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Erasmus Forum Bulletin / Volume I 2018 5 Notes on Contributors Hywel Williams Hywel Williams is Director of the Erasmus Forum and editor-in-chief of its Bulletin. His new book The Seven Ages of Britain (Head of Zeus 2021) is the first post-Brexit history of the British Isles. Semir Zeki Semir Zeki is one of the foremost neurologists of his generation. He obtained his Ph.D. in anatomy from University College London, where he became a Henry Head Research Fellow of the Royal Society before being appointed Professor of Neurobiology. Between 1994 and 2001, he was the director of the Wellcome Laboratory of Neurobiology. He is also a Fellow and member of several other organisations including the American Philosophical Society, Academy of Medical Sciences, European Academy of Sciences and Arts and Academia Europaea. Zeki has specialised in studying the primate visual brain and more recently the neural correlates of affective states, such as the experience of love, desire and beauty that are generated by sensory inputs. His lifetime contributions have led him to be known as the ‘father of neuroaesthetics’. Throughout his career he has been the recipient of numerous awards and honours, his most recent being the Rome Prize (2012) David Abulafia David Abulafia is Professor of Mediterranean History at the University of Cambridge and a Fellow of the British Academy. His interests embrace the economic, social and political history of the Mediterranean lands in the Middle Ages and the Renaissance. His most recent book, The Great Sea (Penguin), explores the history of the Mediterranean from 22,000 BC to AD 2010. In 2013 he was awarded. A British Academy Medal for the ‘landmark academic achievement’ which the book represents. He has written many other books including The Discovery of Mankind: Atlantic Encounters in the Age of Columbus; The Western Mediterranean Kingdoms, 1200-1500; The Struggle for Dominion, Mediterranean Encounters, Economic, Religious and Political, 1100-1550 and A Mediterranean Emporium: The Catalan Kingdom of Majorca. A.N. Wilson As novelist, biographer and critic Andrew Wilson occupies an unique position in English literary life. Sweets of Pimlico (1977) heralded the arrival of a distinctive voice in the history of the English novel encompassing as it has done an immense variety of thematic preoccupations and stylistic effects. My Name is Legion (2004) held a mirror to Britain’s newspaper industry and Gentleman in England (1983) is an elegantly accomplished pastiche of the Victorian religious novel. Nineteenth century England has been a more or less continuous inspiration for the Wilson pen.

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Erasmus Forum Bulletin / Volume I 2018 6 Notes on Contributors Studies of Hilaire Belloc (1985) Milton (1983) C.S.Lewis (1990) Iris Murdoch (2003) and, latterly, Charles Darwin, (2017) have shown the author’s unerring ability to shine a piercing light on some of the more monumental figures in the English literary landscape. The Victorians; After the Victorians, and Our Times- a trilogy covering the experiences of the British peoples from the age of the regency to the present day- is both panoramic in effect, and bracingly synoptic in its exegesis. Biographical accounts of Tolstoy (1988), St Paul (1997) and Dante (2011) have revealed the author’s European range of scholarship. Present throughout the Wilson oeuvre is a truly Erasmian capacity to combine seriousness with satire. Mark Jones After training for ordination in Oxford, and serving his title in the West Midlands, the Revd Mark Jones returned to his Cambridge college, St John’s, as its chaplain for five years, where he taught History and Theology to undergraduate students, before moving to Eton College as Head of Divinity in 1989. He has taught there ever since, including a thirteen- year period as a house master, and currently holds the post of Director of Boarding. Paul Lay Paul Lay is editor of History Today. He is a Senior Research Fellow of the Humanities Research Institute at the University of Buckingham and is a member of the advisory board of the History and Policy group at King’s College London. Anne Murphy Before embarking on an academic career Anne Murphy worked for twelve years in the City of London trading interest rate and foreign exchange derivatives. She is now Reader in History and Associate Dean Research in the School of Humanities, University of Hertfordshire. Her publications include The Origins of English Financial Markets : investment and speculation before the South Sea Bubble (CUP 2010). Nicholas Crafts Catherine Schenk Catherine Schenk is Professor of Economic and Social History at the University of Oxford. Previously, she was Professor of International Economic History at the University of Glasgow, a visiting researcher at the International Monetary Fund and the Hong Kong Monetary Authority. Her publications include International Economic Relations since 1945 (2011) and The Decline of Sterling: managing the retreat of an international currency (2010). She is also co-editor of the Oxford Handbook of Banking and Financial History (2016). Nicholas Crafts CBE has been Professor of Economic History at the University of Warwick and the Director of the ESRC Research Centre on Competitive Advantage in the Global Economy at Warwick University since 2010, and is a Fellow of the British Academy. He has been a consultant for many organisations including HM Treasury, IMF, Unilever and World Bank

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Erasmus Forum Bulletin / Volume I 2018 9 t helps in understanding the Luther of 1517, the year of his decisive emergence into public notoriety, if we think of him as rather like a young academic in a new British university of the sixties, teaching a newly minted subject – cultural studies or sociology, say: a man conscious of being in a position that is both intellectually exposed and potentially pivotal in changing a whole discourse, working in an institution that is itself conscious of being on the advancing edge of change. Wittenberg, where Luther had studied briefly in 1508-9, and where he returned as a young professor in 1511, was in a remote area of the Holy Roman Empire, and its university was a raw newcomer to the academic scene; but the district was becoming more prosperous because of the success of mining enterprise, and its ambitious ruler, the Elector Friedrich, was determined to provide it with the institutions required in a princely city of ascending status. The university was less than ten years old when Luther began working there, and its foundation had been helped along greatly by Luther’s own mentor and confessor, Johann von Staupitz. From the start, the community of Augustinian friars, whose convent stood next to the university buildings, played a key part in providing teaching staff. Exactly what the intellectual climate at the university was like is a slightly complex question: we know that the curriculum was initially rather old-fashioned as far as theology was concerned, in that scholastic theology and philosophy as developed up to the fourteenth century was still the dominant presence. Staupitz would have preferred more openness to newer currents in theological thinking – the via moderna of writers like Gabriel Biel and William of Ockham, with its scepticism about the existence of anything except unique particular substances in the world, so that any notion of actually existing unifying forms within and beyond individual things had to be left behind. But neither Staupitz nor most of Luther’s colleagues really represented the world of humanist scholarship, the recovery of classical learning and style, which (as we see in Erasmus) regarded both older and newer varieties of scholasticism with some disdain. Luther himself had picked up an interest in the strictly linguistic aspect of the new learning and the Elector’s secretary, Georg Spalatin, had introduced him to humanist circles in Nurnberg. The university seems to have made polite gestures to humanist scholarship and invited a few prominent names to lecture, but for all this parading of its openness to novelty the core teaching in theology was generally conservative. What Luther brought to the table was not a passion for Greek and Hebrew in the humanist style, but a passion for teasing out the theological themes of the Greek and Hebrew texts in a way that offered a drastically different model of theology, neither scholastic nor humanist. In that second decade of the sixteenth century when Luther was maturing his thinking, the newness of his contribution lay essentially in the way in which he pursued the interpretation of Scriptural texts, looking for coherent patterns of vocabulary and thought – and also in his willingness to do this through the medium of the German language. Before the events of 1517 he was refining his understanding of divine righteousness as set out in Paul’s Letter to the Romans, announcing his great theological discovery: when Paul spoke of God’s righteousness or justice, he had in mind that justice by which we are made to be just, not only the justice that condemns our unrighteousness. We are incapable of being righteous by our own acts, and the only way in which we can be made iusti is if God’s own righteousness is exercised upon us to declare us to be just, simply by the all-powerful decree of God. This is ‘passive’ righteousness; recognising this is the only thing that can deliver us from the terror of God’s own active justice, which pronounces sentence upon us. Luther’s own agonising struggles over his acceptability in the sight of God, which had shadowed all his early life in the monastery, were resolved by this fresh recognition. As he put it in his lectures on the Psalms, which come from the same period as his work on Romans, our only security is insecurity, in the sense that it is only when we acknowledge that we have absolutely no ground on which to negotiate our safety with God that we can realise that God is the one ground upon which we can safely stand. We possess nothing we can bring to God to make ourselves acceptable; but if it is God’s decision that we be acceptable, nothing can shake that divine purpose. ‘Passivity’ is our only security. Without going into the detail of this theology, extensively elaborated in lectures on Paul’s Letter to the Galatians as well as Romans, we can see how Luther is refining a theological method that is essentially shaped by an urgent pastoral imperative. Neither scholastic nor humanist theology can resolve the situation of a soul conscious of its total impotence to move or motivate itself towards the good in any I

