6.12.2009

Too Big to Fail... 244 Years Ago

While enjoying the cool evening on my patio yesterday, re-reading the Sparrowhawk series, I came upon a passage in Book Four: Empire that really jumped out at me.

As Hugh Kenrick -- one of the series' two main heroes -- and Patrick Henry prepared to attack the Stamp Act in the Virginia House of Burgesses in May of 1765, they first debated a proposed bill for a "loan office." This was a scheme for the wealthiest and most in debt plantation owners to erase some of their debts to the Crown and British creditors. One of the supporters of the shady bill, Edmund Pendleton, stood up and defended it to the House:
"…The depressing circumstances of this colony -- the present low price of tobacco, the recent ban on our ability to issue money, the nullification of so many patents on land west of the Blue Ridge -- all these factors, and others, have obliged so many persons here of substantial property to enter into great debts, which, if their payments were severely demanded, would ruin those men and their families and all who depend on them, and their ruin would certainly harbinge the ruin of men of lesser and other circumstances throughout this colony. A loan office, supervised by men of the strictest virtue, would enable those more substantial persons to pay their necessary debts with greater ease, and help to put this colony on a firmer and unassailable footing." [bold added]
Sound familiar? Here are the arguments for TARP, AIG, GM, you name it, just 244 years ago. The plantation owners were "too big to fail" and so they wanted government to bail them out.

I was prepared to write a long post about this, and then I found that Ed Cline, author of Sparrowhawk and blogger at The Rule of Reason, wrote it better than I could in December of last year. Go check it out!

1 comment:

Doug Reich said...

This is excellent. Thanks for pointing this out.