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A Short History of Money Posted - Aug 12, 2018
Money—and its counterpart, Finance—has been ever with us, from the time hunters and gatherers first pooled their resources and created the world’s first cities in the Mesopotamia Valley. With an annual harvest of crops and livestock entering the cities for sale and distribution, some form of accounting was needed. This led to the invention of numbers and basic math which in turn led to the creation of writing and education. This is among the many insights of “Money Changes Everything” by financial historian William Goetzmann.

Finance, notes the author, enables people to transact with each other over time and places a value on time itself. He cites the invention of debt and the emergence of interest to incentivize lending in third millennium Mesopotamia as “the most significant of all innovations in the history of finance.” Indeed, much of what we associate with a modern economy—mortgages, promissory notes, lines of credit, partnership contracts, and international trade—were developed at this time. The world’s first investors were something akin to capitalists—using money to make money. How big a role did finance play in the first cities? Very big. Archeologists have unearthed the world’s first financial district in the ancient city of Ur—the fabled birthplace of Abraham, the Biblical patriarch of Judaism, Christianity, and Islam.

The classical civilizations of Greece and Rome developed sophisticated financial economies based on money and markets. Writes the author: “The Greeks invented banking, coinage, and commercial courts. The Romans built on these innovations and added business corporations, limited liability investments, and a form of central banking.” Unlike the cities of Mesopotamia, Athens and Rome both outgrew their local agricultural capacity and so became overseas traders to feed the people of their cities.

Since that time, finance has made its greatest advances where the power of the state has been limited. In the Middle Ages, it was the self-governing Italian city-states that took finance to the next level. The Lombards dominated European banking. Venice created the first bond market. Genoa refined the corporation with distinctly modern features, including a separate legal identity, dividend payments, and transferable shares. The first money-markets appeared in the free cities of Antwerp and Bruges, and the first stock exchanges appeared in the free cities of Amsterdam and London. Says the author—the freedom to speculate in an open market equates to freedom and self-rule. Democracy is a direct result.

What happened in China, on the other hand, is quite a different story. The Chinese were the first to invent paper money, but they failed to develop a market for government credit or the equivalent of modern corporations. Private business in China, then as now, was vulnerable to expropriation by the state. “The intricate bureaucratic structure that made China the world’s longest-lived continuous civilization,” says Goetzmann, “survived by regularly seizing commercial opportunities from private entrepreneurs and crowding out private enterprise with state-supported monopolies.” At the expense of free enterprise, the Chinese state was always financially secure, therefore, never having to borrow money, such as governments in the West. Indeed, the Chinese government itself served as lender to business, rather than the other way around. As a result, economic development suffered. The Middle Kingdom failed to originate its own industrial revolution. The Chinese were richer, per capita, in the 12th century under the Song Dynasty than they were under the socialist party of Chairman Mao.

In the West, where the rule of law, intellectual property rights, and the ready availability of profit-seeking capital, served to stimulate economic growth and—oh-by-way— funded the Industrial Revolution— and drove the Great Age of Discovery. At the heart of it was the freedom to choose.

The English and Dutch East India companies that dominated world trade for 200 years and helped colonized North America were privately-funded enterprises.

While finance has shaped civilization and made our world an infinity better place to live, it has a dark side. Abuses have always been a part of the game. The antidote? Transparency, says the author. Finance is about trust. Investors need to know exactly how their money is being invested. It was a lack of transparency that led to the 2008 financial crisis: Wall Street practices had become overly complex—securitized bonds were issued with hundreds of pages of documentation, and credit was measured by employing highly contrived mathematical models that few could understand, and fewer still tried to understand. Banks in Europe and American invested billions in packaged loans without really knowing what they were buying. The result was very nearly catastrophic.

There is a great deal more to Goetzmann's book, of course, including chapters on Karl Marx and Communism, John Maynard Keynes, Russia, the secret of successful investing (there is none), and three profound concluding chapters: “The New Financial World,” "Re-Engineering the Future,” and “Post-War Theory.”

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Will I Am
Posted - Aug 06, 2018
Will I Am

That’s “Will” as in William Shakespeare,
and “I Am” as in iambic pentameter,
the meter in which he wrote his plays.

It’s writing with a beat, a heartbeat,
with ten beats to the line,
da-dum, da-dum, da-dum, da-dum, da-dum
with the accent on the second syllable,
da-DUM, da-DUM, da-DUM, da-DUM, da-DUM

as in,

Macbeth, Macbeth, Macbeth, beware Macduff


A horse! a horse! my kingdom for a horse!


Sweet mercy is nobility’s true badge.


Mine honor is my life; both grow in one;
Take honor from me, and my life is done.


This above all: to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.


Sweet are the uses of adversity,
Which, like the toad, ugly and venomous,
Wears yet a precious jewel in his head:
And this our life, exempt from public haunt,
Finds tongues in trees, books in the running brooks,
Sermons in stones, and good in everything.