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Erasmus Forum Bulletin / Volume I 2018 10 way that will meet the demands of an absolutely just creator. The ambition of the human self to establish and secure itself is absurd and ultimately lethal, leading either to despair or to monumental self-deception – to hell in one way or another. And this is the area in which Luther briefly but significantly joins forces with the imaginative world of the spirituality and teaching on contemplation of many writers of the late mediaeval German Catholic world. The anonymous work known as the Theologia Germanica or Theologia Deutsch, originally complied towards the end of the fourteenth century, drew together the main themes of some of the most prominent writers on contemplation in mediaeval Germany (though it only refers explicitly to the great fourteenth century Dominicans, Eckhart and Tauler), with a good deal of appeal to Scriptural texts and to the authoritative pseudonymous corpus of writing associated with the name of Dionysius the Areopagite (who, as a convert of St Paul – Acts 17.34 – was treated as having near-apostolic status. Luther, who believed the work to be directly from Tauler’s hand, produced editions of this work in 1516 and 1518, with the intention of showing that his own teaching was anchored in biblical and patristic thought; but this was a very different kind of ressourcement from that of most contemporary humanist scholars. This was a patristic theology read through the lens of a discourse of radical self-dispossession and obedience, in which the created soul is summoned to let go of everything that binds it to the created order and to its own self-concern (the text uses the curious coinage icheit, ‘I-ness’, to describe this). Adam’s fall has condemned us to a hell we are already in some sense experiencing, the hell of present alienation from God because of our disobedience: ‘everything that arose and came to life in Adam is defeated and dies in Christ’ (ch.15). Thus our salvation comes through our acceptance of complete passivity in respect of God’s will: we embrace the sentence of God on our sinful humanity (and so ‘descend into hell’) and are reborn as a sort of empty space for Christ to inhabit (e.g. chs.11 and 24). This is what union with Christ means: the loss of our created selfhood and so of our reliance upon our own will or reason (e.g ch.40). The Theologia Germanica is (unsurprisingly) familiar with scholastic terminology and argument, but its own argumentation owes little to this idiom. And while Luther increasingly identifies areas where he is not in agreement with this text’s approach, it is not hard to see why it appealed in the second decade of the sixteenth century to someone for whom scholasticism was an abstract and unpastoral world, but equally someone with no special investment in new learning for its own sake. 1517 saw a frontal attack on scholastic method by Luther in the form of a series of 97 theses advanced by his pupil Franz Guenter and approved by the University: the open repudiation of Aristotle in this text and the strident denunciation of Scotus, Ockham and Gabriel Biel laid out a clear agenda of anti-scholasticism and anti-humanism alike. The fallen will is not free to love God or the good (10), and – a powerful phrase – does not want God to be God (17), since it itself desires to be God. Any emphasis on some natural capacity to seek virtue and so to be pleasing to God makes God passive to creation, and this robs him of his divinity. Luther is at one with much of later mediaeval theology in stressing the absolute primacy and liberty of divine will. But where Scotus or Ockham had used this to establish the idea of a God who freely ordains that keeping the ordinances of the Church will count in his sight as meritorious simply because they are exercises in obedience, Luther goes much further. A total dependence on God’s freedom cannot even assume that particular human acts are ‘reckoned’ to be worthy: all that matters is the annihilation of all self-will and self-reliance, so that there is literally nothing going on in the Christian soul but Christ’s action. As he writes in a later meditation on Psalm 118, we can only be secure when we can say to the devil, ‘There is nothing here but God’s might’ (Early Protestant Spirituality, p.59). II If the first theological salvo fired in 1517 was the set of theses proposed by Guenter, laying a broad methodological and theological foundation, the second and more famous, the 95 theses posted at the end of October, brought the debate home to issues of ecclesiastical power and politics. By attacking the system of indulgences, Luther challenged the idea that the Church’s hierarchy had the authority to remit punishments for sin on God’s behalf. The theses begin with the simple declaration that biblical language about repentance does not mean the making of satisfaction or reparation but an internal change. Anything else is a commodifying of grace which reinforces the point made earlier in Guenter’s theses that the sinful soul essentially wants to strip God of being God, i.e. to make God a passive object for

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Erasmus Forum Bulletin / Volume I 2018 11 human agency to manipulate. But this assault by Luther in practice, on the actual exercise of ecclesial power, raises the temperature of debate significantly. And the most visible result of this is that Luther, writing eloquently about the abandonment of self-will, is pushed into a strategy that requires him to promote his own self-image in a quite new way. He is making himself exceptionally vulnerable, and so needs protection; and one novel form of protection is the mass media of the day, the new technologies of print, with the possibility of cultivating a personal following far more extensive than any mediaeval teacher could have had. If Luther up to 1517 is something like a radical sixties or seventies academic, the Luther of the years that follow is a man making full use of the sixteenth century equivalent of an online presence, a Facebook profile or YouTube channel. Not only does the new technology of print allow a rapid and wide dissemination of his ideas; it also allows him to present himself as the hero of a story of struggle. When he faces interrogation by Cardinal Cajetan in 1518, he deliberately ‘theatricalises’ the event, in advance of, during, and after the actual encounter. It is a risky strategy but a remarkably successful one; appealing over the head of routine canonical process, he creates a public who will make it harder for him to be officially silenced. His aim is to make it as risky for his opponents to silence him by imprisonment or death as it is for him to speak in the first place. And since the public he creates includes some of the most influential aristocrats in a politically volatile Germany, he begins to learn how to manipulate the political tensions of the day in the service of his cause, recognising just how far popular resistance to clerical power had spread among the literate and more-or-less literate classes in Germany. And thanks above all to the brilliant collaboration of Lucas Cranach, he is able to create a popular image, in picture and narrative: his portrait begins to be circulated until it becomes probably the most widely known image of a human face in sixteenth century Europe apart from Christ and the Virgin. The success of the strategy is illustrated by the fact that he is not immediately excommunicated (not until 1521, in fact) – by which time, his protection is on a sound footing. It is worth noting that he was not alone in deploying these methods: an example that Luther would have had mixed feelings about was that of the Bavarian aristocrat, Argula von Grumbach, who after challenging the theologians of the University of Ingoldstadt to debate Luther’s ideas and other novel proposals and being refused a hearing ‘created her own far larger audience by the use of print’ (Reformation Christianit, p.268), notably by publishing what we would call ‘open letters’. In one of these, she says tellingly, ‘I had intended to keep my writing private; now I see that God wishes to have it made public’ (Early Protestant Spirituality, p.27). Like Luther, she has concluded that she needs to appeal over the heads of conventional authority if she is to make any impact and to avoid the various ways of silencing that conventional authorities can deploy. The more this public image and narrative is polished, of course, the more difficult it is to retract or retreat. Luther nails his colours firmly to the mast of protest and critique in the works he produces after 1517; and one of the most influential and original of these is – yet again – a set of theses, advanced this time for a disputation at Heidelberg in 1519. This document is perhaps the most emotionally intense of Luther’s early works, a passionate indictment of both scholastic theology and a theology of personal or private revelation, and experiential assurances of faith. The Heidelberg Disputation texts develop the Theologia Germanica tradition in a still more radical direction, underlining both the need for self-annihilation and being brought into hell, and the birth of Christ in the soul. Like the Theologia Germanica, the Heidelberg text says that what is not Christ in us has to die (23), since Christ is the only reality that cannot be killed or destroyed by evil. True theology begins from this point; its opposite is what Luther here calls a ‘theology of glory’, a speculative search for conceptual assurance aiming essentially at the triumph of human self-affirmation. Various Lutheran commentators have insisted that there is a real difference between the mediaeval configuring of self-denial as a task undertaken particularly by a monastic elite and Luther’s assimilation of the idea as a fundamental methodological principle for all authentic Christian utterance, and there is some truth in this – though it underrates the way in which Eckhart and his followers and imitators do indeed see the fundamental gelassenheyt, letting-go or self-abandonment, of the self as something other and deeper than mere acts of self-denial. Perhaps more interesting is the gap between the residual Platonism (and Augustinianism) of the earlier German texts and Luther’s approach: Eckhart, Tauler and the Theologia connect the evil of the

