Blogs: Ralph J. Benko
When Her Majesty's government moved the British Royal Mint in the early 19th century, it was to a building called ... the New Royal Mint. It is by a long yellow brick wall, "in true Wizard of Oz fashion."
According to Medieval Bex:
[K]eep walking south, following the road as it curves left and then right, passing beneath railway arches and Royal Mint Street on your left, and you’ll see not only the Tower of London ahead, but also a huge walled compound on your left that seems highly incongruous with the sights of the street you’ve just travelled along.
New Royal Mint
The New Royal Mint engraving, 1830
Follow this long yellow brick wall (in true Wizard of Oz fashion!) and you arrive at a rather grand and stately building. This is (or was) the New Royal Mint. In the early nineteenth century the decision was made to remove the mint from the Tower of London following the outbreak of war with France and the resulting demands on the Tower’s space. Building work began on Little Tower Hill in 1805, and was completed in 1809. The buildings housed the new steam-powered minting machinery and residences for officers and staff, and were surrounded by a boundary (the yellow brick wall) shadowed by a narrow alleyway that officers could patrol. The mint outgrew these buildings and was moved to Wales following decimalisation, and this structure is now used as commercial offices by Barclays.
Presumably the same Barclays that, according to Reuters, just was
fined 26 million pounds ($43.8 million) for failures in internal controls that allowed a trader to manipulate the setting of gold prices, just a day after the bank was fined for rigging Libor interest rates in 2012.
Britain's Barclays is the first bank to be fined over attempted manipulation of the 95-year-old London gold market daily "fix", although a source familiar with the fine said it was a one-off and not part of a wider investigation into gold price rigging.
The lure and lore of gold continue to intermix in a rich tapestry of past and present, fantasy and reality.
We ignore the man behind the curtain at our peril.
One of the most impressive, if (appropriately) reserved federal buildings in the national capital is that of the Federal Reserve's headquarters located on Constitution Avenue. For its classical architectural elements -- and perhaps for the somewhat hermetic rituals therein performed -- it has been called a "temple."
Photograph courtesy of the Board of Governors of the Federal Reserve System
According to the Fed's own historical account:
From 1913 to 1937, the Board of Governors of the Federal Reserve System met in the United States Treasury building at 1500 Pennsylvania Avenue, N.W., and the employees were scattered across three locations throughout the city. With the implementation of the Banking Act of 1935, which centralized control of the Federal Reserve System and placed it in the hands of the Board, it became necessary for the staff to be united in one building.
In the spring of 1935, the Federal Reserve Board made the decision to use a national competition to select an architect for its new building. ... Ultimately, Paul Philippe Cret (1876-1945) submitted drawings that impressed the members of the Board of Governors. Born in France, Cret trained at the École des Beaux-Arts in Lyons and Paris before moving to Philadelphia in 1903 to teach architecture at the University of Pennsylvania. Soon, Cret started his own practice and won many important commissions for buildings across the country. In Washington, D.C., Cret is also known for his design for the Organization of American States building (1908), the Folger Shakespeare Library (1929), and the Calvert Street Bridge (1935, now known as the Duke Ellington Bridge).
Cret's training focused on the study of Greek and Roman architecture and encouraged the interrelationship of all the arts. His design for the new Board building managed to combine a number of classic elements by skilled craftsmen who were highly regarded in their fields, while also exercising restraint.
One could perhaps wish, in this era of QEs, Twists, and Tapers, that the Federal Reserve would be inspired in its conduct of monetary affairs by the restraint -- or, at least, becoming reserve -- showed by Cret.
Wikipedia gives us a glimpse of the picturesque history of the British Royal Mint, where Sir Isaac Newton created, de facto, the modern classical gold standard that was to well serve the world for nearly 200 years:
The London Mint first became a single institution in 886, during the reign of Alfred the Great, but was only one of many mints throughout the kingdom. By 1279 it had moved to the Tower of London, and remained there the next 500 years, achieving a monopoly on the production of coins of the realm in the 16th century. Sir Isaac Newton took up the post of Warden of the Mint, responsible for investigating cases of counterfeiting, in 1696, and subsequently held the office of Master of the Royal Mint from 1699 until his death in 1727. He unofficially moved the Pound Sterling to the gold standard from silver in 1717.
