The History of Paper Money – Barebones Economy – Extra History – #3

The History of Paper Money – Barebones Economy – Extra History – #3


In the last episode, we got to the ad hoc, unofficial beginnings of paper money. This week, we’ll look at some of the rogues’ gallery that really created the intellectual argument for adopting paper money in some more official way. When we last left off in England in 1640, the first unofficial banknotes were starting to circulate But in the early 1660s in Stockholm, the first semi-official banknotes, the first banknotes from what we might think of as a central bank, the first banknotes that really started to replace a hard currency. Began to appear But with those banknotes, come the problem of unregulated Fractional Reserve Banking Remember how we mentioned that the Goldsmiths of London realized that using banknotes, they could actually lend out more money than they had gold or silver to cover? Well in Stockholm, they really went to town. Soon, there were so many banknotes out there, that people couldn’t help but notice, And as soon as people noticed, everybody rushed to the bank to get their banknotes turned back into coins. Which of course they couldn’t do. And there goes the Swedish economy. So, clearly there were still some kinks to work out with these newfangled banknotes. Now let’s hop back to England, once Civil War, and half a Dozen other wars After Charles I so politely jump started this whole banking thing which that forced loan of his. The year is 1695, the English have just gotten themselves kicked around in the Channel by the French. And if we know anything about history, we know that that will never do. So, the English established a Central Bank, the Bank of England To raise money and to help the government pay to refit the navy As part of this, they issued banknotes, but the idea of banknotes, and their role in the economy had been a topic of debate in England for a few years. Which leads us to the first of our roguish economic theorists. And yes, this is his real name – Nicholas If-Jesus-Christ-Had-Not-Died-For-Thee-Thou-Hadst-Been-Damned Barebone Who, for obvious reasons went by the name – Nicholas Barbon Nicholas Barbon’s father was Praise God Barebone (Yes really) Who will surely make an appearance in episodes covering the English civil war Nick Barbon started his career as a doctor, getting his degree from the University of Utrecht And joining the Royal College of Physicians But this trade had too much saving people, and too little amassing vast quantities of wealth. So Nicholas turned instead to Real Estate and Construction. Luckily, he had in a break, when, in 1666, the Great Fire of London swept through and incinerated about 13,000 homes and left about 1/6 of the city homeless Hussah! This of course was seen as a great opportunity by Barebone who will rebuild most of London And even very illegally, reshape it. If you’ve ever been to the Western parts of the Strand or Bloomsbury Those areas basically exist because Barebone didn’t listen to any of the restrictions that said that you couldn’t build between London and Westminster After all, as he saw it, that’s where the open land was And where easier to build? I mean, yeahhhhhhh, it’s open because it’s illegal to build there, but what are they gonna do? Tear down the houses you just built? They’re already built. Deal with it. And from there, the sky was the limit. Barebone at first got into the reputable business of selling fire insurance in a town that had just burnt down After that, he realised that he could invent the mortgage, I mean, I can’t say that he was absolutely, absolutely, the first person to really invent the modern mortgage, but he certainly was the first major player to do so in England. He created the National Land Bank. And began to issue loans secured by people’s homes or properties. He followed that with a few stint in Parliament, largely to avoid prosecution. And then he retired to write some books. And it’s really the books that we’re interested in. And the thoughts he put in them. Because while I’ve been joking about his wild and rapacious greed, he was highly intelligent. And it’s kinda hard to write him off as evil. All of these things he did actually ended up having positive effects. And his writing sort of shows that he knew that. Insuring people against fire provided him with a guaranteed profit, but also created a great deal more stability for the English economy. Fires were still a major issue, but no longer would they be a massive economic displacement. Instead, everybody would put some money into the pot, to bail out whoever lost their home or trade to a fire And he would skim a little from the top Great for the economy! And mortgages? While we might today that it’s the bank’s way of keeping us down, so much of England’s wealth was locked up in Real Estate that it was a huge drag to the national economy. When people bought a house, that money just stayed locked up in that house It didn’t circulate through the economy, it didn’t help to finance businesses, it just sat there. Until somebody generations later decided to sell it. But with the idea of the mortgage, the single biggest asset that most people owned was now freed up to help drive the economy Instead of the sellers simply getting a pile of cash, and the buyer getting an unspendable house, the mortgage freed up that value. You could now spend your house and live in it too! Meaning that that money could circulate through the economy again and again. And Barebone was also, of course, one of the first people to decouple morality and spending Which totally sounds evil, I admit, but up until this point, a lot of the writing on money was written by the Church Basically arguing that everybody live the simplest life possible. And that’s probably good advice, in a lot of ways, but it doesn’t make for a dynamic economy. Barebone argued for fashion and innovation, because they get people to buy new goods before they fully consumed the previous goods, thereby, creating demand, And while we’re not to Adam Smith yet, The basic concept that demand creates supply and grows the economy is there in Barebone’s work. But for us, his most important work is probably his arguments against Mercantilism Mercantilism was the driving political and economic theory in most of Europe, in Barebone’s day. Basically, it sort of saw nations as being in a state of perpetual economic war. The goals for any nation was to get as much literal gold, and silver as they could for itself. And try not to give any to anybody else. In a broader sense, the object was to have your state, be self-sustaining. Importing as little as possible, while exporting as much as you could. Colonies existed to feed the mother country, and weren’t allowed to trade with any country other than their colonial power. And when imports had to be made, the goal was to only import raw materials, so that they could be turned into more valuble, finished goods in your country. And while today, we see a lot of reasons why every country trying to produce every type of good is a terrible idea, In some ways, mercantilism makes a lot more sense when you think of economies based on commodity money, like gold or silver. After all, if your entire economy is based on gold and silver, then your economy could literally only be as big as the amount of gold and silver you have. While many were starting to see this dilemma, Barebone cut to the heart of it. He basically said that even gold and silver don’t have a innate value. They are just worth whatever the market values them at. So instead of stockpiling more gold and silver to grow your economy, why don’t you just get rid of gold and silver entirely? and move to paper money? But these ideas of Barebone’s are only the beginning of the intellectual ground work that will see a world accept slips of paper in exchange for a loaf of bread, a cell phone, or a house. Join us next time and we will witness somebody else try and put their own theories of paper money into practice. On the grandest scale.

100 Comments

  1. Saffana Siddiqui says:

    Omg he left medicine because it had too much of saving people and little money XD
    Hahahahahaha…. And his name!!

  2. Emy XD says:

    If-Jesus-Christ-Had-Not-Died-For-Thee-Thou-Hadst-Been-Damn…unfortunately, not even Jesus could do much about this guy's name. Seriously son, what were your parents on when they made you?

    On another note, I misspelled the name while writing this comment. I can only imagine the reaction to that if it was an actual situation.

  3. Breedoe says:

    And I thought some modern day names were ridiculous.

  4. Loki San says:

    And here we are, thinking today's kids get silly names ^^

  5. giannis psillias says:

    2:54 so that’s where “it’s free real estate” came from….interesting

  6. Eve says:

    Would rather have an unspendable house than having to make monthly payments I know the house is mine cannot be evicted from my home.

  7. Chelle says:

    i read Huck's Raft: A History of American Childhood by Steven Mintz about the puritan colonist in america trying to make a new society of really strict puritan ideas and rules and stuff. (spoiler their children just bought their own land and moved away from these ideas). The sentence names were common because like Nicholas, they were to bring back ideas related to the church and jesus and what not.

  8. Jeremiah - Roblox & More! says:

    2:17 It's Free Real Estate!

  9. Jeremiah - Roblox & More! says:

    Mother: Nicholas If-Jesus-Christ-Hadst-Not-Died-For-Thee-Thou-Hadst-Been-Damned Barebone, why thou hast long name?
    Nicholas If-Jesus-Christ-Hadst-Not-Died-For-Thee-Thou-Hadst-Been-Damned Barebone: I thou hast been named thee.
    Mother: PRAISE GOD! Why?
    Praise-God Barebone: Thou hadst no right to name?

  10. TheOfficialJeb_ says:

    I mistaked Nicholas if jesus christ had not died for thee thou hadst been dammed barebone 's name for
    Nicholas If jesus Christ had not died thee thou hadst been dammed barbarian, God dahm these names are killing me.

  11. Shahzaib Ahmed says:

    Did anyone else hear the laugh at 2:53

  12. Charles Yeo says:

    His name is so ironic. He is literally the incarnation of greed. He championed consumerism

  13. Rajiv Nori says:

    S-sir, if I may… Was it Walpole?

  14. Wesley P says:

    the idea that houses are money that is locked away and undependable is flawed. a chair is equally money that is locked away and undependable. a cake you ate is too by your logic. a house isnt money, its a dwelling.