Iambic pentameter works especially well in German and in the language that grew out of it–English. In fact, we speak in iambic, emphasizing one syllable over another, as in “we SPEAK in IAMbic,” or “my NAME is RICHard NISley” or “are YOU goING to THE store” or (quoting Shakespeare) “it’s GREEK to ME.” To do otherwise is to speak in a monotone, which is boring. Which brings us back to Shakespeare. Shakespeare livened up the English language and one of the ways he did it was with writing in iambic pentameter. For actors, it makes memorization much easier. As one actor put it, learning Shakespeare is like hearing a song on the radio. With repetition the words become memorable, thanks to the steady iambic beat, ten syllables to the line, line after line after line.

From Macbeth, I leave you this:

Double, double toil and trouble;
Fire burn and cauldron bubble;
Fillet of a fenny snake,
In the cauldron boil and bake;
Eye of newt and toe of frog,
Wool of bat and tongue of dog,
Adder’s fork and blind-worm’s sting,
Lizard’s leg and howlet’s wing,
For a charm of powerful trouble,
Like a hell-broth boil and bubble;

By pricking of my thumbs,
Something wicked this way comes;
The ‘“Why” of American Exceptionalism: “Rutgers v. Waddington”
Posted - May 17, 2018

What is American Exceptionalism? According to President Ronald Reagan, who used the term often while campaigning for president, it was America’s divine chosen-ness and moral superiority. The term, however, originated with a French visitor to America, Alexis de Tocqueville, who coined the term in his 1835 travel account, writing that “The position of the Americans is therefore quite exceptional, and it may be believed no democratic people will ever be placed in a similar one.” Sociologist Seymour Martin Lipset, took this idea a step further when he wrote in 1997: “Being an American is an ideological commitment . . .” a commitment in which “law is the only sovereign.”

What does American Exceptionalism have to do with a court case that was decided before creation of the U.S. Constitution? A great deal, actually. The case is “Rutgers v. Waddington.”

In Peter Charles Hoffer’s compelling book about the case, the better part of American Exceptionalism is the legal forgiveness of one’s former enemies.

At the center of Rutgers v. Waddington is Alexander Hamilton, who argued for the defendant in 1784. The war with Britain was over by then, but the infant Republic was embroiled in something of a cold war between Patriots and Loyalists, in what the author calls “the first American civil war.” At issue was property, property that had been abandoned during the war. Much of it was in upstate New York and owned by Loyalists who had fled the country. Now that the war was over, they wanted it back.

In the case of Joshua Waddington it was the opposite. He was a Loyalist who during the war had rented a brewery house in New York City from Elizabeth Rutgers, a Patriot who had fled the city. New York City was occupied by the British up to their departure in 1783, and Waddington had paid his rent to the British, who in turn donated the money to various charities throughout the city. Now that the war was over, Anthony Rutgers, acting on behalf of his mother, wanted back payment for the rent. A dispute ensued over the exact amount to be paid. The dispute turned ugly during negotiations when the brewery house mysteriously burned down. Suspecting the worst, Rutgers upped the amount to what today would be one million dollars, and turned to the courts for redress.

Prior to this, the New York state legislature had passed the Trespass Act, which tilted the advantage heavily in favor of the Patriots. Nonetheless, Hamilton saw an opportunity for himself and took up the study of law. Many of the Loyalists seeking redress were wealthy and able to pay healthy legal fees to regain possession of their property, which was considerable. In the immediate postwar years, where tensions still ran high, taking sides with the Loyalists was not the most popular thing for a Patriot to do, but Hamilton had a motive. He wished to create a lucrative law practice while redressing Loyalists’ grievances caused by The Trespass Act. Many were wealthy merchants with overseas business connections with ample investment capital that Hamilton believed was critical to jumpstarting the nation’s ailing economy. Rutgers v. Waddington was Hamilton’s first big case, and something of a test case at that. Should he win, it would set a legal precedent in the courts that favored Loyalists’ return to their former place in the American business world, and generate considerable new business for Hamilton’s law practice.

The odds of winning were stacked against Hamilton. The terms of the Peace Treaty were vague concerning the welfare of Loyalists, and the Trespass Act outright hostile. Hamilton turned to the writings of Blackstone and Vattel to buttress his case while arguing that the sovereignty of the people was not in the state legislature or the state constitution, but in Congress under the Articles of Confederation. “The first act of our government adopts it as fundamental law . . . these reflections teach us to respect the sovereignty of the union and to consider its constitutional powers as not controllable by any state.” This was heady stuff Hamilton was proclaiming, at a time when state power was considered equal if not greater than that of the Confederation Congress. Fortunately for Hamilton, he had a friend in the Mayor’s Court which tried the case, in whom he may or may not have shared his legal brief prior to the court’s judgement. Whatever actually did occur (the author is uncertain), Hamilton’s legal arguments were persuasive and carried the day for his client. Waddington paid a significantly reduced rental fee.

The case has since been considered an early milestone in developing the American doctrine of judicial review. Yet, there was more to the case than meets the eye. It set the tone for what it means to be an American—what “American Exceptionalism” is really about. Writes the author: “(Rutgers v. Waddington) stood for a commitment to resolve differences, even the most violent of differences, under the rule of law. It stood for the autonomy of the judicial branch in a system of checks and balances. It stood for basic fair play. In 1784 and 1865, the sense of fair play had been severely tested by civil warfare. But Rutgers and its legacy envisioned a polity in which former enemies could find neutral forums to resolve disputes and then willingly accept the decisions of these forums. To load all of this on one case in New York’s Mayor’s Court may seem overreaching, but at the time, contemporaries thought the case of great importance. If, in the course of nearly two and a half centuries of legal and political change, Rutgers’s significance has diminished, it is surely long past time to restore its place in the canon.”

Final note: there is more to Hamilton’s legal arguments than can be summarized in a review, which, to say the least, are fascinating and insightful in how Hamilton reasoned out his arguments—reason enough to read to this book.

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Ordering up a New World
Posted - Mar 18, 2018
They were 18th-century Scottish philosophers, and what they did was order up a new world that became the United States. Fittingly, they’re the subject of a recent book, “The Infidel and the Professor,” by Dennis C. Rasmussen. The “infidel” is David Hume and “the professor” is Adam Smith. The author is Dennis C. Rasmussen, associate professor of political science at Tufts University.

Hume was born in Edinburgh and spoke with a decided Scottish burr, while Smith, who was born a few miles to the north, in Kirkcaldy, Fife, did not. Both were highly gifted students. Hume attended Edinburgh University, but did not graduate. Smith attended Glasgow University, and did. Both suffered temporary breakdowns as a result of overstudy. Hume did not teach, and spent most of his adult life writing, which came easily to him. Smith taught at Glasgow U, and struggled with the pen. Neither married (few great philosophers do), although Hume did fall madly in love with a lady of Parisian society but ended the relationship fearing it would draw him away from his true passion, study and writing.

Hume wrote about human behavior, ethics, religion, political theory, economic theory, and authored a stellar six-volume history of England. Smith wrote two books, one concerning political theory, and one concerning economic theory.

Unlike a number of Enlightenment writers, neither Hume nor Smith were radicals. They did not advocate grand schemes for radically restructuring society. They embraced the benefits of the rule of law, limited government, religious tolerance, freedom of expression, private property, and commerce, while insisting that necessary societal changes should be implemented in a gradual, measured way. Unlike other revolutions to come, this was exactly the result of the the American Revolution–gradual rather than sweeping change.

“The Infidel and the Professor” is almost as much about Hume’s and Smith’s friendship as it is about their books. The author devotes approximately two chapters to Hume’s writings and two chapters to Smith’s: one to “The Theory of Moral Sentiments” and one to “The Wealth of Nations.” Of the two, “The Theory of Moral Sentiments” was more popular in Smith’s day. Meanwhile, across the Atlantic, Hume’s and Smith’s books were widely studied in America by the Founding Fathers, particularly Alexander Hamilton and James Madison. Thanks to the scholarship of historian Douglass Adair, we know that Madison was greatly influenced by the political theories of David Hume. Writes Adair: “It was David Hume’s speculations on the ‘Idea of a Perfect Commonwealth’ . . . that most stimulated James Madison’s thought on factions.” He goes so far as to say Madison had a copy of Hume’s book at his side while writing Federalist No. 10. For his economic ideas, Madison drew upon Smith’s “The Wealth of Nations.”

According to historian Forrest McDonald, it was the opposite with Hamilton. For his economic theories, Hamilton drew more on Hume’s economic theories, and for his political theories drew more on Smith’s “Theory of Moral Sentiments.” Unfortunately, Rasmussen does not discuss in any depth the actual influence Hume and Smith had on America's founding. That said, I enjoyed his book, and recommend it to anyone desiring to know more about two of the greatest and most influential writers of the 18th century Enlightenment. To learn more about their impact on America’s founding, I suggest “Novus Ordo Seclorum: The Intellectual Origins of the Constitution” by Forest McDonald; “Explaining America: The Federalist” by Garry Wills; and “Fame and the Founding Fathers” by Douglass Adair.

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Work of My Sons

Morning Softly - Water Echoes Movement
-Released in 2014. Bill made guitar riffs and synth tracks at home, got Lya Finston to write some lyrics and sing, and got Scott to provide some bass.

Morning Softly - Early Eerie Feeling
-Recorded in 2014. Songs written by Bill, at home. Synthesizers were added later. Some drumming done by Brendan Lenihan.

Scott Nisley - Brick City Skies
-Released in 2014. With his piano melodies and vocals, Scott entrusted the production of his album to several studio musicians.

The 45's - Roof-Hopping
-Recorded in 2010. A collaborative effort between Scott and Bill Nisley, Adam Sherman, and Zach Belka.

Oh, Yeah...

Richard Nisley's Brothers in Cars
Thanksgiving Day, 1967. From L to R: my brothers David, Charles, and Rob. Photo by John Nisley.
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