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Erasmus Forum Bulletin / Volume I 2018 12 rebellious will with a sort of collapse into the basic non- being of creation as such, while Luther shows no interest in exploring this sort of metaphysical ground for evil, and focuses on the bare fact of the will’s impotence and perversity. Themes from the 1517 texts are echoed, but here the two fresh perspectives are the emphasis on the invisibility of God’s work, hidden in its apparent opposite (in suffering and death, in the dereliction of Christ on the cross) and the contrast between a human will which seeks out what will satisfy it and a divine will which creates what is pleasing to it. To project the former on to God is once again to deny that God is God. Thus, so far from the presence of God’s reality being in some way ‘proved’ by the signs of divine activity in the world or in my individual experience, the paradox is that we can be sure of God only when there is nothing we see, internally or externally, that suggests the divine. What happens in this world is chaotically vulnerable, and to identify God’s presence with the signs of this or that transient set of phenomena is a sure way of creating an idol. As in the Theologia, so long as we are still acting so as to secure our faith and our acceptability, we cannot be sure or acceptable: the only route to God is the recognition that we are already in hell and doomed to stay there as long as we imagine we can get out by our own act. This is the point at which Luther is perhaps furthest from pretty well all his contemporaries and most conspicuously original, turning the ‘mystical’ rhetoric of his mediaeval predecessors into a comprehensive theological programme; but it is essential to see that this enterprise would be impossible without that background of focus on the need for our action to be displaced in some sense by the act of God in the event of grace. Here the theology of faith developed especially in the earlier lectures on the Psalms and Galatians comes to its fullest and most striking expression, despite the extreme compression of the text, in a brilliantly paradoxical set of formulations, implying that the ultimate ‘experiential’ grounding of faith is a lack of what we usually think of as religious experience. And it is here that Luther’s legacy is most generative in European thought. III. In one way, what Luther is proposing is a fundamentally ‘disenchanted’ world. On the surface at least, he is protesting at the identification of the divine with aspects or elements of the world we can see and sense and even reason about. Faith becomes a miraculous capacity to see what is ‘naturally’ hidden – the omnipresence and omnipotence of divine action; and ethics is not – as in a more classically inflected scheme – the fulfilment of a natural calling or capacity but the outworking of a divine presence that has displaced the corrupt human will. In Luther’s own great early treatise on the foundations of ethics, The Freedom of a Christian, written in 1520, he delights in turning upside down what he understood to be the conventional mediaeval approach to God and holy living: it was not the obedient following of God’s will by the human will, producing divine favour for the satisfactory performer, but the effect of divine gift, bestowed quite independently of any innate capacity let alone any deserving on our part. Good acts express and signify divine favour, they do not earn it – hence the freedom of the Christian, because this means we are never in the position of being obliged to do what is necessary but unwelcome. Good action, selfless service of others, is natural – not to us but to the indwelling God. Fundamental to this picture is the conviction that nothing less than this can dissolve the chains of self-doubt and self-hatred – and indeed, hatred for God: hating oneself for failing to satisfy a set of impossible divine demands is terminally entangled with hatred for a God who demands the impossible and punishes failure without mercy. The animus with which Luther attacks any hopes for positive ‘religious experience’ in the Heidelberg theses arises from his refusal to entertain the belief that security in respect of God can rest upon any state of affairs in us: to do justice to the absolute priority of divine action means that such security can only be found in the absence of any contingent state of affairs that would externally support a conclusion about God. Luther does not quite say that all objectivising, third- person language about God is vacuous, but he comes very close to it – and in this respect he is indeed a precursor of the greatest Lutheran thinker of modern Europe, Soren Kierkegaard. The effects of this are complex. From one point of view, Luther’s theology affirms in clear terms the solid givenness, the consistency and integrity, of the created order. Although he has no intention of excluding the miraculous or arguing for a closed cosmic system in a post-Enlightenment way, his theology certainly has the potential for converging with this particular aspect of intellectual modernity.

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Erasmus Forum Bulletin / Volume I 2018 13 As some twentieth century Lutherans – like Rudolf Bultmann, with his programme of ‘demythologising’ Christian doctrine – have argued, a consistent theology of the cross in Luther’s sense can be a means of dissolving any supposed rivalry between ‘world-views’: theology cannot be a ‘world-view’ if that means a system making sense of the things that happen in the universe, and God is never to be imagined as an explanatory resource. Positively, this means that any conflict between religious claims and the facts evident in a scientifically understood cosmos must be a category mistake; and there can equally be no sense that Christian identity entails a policy of world- denying asceticism, for instance, since a policy of ascetic achievement once again links God to a particular way of life and set of behaviours and so compromises God’s divine freedom. A radical consistency of this sort about God’s transcendence brings with it a radical affirmation of a world which gains its meaning not through being sporadically interrupted by divine intervention but through the free acceptance of its constraints by the liberated believer, sovereignly delivered from any kind of bondage to what happens to be the case. Yet the deep ambiguity that lurks within this vision is not hard to tease out. It is a perspective in which any notion of intrinsic worth in finite reality is more or less ruled out. Everything depends, morally and imaginatively, on the deliverance of the self from its illusory and idolatrous captivity to the fiction of its own power; but the deliverance in question comes when the direct act of God in effect replaces the finite agent. This replacement is what enables the new engagement with the world that is celebrated in the treatise on Christian freedom; but if it is only this drastic de-creation that makes possible a transformed life, what is left to be said about the independent meaning or value of anything outside the evacuated and divinely reoccupied self? It is not easy – as aspects of Lutheran history show – to derive from Luther’s theology either a discipline of self-critical awareness of how we grow or fail to grow in spiritual maturity or a critical perspective on public and political affairs. In the Lutheran night of spirit, all cats are grey: learning skills of self- knowledge, beyond the recognition of a basic habit of self-deceit, learning skills of ethical prudence and political scepticism – all this is firmly set aside. It is theologically unimportant whether a person is or is not aware of the gradations of self-deceit in their life or whether a political environment is more or less collusive with the pervasive idolatry of the human ego. Part of what is so intriguing in Kierkegaard’s immensely subtle reworking of Lutheran themes is his diagnosis of the paradoxical self-satisfaction that can arise from a theology of such radical dismantling of selfhood: the ironic awareness which Kierkegaard explores is something rather different from a mere blanket acceptance of one’s incapacity: it has to be looked at, both nurtured and scrutinised. And Dietrich Bonhoeffer’s equally subtle reworking of Lutheran political theology in his last years before his arrest and execution by the Third Reich similarly diagnoses the risks of failing to ask specific questions of prevailing political hegemonies about whether they are serving natural and inalienable human goods. Perhaps the problem is that Luther does not go far enough in his insistence on separating God from the categories of the world and the human imagination and reason. It is rather as though he conceives the divine and the finite as separated by an impassable frontier, so that what applies in one territory does not apply in the other. His image of the ‘Two Kingdoms’ in which we live, the realm of divine love and the realm of the world as it is, can readily slip into a picture in which God and the world simply sit alongside each other in hermetically sealed compartments, so that what is natural in one order simply has no rationale or purchase in the other. But if the divine transcendence is thought of less as something that – ‘territorially’ – excludes finite reality and more as an agency that is impossible to locate in any limited way, the map changes a bit. Divine action that is always already expressing itself through the sheer existence of things in the world (including human agents) does not have to displace what is created; it is possible to say that its action always works to realise or complete what it makes possible in the gift of creation. But this is precisely to go back to some of the philosophical assumptions that can be discerned in the mediaeval contemplative literature Luther draws on, and which many Lutheran scholars are so unhappy with. Goodness in creation exists as a sharing in divine goodness, and not even the most extreme distortion of human sin and alienation can alter that. But in that case, it becomes possible to look with discernment at states of affairs in the world and to ask whether and how they may

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Erasmus Forum Bulletin / Volume I 2018 14 more fully become what they are capable of being – whether it is a question of individual growth in discipline and virtue or of challenge to unjust and inhuman forms of political power. Luther’s critique of a greedy experientialism, searching for experiences and emotional states that will confirm our rightness, is a salutary counter to self-indulgent self-reassurance, to a basically corrupt and sentimental hunger for a particular kind of certainty. But his impatience with philosophical clarifications and his passion for preserving intact the absolute primacy of divine agency exact a rather high price. The self that he imagines and vocalises is one that begins in a state of utter untruthfulness, and is then lifted out of its solipsistic hell by God’s entry into the void at its centre. And in a world in which there is apparently no intrinsic value and from which the divine is radically absent, the God-filled self then becomes a source of worth or meaning. And this is a very significant element in the shaping of a new kind of selfhood in European culture, a selfhood which is at one and the same time the source of value in a neutral or abandoned world, and itself an empty reality, stripped of any innate anchorage in truth, any actual share in the reality it perceives and processes. For Luther, God’s saving and merciful action rescues both self and world from their basic emptiness; but if the action of God ceases to be a culturally credible notion, what is left is the characteristically rootless modern ego, stripped of its anchorage in the rest of the finite world, yet charged with giving intelligible and moral shape to that world in the absence of any firm points of orientation. Luther would have been startled to find himself so regularly represented in semi-popular discussions of the Reformation as some sort of champion of individual liberty and freedom of conscience; his own priorities are nowhere near those of the real individualist (let alone the modern liberal), and his systematic mistrust of any appeal to experience is a theologically sophisticated defence against any tyranny of the unexamined individual subject. But it is precisely the sophisticated equipment, which he brings to this argument that entangles his legacy. In order decisively to separate the action of God from any finite activity, especially on the part of human beings, he has, in effect, to define finite reality as a place where God is absent: the world is where God is not, or at least not in any way discernible. This allows him to develop a powerful model of redemption as the displacement of Godless worldly reality by God’s immediate agency – thereby dramatically liberating the human self from the unattainable task of changing or saving itself. As we have seen, behind this lies the strong rhetoric of the late mediaeval German contemplative writing which Luther was absorbing (and editing) in the second decade of the sixteenth century: where Christ is alive, everything else is dead, and ‘nature’ in and of itself, is for all practical purposes identical with evil (Theologia Germanica ch. 43). But all this is framed in the earlier contemplative literature (especially in Eckhart and Heinrich Suso, but even to some extent in the Theologia Germanica) by the pervasive Platonic and scholastic perspective in which the substantial and active reality of the finite world is as it is in virtue of its participation in eternal activity: it cannot cease to be or to be good. In this context, what is dissolved or annihilated in the life of faith and prayer is not the foundational active being of the self or its objects, but the exclusive and possessive state of mind which seeks to grasp both the self and the things of the world as if they were not grounded in God’s self-giving. Luther’s indifference to this cosmological element in the spiritual language of the earlier writers pushes him dangerously in the direction of a radical alienation between creator and creatures. Of course, there are many aspects of his developed theology, which in fact offset this kind of language – although the extreme moral duality of the ‘Two Kingdoms’ picture is an uncomfortable reminder of how the language of basic alienation can work itself out in practice. But this construction of a self and a world defined in their ordinary life by God’s absence and invisibility is the model with which he works at the most creative and influential period of his intellectual life – not least because the clarification of this point is for him a matter of life and death. It was said of T.S. Eliot that in The Waste Land he transformed a personal neurosis into a cultural crisis; the same could be said of Luther. It was no part of his agenda to create a new sense of self for a Europe shaking off the habits of thought that had prevailed from late Antiquity to the end of the Middle Ages, let alone a sense of self tailored to the acquisitive and competitive obsessions of nascent capitalism or nationalism or religious experientialism. Quite the contrary, we might say, given that the focus of his severest polemic is the illusion of control over ourselves or our world. Yet – to go back to the point made earlier – any erosion of belief in divine

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Erasmus Forum Bulletin / Volume I 2018 15 action leaves the self of Luther’s theology in just the kind of desert that characterises the modern and even more the postmodern self, where only the levels of will and passionate emotion which Luther so distrusted and despised can be called on to deliver meanings that are simply imposed or asserted – so that, as a good many critics of postmodernity have argued – reasoned debate and discernment give way to a basic violence of conflict. Power settles what is to count as truth. Looking back on Luther’s revolution across half a millennium – and looking back from a cultural vantage point where the confusion of power and truth seems a more acute issue than ever – the task is not to apportion blame to Luther for cultural crises he could never have imagined. But part of the point of studying intellectual history is to see how we learned to think thus and not otherwise – and in seeing how we have learned, to learn that we do not have to think like this: it is a contingent matter, not a natural and necessary one. So tracing Luther’s immensely ambitious journey away from both scholasticism and humanism and his deeply original and personally driven reworking of the German mystical repertoire of self-presentation allows us to reflect on what this bold enterprise misses or distorts, and so to ask what resources there might be to counter the legacy of a change never intended by this complex and troubled figure whose memory we celebrate. Note: For Luther’s life and intellectual development, Lyndal Roper’s recent Martin Luther: Renegade and Prophet, London, Bodley Head 2016, is a very good place to start. Luther’s debt to mediaeval German mystical literature has been explored by various writers; a recent survey is Volker Leppin, Die fremde Reformation: Luthers mystische Wurzeln (‘The Unknown Reformation: Luther’s Mystical Roots’), Frankfurt am Main, C.H. Beck 2017. An older but valuable work touching some of these questions is Steven Ozment, Mysticism and Dissent: Religious Ideology and Social Protest in the Sixteenth Century, New Haven, Yale University Press 1973. The classic work on Luther’s ‘theology of the cross, including some discussion of its relation to the ‘mystical’ literature of Germany, is still Walther von Loewenich, Luther’s Theology of the Cross, translated from the fifth German edition (1967; the work was first published in 1929) by Herbert J.A. Bouman, Belfast, Christian Journals Limited, 1976. Bernard McGinn’s magisterial study, The Harvest of Mysticism in Mediaeval Germany (vol. IV of his general history of Western Christian mysticism, The Presence of God), New York, Herder and Herder/Crossroad Publishing Company 2005, has a full and careful treatment of the Theologia Germanica.. There is a translation in the Classics of Western Spirituality series by Bengt Hoffman (New York and Mahwah NJ, Paulist Press 1980) Also in this series, Early Protestant Spirituality, ed. and tr. Scott J. Hendrix (Paulist Press 2009), contains some useful texts in translation. And Peter Matheson, ed., Reformation Christianity, Minneapolois, Fortress Press 2007, has some useful perspectives on the importance of the new ‘mass media’ of the sixteenth century.