By the time Newton arrived, the Mint had expanded to fill several rickety wooden buildings ranged around the outside of the Tower. In the seventeenth century the processes for minting coins were mechanised and rolling mills and coining presses were installed. The new machinery and the demand on space in the Tower of London following the outbreak of war with France led to a decision to move the Mint to an adjacent site in East Smithfield. The new building, designed by James Johnson and Robert Smirke, was completed in 1809, and included space for the new machinery, and accommodation for the officers and staff of the Mint.
The great Restoration diarist Samuel Pepys confided, to his diary, on May 19, 1663, some observations he made at the Royal Mint and its manufacture of coins under the new "milled" method. This method was considered in its day a state secret, making his observations, published long after the fact, all the more interesting.
Pepys, by by Godfrey Kneller, 1689, courtesy of Wikipedia
He dined with some of the officials of the mint after, and records:
At dinner they did discourse very finely to us of the probability that there is a vast deal of money hid in the land, from this:
Next, that there was but 750,000l. coyned of the harp and Cross-mony [i.e., Commonwealth coins, so-called from the English cross and the Irish harp on the reverse], and of this there was 500,000l. brought in upon its being called in, and from very good arguments they find that there cannot be less of it in Ireland and Scotland then 100,000l.; so that there is but 150,000l. missing; and of that, suppose that there should be not above 50,000l. still remaining, either melted down, hid or lost or hoarded up in England, there will then be but 100,000l. left to be thought to have been transported [i.e., taken abroad].
Now, if 750,000l. in twelve yeares time lost but a 100,000l. in danger of being transported, then 10,000,000l. in 35 Years time will have lost but 3,888,880l. and odd pounds. And as there is 650,000l. remaining after 12 years’ time in England, so after 35 years’ time, which was within this two years, there ought in proportion to have been resting 6,111,120l. or thereabouts besides King James and Queen Elizabeth mony.
There is contemporary speculation as to the contents of the Treasury Repository at Fort Know and the contents of the vaults of the Federal Reserve Bank of New York. (That state of such contents is operationally nearly immaterial to the ability to restore the classical gold standard.)
It would seem that there is something, then and now, about dinner conversations that encourages speculation as to missing or hidden gold.
James Narron and David Skeie, two meticulously scholarly monetary officials of the Federal Reserve System, publishing, again, valuable lessons from history at the NY Fed's Liberty Street Economics. This time, about the first Wall Street panic.
Narron and Skeie:
From Political to Financial Revolution
The authors go on to marvel at how Hamilton's actions anticipated Bagehot's dictum, set forth in Lombard Street, long before formulated by Bagehot:
The Panic of 1792 appears to have been effectively managed with little or no long-term spillover to the economy. And most importantly, it didn’t derail the financial and economic revolution taking place. What’s more, key features of Hamilton’s market intervention predate Walter Bagehot’s famous rules for central bank crisis management by nearly a century. For example, Hamilton instructs Bank of New York to lend on good collateral, in this case U.S. Treasury securities, at a penalty rate of 7 percent on the U.S. Sixes. This action was coordinated with the bond dealers in New York so as not to drain gold and silver specie from the banks. And this coordination ultimately led to a May 1792 meeting of twenty-four broker-dealers under a buttonwood tree on Wall Street, who signed an agreement of cooperation, an act many historians view as the origin of the New York Stock Exchange.
The authors conclude, "Tell us what you think."
This writer thinks that the Federal Reserve System is extremely well served to have two of its career civil servants, Narron, a senior vice president and cash product manager at the Federal Reserve Bank of San Francisco, and Skeie, a senior economist in the Federal Reserve Bank of New York’s Research and Statistics Group, so immersed in the facts that only can be found in what Lewis E. Lehrman, founder and chairman of the Lehrman Institute, calls "the laboratory of history."
BY RALPH J. BENKO: