total of (the individual assessments), increases.

Read the whole thing.

Via Isegoria.

Worthwhile Reading

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David Brooks argues that the crime wave of the 1970s has had a long-term effect on the American psyche, and especially on parenting. (via FFOF)

Victor Davis Hanson reflects on small-town America.

Paul Levy describes redesign of the pharmacy in the hospital he runs, making use of Lean principles, including mock-ups and heavy participation from those who will be using the new space. (via Lean Blog)

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