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Erasmus Forum Bulletin / Volume I 2018 17 Williams: Let’s begin by defining ‘neuroaesthetics’ as a subject. What’s the field of enquiry and what makes this research so distinctive as a body of knowledge? Zeki: Well, first of all, let us say what it is not. It is not an enquiry into beauty. It is not an enquiry into art. These are topics which are left to the philosophers of art - students of aesthetics – and to historians of art. It is really an off-shoot of neuroscience, neurobiology, which enquires into the brain mechanisms that are involved in different states of being. For example, what are the brain mechanisms that are involved when you see colour? What are the brain mechanisms that are involved when you perceive faces? In neuroaesthetics we ask another, equally legitimate, scientific question: What are the brain mechanisms that are engaged when you experience beauty? Beauty is an extremely important human experience. It touches everybody- all of us have an idea of what is, and what is not, beautiful. Billions of pounds are spent on beauty every year. Now there are a whole lot of people out there who ask: how can science answer the question of what is beautiful? Well, I’m not sure whether it can or not but it’s not what neuroaesthetics does anyway! It is a discipline which enquires into the neuro mechanisms that are engaged when we experience beauty and its related aspects, love and desire. Neuroaesthetics analyses those mechanisms of the human brain that are conducive to creativity. Williams: So, neuroaesthetics is not an enquiry into beauty? Zeki: No. Williams: But one implication of what you’ve just said surely is that you take the idea of beauty for granted. You don’t investigate it. An unexamined assumption is surely no basis for a scientific mode of enquiry? Zeki: Neuroaesthetics takes the idea for granted in this sense. We know that human beings do as a matter of fact experience beauty. But in neuroaesthetics we do not attempt to define art nor do we seek to supply a definition of ‘the beautiful’. Having said that, there are two further important points to make. Neuroaesthetics does draw on aesthetics – that is to say the philosophical analysis of art – an area of enquiry that has produced brilliant insights from the time of Plato onwards. Moreover, the things that we have discovered in neuroaesthetic research should interest the philosophers of art. The experimental study of the experience of beauty and of the brain mechanisms involved has uncovered lots of interesting facts, which philosophers of aesthetics should take notice of. If they don’t, they are being foolish. Williams: Let’s go back to the moment in your life when you discovered neuroaesthetics as a subject and how it changed your way of thinking, first of all, as a scientist. Zeki: I don’t like crowds. I don’t like being with too many people in the same area of scientific research. So, I chose the visual cortex, outside the primary visual cortex. In those days everybody who was working on vision concentrated on the primary visual cortex and they all hated each other. For a good ten years, they left me alone. I had the whole field on my own. You know that book by Patrick Howarth –When the Riviera was Ours? Williams: Yes – a history of the French Riviera before it was popularised – and destroyed. Zeki: Well – in a rather similar way – and for a long time – the visual cortex was mine! Nobody took the slightest notice of me. Once they discovered that I was doing something interesting, they came in in droves and they quarrelled. All sorts of things happened but what came out of it all in the end was this: it was established that there are lots of different visual areas, not one; and that these different areas do

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Erasmus Forum Bulletin / Volume I 2018 18 different things – they specialize for colour, for motion, for form. That story is now settled and has been for a long time. I then became interested in the question of what’s actually going on when one visits art galleries – when one sees, and admires, beautiful things, when you become emotionally involved. I had learnt a great deal about the brain. So why was I moved to tears when I first saw the Pieta of Michelangelo ? There must be something interesting there. And so I decided, “Hey, I’ve got it ! I’ve got the basic knowledge about the visual brain and now I’m living at the beginning of a revolution.” For the first time, scientists are able to look at what happens in the brain during the experience of subjective mental states. Before then it was very easy for scientists to say: “These are all subjective experiences – and unverifiable. Now, however, the field was wide open and lots of subjective states could be studied. We are looking at the experiences of reward and success and motivation. But none of them, I think, begins to approach the experience of love, desire and beauty. Williams: In relation to motivation and desire I wonder if there’s an analogy to be drawn with the study of economics. Look at how Gordon Brown for example introduced a huge mechanical apparatus – tax credits and so on – while he was Chancellor of the Exchequer. These were meant to operate as levers calculated to control impulses and thereby produce desirable, or otherwise appropriate, human consequences. Are you saying that you’ve been doing something similar – or at least studying something fairly similar – when investigating how human beings behave and react when in the presence of beauty. Zeki: We are some way ahead of the economists! Where I to produce the kind of evidence the economists produce, I would lose my job instantly. When the Queen went to the L.S.E in 2008 – she was opening a new building – and she asked the economists who were lined up to be presented to her a very good question: If you are all so good at economics why couldn’t you predict the economic crash of 2008? She got an extremely stupid answer. They said, well, economic systems predict that you cannot predict a crash. Economists cannot predict anything and then they have slimy excuses when they get it wrong. Williams: Perhaps they’re trying to turn their subject into something that it cannot be? And the model that they do have of what counts as ‘scientific’ is basically a very 19th century positivist notion of prediction? Zeki: Yes. They destroyed the economic system because of the mathematical formulae that they produced and fed to bankers who didn’t really understand them but still applied them. I’m really quite surprised at the status that the economists have compared to ourselves. Had the economists bothered to look at what we’re doing, what science is doing, they would discover that greed is the basis of economics... Williams: The basis of all economic behaviour is greed? Zeki: A lot of the frontal cortex of the brain is deactivated in economic activity. So moral considerations do not really come into it at all. Williams: And what does this frontal cortex do? Zeki: It does a lot of things, among them is judgement. Whether you can apply moral considerations in economic affairs is very very doubtful. Williams: Now fascinating though the economics thing is, we’re deviating ... Tell me how your appreciation of the arts has changed as a result of your research.

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Erasmus Forum Bulletin / Volume I 2018 19 Zeki: Well in a number of ways. I had not really distinguished before about the difference between joyful beauty and sorrowful beauty. The Pietà we were talking about earlier is very sorrowful and so is the Missa Solemnis of Beethoven. But the waltzes of Johann Strauss are joyful – and so are the sculptures of Antonio Canova – his Three Graces for example. Williams: Yes – joyful, beautiful and, perhaps, in an interesting way – rather trivial. Zeki: Trivial - how you distinguish triviality in neurology is quite an awesome and interesting issue. I did not expect that all experience of the beautiful, regardless of source, to correlate with activity in the same part of the brain. Musical beauty, obviously, activates the auditory cortex and visual beauty - the visual cortex. But they all have a common area of activity which is the medial frontal cortex. Moreover, even mathematical beauty which is the most extreme form of beauty.... Williams: Yes, now we’re coming on to symmetry and we’re anticipating a later theme here. Zeki: Yes, there are an endless number of interesting issues with mathematical beauty but that too correlates with activity in the same parts of the brain. This is an extraordinary finding. May I just make a couple of other points? The first relates to the distinction between biological and non-biological beauty. So you know biological beauty – the beauty of faces, the beauty of bodies, beauty of landscapes, beauty of moving – kinetic beauty – are all inherited. But artificial – or constructed – beauty – for example beautiful buildings – that is a different category. The most extensive discussion of these things – of the concept of beauty is, in fact, in the writings of Immanuel Kant and of Schopenhauer. But neither of them gives us a discussion of this difference between the biological and non- biological. Secondly: judgement, aesthetic judgement and experience of beauty. They are all assumed to be the same, but they are not, neurobiologically. If you ask people to judge the beauty of something and then also its size – we soon discover that aesthetic judgment involves different pathways. Williams: You produced two very good examples of what you called “joyful beauty” earlier on - Strauss waltzes and the sculptures of Canova. These would be regarded by common consent to be lovely and joyful and spritely and so on – but also, clearly, not in the same league as the really first-class stuff – catalogued by you as ‘sorrowful’. Might there be neurological mechanisms at work that would enable one to distinguish between these joyful sources of beauty and sorrowful sources of beauty? Zeki: I think, eventually, we will discover those different mechanisms. I have not figured it out. I don’t know how to do it-yet. I’m interested in a further point too – the association between the experience of something which is beautiful and at the same time emotional. The Pietà is an extremely emotional piece of work and very beautiful but a painting by Mondrian is rather cold and austere, although many people find it beautiful. I was listening to Norma by Bellini last night. The Maria Callas... Williams: Well of course, the recording of 1956... Zeki: Absolutely, yes.... Now she is a Prima Donna Assoluta and ruined it, ruined it for every other soprano because she set the standard so high, but where does this emotional power come from? It’s not her voice! But her emotional power and intensity of acting that invests that voice with a power which no other soprano has ever achieved. I’m very interested in learning whether the aesthetic experiences can be neurologically dissociated from emotional experiences. Williams: Let’s get on to beauty is truth - truth, beauty. Now, I have a problem, I can see many circumstances in which, indeed, beauty is a form of truth and yet when I look at these matters as an historian, I’m struck by the way in which there are many forms of beauty, that were not regarded as at all beautiful until the moment of their discovery. Before- shall we say – the 1760s, the Alps were not regarded as beautiful at all. Mists, mountains, thunder storms, nature at its most violent is suddenly