  15. Dr.WhipperSnapper says:

    Mercy Easter egg!

  16. Eli Myers says:

    Y'all're going to do a series on adam smith. Or ELSE.

  17. velvet thunder says:

    Who started the Great Fire of London?
    Nero??
    It was Warpole following Bismarck 's plan
    Bismarck ALWAYS has a plan

  18. Ally Gator says:

    why are you calling this video the creation of paper money? Money isn't paper it's fabric

  19. dali jnifen says:

    I learned is that :
    1- paper money is useful to create a dynamic economy. Because in the past, people could not trade as much as they wanted because of the scarcity of money (at the time gold or other heavy objects were used to trade).
    2- interests by goldsmiths (banks) were an ingenious invention. Because it made people who had gold store it in banks in exchange of interests, paid by banks, paid by borrowers.

  20. Golden Gifts says:

    2:12 I’m surprised no one noticed the OBVIOUS REFERENCE! Seriously! Not trying to be rude

  21. Senior Batman says:

    5:13 I love the Catholic church, the Pope is some Demi-god Emperor living in a literal Ivory Tower, but "money is bad".

  22. White Brad Bad says:

    6:55 So it's THAT fucker's fault!

  23. Nguyễn Tuấn says:

    oooh~ so interesting oooh~

  24. TheBigHurt says:

    Also, the idea of home loans made it possible for people to actually HAVE homes. Remember, before that, the idea of actually owning a home for yourself (versus merely renting) was nothing short of a dream.

  25. that one guy says:

    I have a joke
    London fire goes through
    Nick Barbon
    :It's free real estate

  26. Yürüyen Ansiklopedi says:

    wtf is going on with those names

  27. Tucker Koogler says:

    2:22 how ironic

  28. jeric_ synergy says:

    I get the feeling Republicans are stuck in about 1590, fiscal/emotionally.

  29. Mustache Glasses says:

    And of course Keynesian economics… because… why not? ::sigh::

  30. Kyle Ackerson says:

    Yay part 3!!!

  31. Kyle Ackerson says:

    Also Michigan???

  32. Ethan Steel says:

    Nicholas Barebone is my new historical heroes.

  33. youtoober2013 says:

    … I hate Barbone… and Smith for that matter!

  34. Mallow Nectar Smoker says:

    silk cotton tree seeds cotton red foliated gossypium hirsutum seeds

  35. Jonathan Hennessy says:

    1666 ? sounds like 666

  36. Zenith says:

    Government: Nah you can't build there
    Nicholas Barbon: It's free real-estate

  37. Jaser Aike GODA says:

    That's how Mafia Works!!

  38. shootemup49 says:

    I love these mini series. Especially the financial and economic ones the best. But they’re all really amazing

  39. pootrick yootube says:

    1666 Satan's number on the same year of a fire wow

  40. kairon156 says:

    Did Barbon have a friend who owned a tree farm?

  41. Sen Blake says:

    2:00
    Some Hilarious names there!! lol

    im Catholic

  42. Lady Spock NZ says:

    2:39 why was building between london and westminster not allowed? Illegal to build there, yes but why illegal?

  43. Demon Pigeon says:

    I like how you draw barbon

  44. Bria Pryor says:

    WE ? LOVE ? FAKE ? MONEY

  45. Mureithi Kivuti says:

    Be named Praise God Barebone.
    Drop my middle name.
    Force everyone to praise me every time they mention my name

  46. Umber Gill says:

    It isn't free real estate.

  47. A drunk Russian guy says:

    1:50 HOLY MOTHER OF GOD
    1:59 THIS IS PAIN AND SADNESS

  48. Alex Panciera says:

    … Shouldn’t it have been "If-Christ-had-not-died-for-thee-thou-WOULDST-BE-damned"?

  49. small pupper says:

    1:21 that blue guy is mfw my dog looks at my food

  50. Trin&EL says:

    I could just imagine his mom and dad picking names for nickolas

  51. Muhammad Fiqri says:

    When you go to enemy spawn and then swedish economy turret shoot you…

  52. Speckled Box says:

    Dear lord. Why haven't I heard of this series sooner? Fascinating

  53. Aljaž Glaser says:

    It almost seems the Barebone family was sort of religious.

  54. Loveilz says:

    Excuse me? 1666?

  55. Miguel Angel Rangel says:

    Can't wait for the explanation of bottle cap and bullet money.

