Bonfire Banking

As Brits ritually remember Guy Faukes’ attempt to burn down the Houses of Parliament in 1605, it’s worth remembering when Parliament did actually burn down, why and with what implications. It was 1834, and money was involved.

The British economy had a few types of currency back then, one of which was called “tally sticks”. These were used by the Exchequer to record credits and debts and thus acted as money.

But banks didnt like these tally sticks, which meant the government could issue their own money as they pleased. They wanted to be the ones to create money, by issuing their own notes, and to charge interest on loans of notes and coins.

So they lobbied Parliament and got the tally sticks abolished in 1826. A few years later some were still being used. That wasnt good enough for the banks. They wanted them gone. A decision was taken to burn them. Where? In the stoves of the Houses of Parliament. When? In a rush. Why? Who knows, but the histories we read tell of how the chap burning them wanted to go home early, and put too many sticks in the stove.

As a systems thinker, Im always a bit suspiscious of the pilot error, lone gunman, individual madman view of historical events. But who knows? It was handy for the bankers that if a fire broke out from burning these pesky sticks and it burned down the Parliament, that the government would have to go into debt to the banks’ own forms of money to build a new one. There was no more tally stick money to go back to, to buy the materials and pay the workmen. So the government borrowed 2 million in bank money, to build a new Parliament. Its good to have your government owing you money, paying the interest, keeping you happy.

Reading this history, I wondered… would it make more sense to burn a different effigy on bonfire night?

(thx to Cairan for alerting me to the tally stick burning history. happy bonfire night!)