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Erasmus Forum Bulletin / Volume I 2018 20 discovered to be a source of aesthetic power. The ‘sublime’ as Burke calls it in his famous essay. Isn’t this, really, rather a problem for you in terms of neuroaesthetics - the fact that human beings have different views of what constitutes the beautiful, that opinions and judgements evolve and vary? Zeki: No! No. It is not a problem for neuroaesthetics. It’s a problem for the philosophers of art; not for us at all. And I’ll tell you why. The experiences of the sublime and experience of the beautiful engage different pathways in the brain, totally different pathways. Williams: So, I’m a little bit of the sublime and I’m going to go down this pathway and I’m a little bit of the beautiful and I’m going to go down a different pathway? Zeki: A different pathway... you got it, yes, yes! Williams: How does that work? Zeki: Well, I think at the intersection it is very very difficult but at the extremes, it is not. I mean the view of, say, a hurricane - when you’re at a safe distance - is a sublime experience, but, it is not in any way equivalent to viewing a beautiful painting by Chardin. Williams: But this rather pre-supposes that the idea of the sublime has always been around. And my point would be this... Zeki: It has, it has.... Williams: My point would be this - it’s invented in the 1760s and 70s.... Zeki: No, no, no... Williams: It’s not around before then... Zeki: AD Longinus, the Greek philosopher of the third century ad, he brings up the question of the sublime. But whether it’s been around or not the fact is... Williams: But it’s very important whether it’s been around. Zeki: People have experienced it and it was then formalised in the 1760s. Williams: Here we must disagree. It was discovered. It’s a moment...it’s a distinctive break in the history of aesthetics. Zeki: No, no, people experienced seeing the sublime long before they actually articulated it. Williams: They meant something different by the word ‘sublime’. Zeki: Well, that brings us to another question - the complexities of language and how you describe it. Even before the late eighteenth century people did go to the Alps, they did describe the horrors of a typhoon and so on... Williams: But they didn’t regard those things as a source of aesthetic wonder. Zeki: That is a discovery that occurs in the 1770s when people decide to go to visit Mont Blanc and so on – and this then becomes formalised in text but that does not mean to say that people did not actually experience this before. The fact is fact, that in terms of activity in the brain, you can show people pictures of things which can be regarded as sublime and that experience engages different systems. This implies that the experience itself must have been there for a long time.

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Erasmus Forum Bulletin / Volume I 2018 21 There is a big misunderstanding about what is subjective. The only reality, the only truths that you are able to experience are the ones that your brain allows you to experience. And beauty is one of them. It can be identified and quantified. ‘Subjective’ is the stick which people used to beat us, but these critics don’t understand what the difference use is. Now you can be sure – and there’s nothing in the world that would convince you otherwise – that you are in love with someone. But you can’t even be sure that they love you in return. When you are in love in exactly the same way, you can be sure that you have experience something as beautiful. But you cannot be sure that I’d find it beautiful. These are not to be dismissed as subjective experiences, therefore, not reliable, not true. You can be for yourself quite sure about it. I, on the other hand, can sit down and measure activity in your brain. If you say to me, “ I find this painting beautiful because it’s got great monetary value,“ whereas, in fact you do not. I can detect that. Now what could possibly be more objective? Williams: I think that we’re going to draw our conversation to a close here. Thank you, Semir for the wonderfully accomplished flair that you bring to the exposition of your central arguments, the distinctiveness of your erudition and the readiness to share your scholarship with others. Editor’s note. This conversation between Semir Zeki and Hywel Williams was recorded before an invited audience at University College, London. John Keats’s claim that: ‘beauty is truth, truth beauty‘ (“Ode on a Grecian Urn“) formed the central part of the dialogue. The complete text of this transcribed dialogue will be published on the Erasmus Forum website. !

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Erasmus Forum Bulletin / Volume I 2018 23 uring the Middle Ages, intensive maritime networks developed in the connected space of the Baltic and the North Sea, the ‘Mediterranean of the North’.1 This became an organised space; that is to say, the activities of merchants were controlled with increasing attention by a loose confederation of towns that had itself emerged out of corporations of merchants. During this period, from about 1100 to about 1400, the Mediterranean became a theatre for contest between the Genoese, the Pisans, the Venetians, and eventually the Catalans, who were often as keen to challenge one another as they were to join campaigns against the real or supposed enemies of Latin Christendom in the Islamic lands and in Byzantium.2 In the ‘Mediterranean of the North’, by contrast, the unity of purpose of the merchants is striking — there were, of course, rivalries, and efforts were made to exclude outsiders from England or Holland, but cooperation was the norm. This confederation of merchants from towns along the shores of the Baltic and the North Sea, and across great swathes of the north German hinterland, is known as the German Hansa. Hansa or Hanse was a general term for a group of men, such as an armed troop or a group of merchants; in the thirteenth century the term Hansa was applied to different bodies of merchants, German or Flemish, from a variety of regions, for instance the Westphalian towns that gravitated around Cologne, or the Baltic towns that were presided over by the great city of Lübeck. However, in 1343 the king of Sweden and Norway addressed ‘all the merchants of the Hansa of the Germans’, and the idea that this was the Hansa par-excellence, a sort of super-Hansa embracing all the little Hansas, spread thereafter.3 The phrase used here was ‘Deutsche Hanse’; but the official term that the early Hanseatic (or, as they are sometimes called, Hansard) merchants used for themselves in places where they successfully installed themselves, such as Bergen in Norway or the Swedish island of Gotland, was rather different – ‘The Merchants of the Roman Empire’.4 For even in German lands far beyond the Rhine and the Danube that had never fallen under Roman rule, nobles, knights, and merchants took pride in the imperial authority of the medieval German kings, most of whom received the crown of the Holy Roman Empire. The major Hansa city in the Baltic, Lübeck, was elevated to the special status of a free imperial city by Emperor Frederick II in 1226, having already received privileges from his grandfather Frederick Barbarossa in the twelfth century. Accounts of Hanseatic history have been moulded by modern political concerns. In the late-nineteenth century, Bismarck and the Kaisers dreamed of making Germany into a naval power capable of confronting the British at sea; as Admiral von Tirpitz explained, “Germany’s most dangerous enemy at sea is England”. The difficulty was that Great Britain appeared to possess a naval tradition that Germany lacked; with a little probing, however, just such a tradition was discovered, in the fleets of the Hansa cities. Such ideas were taken still further by historians writing under the Third Reich. By now the Hansa was associated not just with racial purity but with German conquest, because the cities founded along the shores of the Baltic by merchants and crusaders could be presented as glittering beacons of the ‘Drive to the East’ that had subjugated, and would once again subjugate the Slav and Baltic peoples. Even after the fall of the Third Reich, the politicisation of Hansa history continued, though in new directions. Since several of the most important Hanseatic towns, such as Rostock, lay along the shores of the now vanished German Democratic Republic, East German historians took an interest in the Hansa. They were wedded to Marxist ideas about class structure, and they made much of the ‘bourgeois’ character of these cities, which were by and large self-governing communities, able until the fifteenth century to fend off the attempts by local princes to draw them into their political web. East German historians also laid a strong emphasis on evidence for political protest among the artisan class in the Hansa towns, and they asked themselves whether these were places where a precocious proto-capitalism came into existence (whatever that term might mean).5 Following the collapse of the discredited East German regime, interpretations of the history of the Hansa have swung in a different direction, with German historians once again taking the lead. The Hansa is now held up as a model of regional integration, an economic system that crossed political boundaries by linking together Germany, England, Flanders, Norway, Sweden, the future Baltic States, and even Russia. Andrus Ansip, Prime Minister of Estonia, celebrated the entry of his country into the Eurozone by declaring “the EU is a new Hansa”. Modern German accounts of the Hansa barely conceal their authors’ satisfaction that German D"