  56. Yannik Raab says:

    no Jakob Fugger?

  57. HYPERION SELENIC says:

    Nicolas barebone is the father of the Red Shields I am telling you people

  58. HYPERION SELENIC says:

    5:10 and because of that consumerism is killing the east especially India

  59. Cielo y cirros says:

    That Mercy ?

  60. Overclocked super Mines says:

    Look it’s mercy

  61. DragonKnight90001 says:

    ……now i know what to name my son now

  62. Toxiciron says:

    Nicholas If-Jesus-Christ-Wouldn'st-Extorteth-The-Poor-Then-I-Don't-Even-Knoweth-What Barebones.

  63. Xintong Yu says:

    anyone here in 2019?

  64. Htin Moe says:

    2018 anyone??!

  65. Scott Carothers says:

    Yay! I’m number 1000! BTW nice episode!

  66. duelgundam says:

    What this episode taught me(along with 17th century economics), was that:

    If you ever feel that you were given a really shitty name, just remember: Nicholas Barbon's full name was "Nicholas If-Christ-had-not-died-for-thee-thou-hadst-been-damned Barebone", and his father: "Praise God Barebone".

  67. Bryce McKenzie says:

    What a name. What a Name

  68. Meme Lord says:

    The Scottish invented the English bank

  69. Goyon Man says:

    "Indubitably"

  70. All Mighty Tray Table says:

    1*666* The Great fire of London….

  71. Islamic Communist says:

    2:10 if you’re gonna get Mercy from Overwatch, you shoulda gotten Medic as well.

  72. æ æ says:

    Wait 1666 you remove 1 u get 666 and that year stuff burned coincidence i think not

  73. Matthew Foster says:

    Hi

  74. PIXEL RACERZ says:

    1*666*

  75. PunkerWithABoner says:

    Defending mercantilism is revolting

  76. Puipuia Hmar says:

    Osas:Are you challenging me

  77. glory to idk says:

    2:20 1666 the devil fire

  78. ImagineMedia says:

    Now I wanna know the history of house building/buying/selling

  79. Ashton Snapp says:

    “And there goes the Swedish economy!”

  80. Bilimin Sırları says:

    A Person:What is your name?
    B Person:Uweuweuweuwe chouwe osas
    C Person:

    Nicholas If-Jesus-Christ-Hadst-Not-Died-For-Thee-Thou-Hadst-Been-Damned Barebone

  81. Joyful Julia says:

    please someone help me! what’s the purpose of paper money during the dark ages!!!

  82. AlanDaGamer YT says:

    Extra Credits: here is how paper money was made

    Me: IT WAS WALPOLE

  83. Sylvia Schultz says:

    Hi

  84. Alex Ross says:

    The land between Bloomsbury and the Strand: exists
    Nick Barbon: It's free real estate.

  85. Trevor Kellogg says:

    So many overwatch reference

  86. Saul Santos says:

    Im sure Nicholas's mother LOVED saying his full name, especially when he is about to get in trouble for something

  87. cringe storm O.o says:

    stonks

  88. Michael Wright says:

    "All of these things he did had positive consequences"

    So did the bubonic plague

  89. Giddy Mwale says:

    dude you have the awesemest videos

  90. Courier Six says:

    Everyone’s talking about mercy but no one is talking about Monopoly man at 4:44 smh

  91. PvP hacker says:

    who's the narrator and why is he not in videos anymore?

  92. jay kardeen says:

    Slowly moving to an economy that will use numbers on a screen to represent how much money you have. I have no clue if this is really bad or really good, just something of note.

  93. star gamer says:

    A couple overwatch references hu

  94. Copelan Fogle says:

    1:51

  95. NinjaDudeYT says:

    I am still waiting for those English Civil War episodes

  96. Issa Tomato says:

    "… and yes, this is his real name, Nicholas

    If-Jesus-Christ-Had-Not-Died-For-Thee-Thou-Hadst-Been-Damned

    Barebones"
    Me: Huh, must've been puritan.

    "His father was

    Praise God

    Barebone. (Yes Really)"
    Me: Yup, definitely puritan.

  97. Donny Jones says:

    0:51 I know kids watch this show but the stripper there just wouldve been perfect

  98. brett knoss says:

    Another thing about those houses, if anyone was evicted from private or public lands, under common law, they must be compensated for any "improvements" such as buildings or infrastructure. So, even if the houses were torn down, Barbon would have to be paid their market value.

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