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Erasmus Forum Bulletin / Volume I 2018 24 economic dominance within Europe has what appear to be inspiring precedents going right back to the Middle Ages — the German Hansa encouraged free trade among its members and constituted a ‘super-power of money’.6 There was even a degree of political integration, since over time the commercial law followed in Lübeck became standard. On the other hand, a leading French historian of the Hansa, Philippe Dollinger, took exception to the common term ‘Hanseatic League’, because the German Hansa was not one league with a central organisation and bureaucracy, like the European Union, but a medley of leagues, some created only in the short term to deal with particular problems. Professor Dollinger therefore suggested, very sensibly, that the term ‘Hanseatic Community’ really fits best of all.7 In fact, all these ways of reading the history of the Hansa distort its past in a broadly similar way. The German Hansa was not simply a maritime trading network. By the fourteenth century, certainly, it had become a major naval power, able to defeat rivals for control of the waters where its members traded. Less often noticed is the significance of the inland cities that played a very important role in Hanseatic trade with England, in particular, operating under the leadership of Cologne.8 Of its three major trading counters outside the network of Hanseatic cities, places where the Hanseatics were permitted to create their own towns within a town, one, Novgorod, lay inland, though the other two, Bergen and London, were only accessible by sea. The Hansa was a land power (or maybe one should say river power) as well as a sea power, and its ability to draw together the interests of cities in the German hinterland and cities that gave access to goods carried across the sea gave it enormous economic strength. It was a source of supply for luxury goods such as furs from Russia, spices from the Levant (by way of Bruges), and amber from the Baltic; but its members were even more active carrying uncountable barrels of herring, vast supplies of wind-dried cod, or the rye produced along the shores of the Baltic on the lands of allies such as the Teutonic Knights. Indeed, the link to this crusading order of knights and lords of large parts of Prussia and Estonia was so close that the Grand Master of the German Order, to give the Knights their correct name, was a member of the Hanseatic Parliament or Diet. As well as supplying a good part of the food the Hansa cities required if they were to survive and grow, the Grand Master was overlord of several of the towns that the German merchants had set up along the southern coasts of the Baltic.9 The presence of a crusading Military Order in the deliberations of the German Hansa also acts as a reminder that the medieval conquest of the Baltic was not simply the result of merchant endeavours. Just as the Genoese, Pisans, and Venetians took full advantage of the crusades in the Mediterranean to install themselves in the trading centres of the eastern Mediterranean, the arrival of German merchants in Prussia, Livonia (roughly Latvia) and Estonia was rendered possible by the victories of the ‘northern crusades’, wars against pagans, and sometimes against the Orthodox Russians in which two German Military Orders, the Sword Brethren and the Teutonic Knights, played a leading role, as did the Danish and Swedish kings. The Sword Brethren came into existence at the start of the thirteenth century, when Albert von Buxhövden, an enterprising cleric with close family links to the archbishop of Hamburg-Bremen, arrived in Latvia with 23 ships, carrying 500 crusaders. His aim was always to create a permanent German presence in the area, and so he established a trading centre at Riga in 1201. This also became the base for the crusading brethren, whose mission was to convert the local Livs (a people related to the Finns and the Estonians) if need be, by force. The northern crusades borrowed concepts and vocabulary from the more celebrated crusades to the Holy Land. Without constant supplies of state-of-the-art weaponry brought across the Baltic on Hansa ships, these campaigns against wily, well-trained, obstinate native peoples had little chance of success; as it was, the ferocity of the German onslaught did more to unite the opposition than to break it down.10 II Why the Germans became dominant in the Baltic and the North Sea is a good question. After all, around 1,100 German ships were not seen as often in the North Sea or the Baltic as Scandinavian ones, while the Flemings were a notable presence on the river routes of northern Europe, and further south in Germany there were busy communities of Jewish merchants, especially active in the wine trade. Whether deliberately excluded or simply not interested in the far-flung north,

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Erasmus Forum Bulletin / Volume I 2018 25 the German Jews took no part in the transformation of the Baltic and the North Sea led by the Hansa.11 Until Lübeck began to flourish in the twelfth century there were no German towns on the Baltic, and the area that became the German Democratic Republic did indeed have a different identity to the rest of Germany; its inhabitants were pagan Slavs, notably the Wends or Sorbians, who still survive in the Spreewald near Berlin. The predecessor of Lübeck, Liubice or Alt-Lübeck, consisted of a fortress established by a knes or prince of the Polabian Slavs, while not far off, another very small Slav settlement lay at Rostock, in Abotrite territory; beyond lay Rugians, Wagrians, and Pomeranians – Szczecin (Stettin), close to the modern German-Polish border, was famous for its three pagan temples and its strong walls.12 There was an enormous variety of different peoples speaking different languages and dialects, and the fragmentation into small groups rendered all of them much more vulnerable to the organised onslaughts of the Germans and the Danes. But there was plenty of peaceful contact too; several of these Slavonic peoples were happy to trade across the sea, which was also visited by Russian merchants, who were arriving in Gotland off Sweden.13 The transformation of this region was, however, the work of Germans, by which one means speakers of a group of languages which (in their late medieval written form) goes under the name of Middle Low German, and which, at first glance, looks more like Dutch than the High German of further south, which meant that relations with Flemings and Hollanders were easy to maintain. Two places dominated the Baltic in the early days of the Hansa — Gotland, particularly its largest town, Visby, of which more later, and Lübeck. Lübeck was not on exactly the same site as the old town of Liubice, which seemed to be more exposed.14 The foundation of the new city happened in stages, first with the destruction of Liubice in wars between Slavs and Germans, and then with the creation of a new town by the ruler of Holstein, Adolf von Schauenburg, in 1143. During the wars against the Wends, the Abotrite ruler Niklot attacked Lübeck (1147); but it was already well-enough defended to resist him. On the other hand, it proved more difficult to resist the growing power of Henry the Lion, the duke of Saxony and one of the greatest princes in Germany, who refounded Lübeck in 1159, and granted it the iura honestissima, ‘the most honourable charter of town rights’. This gave the leading citizens power over law-making, and established them as the city elite.15 A German chronicler, Helmold von Bosau, was strongly of the view that Henry was only interested in making money, and did not really care whether the Slavs in the surrounding countryside turned Christian; but Henry certainly had a good sense of what was needed to make his new city flourish. “The duke sent envoys into the northern towns and states, Denmark, Sweden, Norway, and Russia, offering them peace and free right of access through his town of Lübeck. He also established there a mint and a market and granted the town the highest privileges. From that time onwards there was ever-increasing activity in the town and the number of its inhabitants rose considerably”.16 He was particularly keen to attract merchants from Visby, for he well understood that a network linking Gotland, situated right in the middle of the Baltic, and Lübeck, with its access to the interior, would be extremely profitable. From 1163, Gotlanders were allowed to come to Lübeck free of tolls. Lübeck grew and grew; although the size of its population before 1300 is pure guesswork, the city is thought to have had 15,000 inhabitants at the start of the fourteenth century, and in the late fourteenth century—a time when plague had depopulated much of Europe—the population may have reached 20,000.17 Lübeck looked in two directions. Westwards, a short overland route connected the new city to Hamburg, giving access to the North Sea, and this was guaranteed by a formal agreement between the towns in 1241; by the fourteenth century, the narrow sea passage through the Øresund, or Sound, between Denmark and what is now southern Sweden took priority. Naturally, use of that route depended on the approval of the king of Denmark, and relations between Lübeck and the Danes were not always easy. There was always the danger that the king of Denmark would come to regard these shores as his own little empire. One important result of these conquests was the foundation of satellite towns within the commercial orbit of Lübeck, towns that followed the Lübeck legal code: Rostock, Danzig (Gdansk), and so on. This ‘Drive to the East’ (Drang nach Osten), in older parlance, was both maritime and terrestrial.18 Lübeck enjoyed special status as a free imperial city, master of its own destiny. Its triumphs

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Erasmus Forum Bulletin / Volume I 2018 26 were expressed in the handsome Gothic buildings that the Lübeckers constructed out of brick, an expensive way to build at that time. There were grand churches, such as the Marienkirche and Sankt Petri in Lübeck itself, but also streets of gabled merchant houses, and these became the model copied by the masons of Rostock, Greifswald, Bremen, and of city after city along the great arc that stretched from Bruges to Tallinn. The design of these houses was determined by the simple need to incorporate a warehouse as well as an office and living quarters, because the Hanseatic merchants looked after their own goods rather than depositing them in central warehouses, as often happened in the Mediterranean. III Late medieval Lübeck gloried in the title ‘Head of the Hansa’ (Caput Hanse), but it is a mistake to write the history of the Hansa as the history of Lübeck. In the early days of the evolving network of what was to become the German Hansa, Gotland exercised more influence than Lübeck, benefiting from its excellent position in the middle of the southern Baltic.19 It had long been a centre of Viking activity, and is the source of many of the finest images of Viking ships, carved on memorial stones. The Gotlanders laid the basis for the later successes of the German merchants who made Gotland their base.20 For it was as a German base that it really flourished, and it owed a great deal to Henry the Lion’s insistence that its merchants should work closely with those of Lübeck.Here, a self-governing community of German traders began to coalesce; on its seal it proudly proclaimed itself to be the ‘the corporation of merchants of the Roman Empire visiting Gotland’. In the thirteenth century, enough Germans had settled permanently on the island to form a second, parallel, self-governing group, with a similar seal, but with the words ‘remaining in’, replacing ‘visiting’. The Germans had their own very magnificent church, St Mary of the Germans, which now serves as the cathedral of the island; the Germans also, as was typical at the time, used it as a safe place to store goods and money. In addition to a quite formidable line of walls, more than two miles (about 3.5 km) in length, Visby contains over a dozen sizeable medieval churches, but following the city’s decline at the end of the Middle Ages all but St Mary’s have been allowed to fall into disrepair. One of Visby’s grandest churches, Sankt Lars, betrays the influence of Russian architectural styles; there was also a Russian Orthodox church in Visby, though this is now buried underneath a café. For Gotland was the great emporium where Russian goods such as furs and wax were received, having travelled part of the way by river, through Lake Ladoga and up the Neva into the Baltic, and then across what could be dangerous waters to Gotland itself. At the other end of the route, in Novgorod, the Gotlanders possessed their own trading colony or ‘Gothic Court’, which included a church dedicated to the Norwegian king, St Olaf, in existence by about 1080.21 Novgorod was not an ancient city, as its name, ‘New City’, suggests.22 The Baltic connection was thus of great importance to Novgorod, just as the Russian connection was of great importance to Gotland, and Henry the Lion and the Lübeckers were keen to tap into that. At first, the Germans rode on the backs of the Gotlanders. In 1191 or 1192, Prince Yaroslav III of Novgorod entered into a treaty with the Gotlanders and the Germans.23 Within 20 years another prince of Novgorod, Konstantin, granted the Germans the right to operate from their own courtyard, dedicated to St Peter (the Peterhof). Actually, they had already set themselves up there, and had built a stone church. The use of stone was a necessary luxury, since here too the merchants stored their wealth, carrying the chest containing the funds of the community back to Visby at the end of each winter. There was a close period during which German merchants did not live in Novgorod, between the winter, when trade in ermine and other Arctic goods was brisk, and the summer, which was a good time to collect wax.24 There was enormous demand throughout Europe for high-quality wax, most of which evaporated into the atmosphere when it was used in church ceremonies; and the range of furs that could be obtained from Russia and Finland was unmatched elsewhere in the north — not just plenty of cheap rabbit and squirrel furs, but pine marten, fox, and at the top of the scale white ermine (de rigueur at princely courts). Rising standards of living meant that demand for these products did not waver very much.

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Erasmus Forum Bulletin / Volume I 2018 27 IV Contact with Russia provided essential priming for the rise of the German Hansa; but the Baltic and the North Sea became increasingly important to the Hanseatic traders, as England and Norway became the prime focus of their longer-distance sailings, while within the Baltic, rye, herrings and other basic foodstuffs became ever more important as the German cities grew, and as their persistent demand for food outstripped local resources. These towns had been founded as centres of trade and industry, but their very success turned them into major consumers of agricultural goods. This was greatly to the advantage of those who produced such food, above all the Grand Master of the Teutonic Order, who was also master of extensive estates where subject Prussians and Estonians laboured on behalf of the Christian conquerors they would rather have seen defeated. This was also greatly to the advantage of the German traders, so long as their agreements with the Grand Master and other great lords enabled them to buy large quantities of rye.25 The ships that the Hansa merchants used were, in the early days, mainly the cogs, with their shallow draught but generous cargo capacity; they had developed in the North Sea and the Baltic over several centuries. The humble cog represents the simple realities of Hansa seafaring; silk and spices certainly reached the ports of northern Germany, whether they had been carried all the way from the Mediterranean down elongated sea routes favoured by the Venetian, Catalan, and Florentine galleys of the late Middle Ages, or humped overland from the warehouse of the Germans in Venice, over the Alpine passes until they reached the rich cities of southern Germany and then embarked on further travels to reach Lübeck and its neighbours. A modern visitor to Lübeck would be missing a great treat if he or she did not visit the famous marzipan emporium of the Niederegger family, founded in 1806; but before Niederegger the city attracted ginger, sugar, cloves, as well as almonds, and—most probably during the golden age of the Hansa— the north Germans discovered how they could manufacture sweetmeats and spicy sausages from the exotic trade goods that reached their cities. The fortunes of the Hansa were not, however, built out of marzipan and gingerbread. Fish, grain, and salt, apparently humble animal, vegetable, and mineral staples, were not quite such modest sources of profit as might be supposed when they were traded in the astonishing quantities handled by the German Hansa. Herrings had a special place in the diet of European Christians, as far away as Catalonia; when Lent arrived, they provided the perfect substitute for forbidden meat, all the more because methods of preserving them became more sophisticated. The difficulty with herring is that it is a very oily fish, and oily fish rot much faster than those with a very low fat content, notably cod. For this reason it was possible to produce wind-dried cod, which remained edible for a good many years (after soaking), whereas herring had to be salted and pickled as quickly as possible after it was caught.26 Tradition records that a Dutch sailor, Willem Beukelszoon from Biervliet in Zeeland, transformed the future of the herring fisheries in the fourteenth century when he devised a method of pickling partly eviscerated herrings and placing them between layers of salt in great barrels.27 Pioneer or plagiarist, Beukelszoon has been rated as the 157th most important Dutchman in history, not surprisingly in a nation that loves its Nieuwe Haring so much, but also in tribute to the fortune that the Dutch made out of exporting this humble fish in later centuries. Nothing, though, compared to the quantities of herring found in the Baltic when the fish spawned off the coast of Skania, now the southernmost province of Sweden but during the Middle Ages generally under Danish rule. It was said that you could wade into the sea and scoop them out of the water with your hand. Rather than sea, there was a mass of wriggling fish, “the entire sea is so full of fish that often the vessels are stopped and can hardly be rowed clear through great exertion”, to cite an early medieval Danish writer.28 All this gave great impetus to the fair held on the shores of Skania, which dealt in many goods, but was most famous for its herring market. Temporary shacks were set up along the shore which provided not merely housing for the thousands of people who came to the fairs, but factory space for the labour force that cured, dried, salted, and in a myriad of other ways, treated the fish. Visitors arrived from northern France, England and even Iceland.29 But at its peak it was not unusual for 250 ships, all loaded with herring, to come into port at Lubeck alone, as happened in 1368.30 Yet none of this could have happened without the availability of salt to preserve the silver harvest of herrings—

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Erasmus Forum Bulletin / Volume I 2018 28 indeed, some Dutch observers went further, and less poetically called it a ‘gold mine’. Here lay Lübeck’s great advantage. Not far away, near Lüneberg Heath, there lay very extensive supplies of salt.31 As these supplies ran out they penetrated to salt flats along the north coast of France, and eventually all the way to Portugal, in search of yet more salt for yet more herring. This meant that their trading world embraced a great arc stretching from the Baltic through the North Sea and the English Channel to the open Atlantic. V Late medieval Europe needed feeding after the calamity that struck first the Mediterranean and then northern Europe from 1347 to about 1351, followed by further periodic visitations of bubonic and pneumonic plague. The heavy toll of the Black Death—as much as half the population in some areas—reduced pressure on supplies of the most basic foodstuffs, notably grain, but had distorting effects on the production and distribution of food. Land went out of cultivation as villages lost their manpower and became unviable. Migration to the towns, where artisans were in short supply, shifted the balance between urban and rural population, so that it was no longer broadly true that up to 95% of the population of western and northern Europe lived and worked in the countryside; and even those peasants who remained in the countryside often managed to cast off what remained of the shackles of serfdom. This was the beginning of a great economic transformation, but the reconfiguration of the economy depended on the easy movement of large quantities of food. Here, transport by sea was of crucial importance, since it rendered possible the movement of really substantial quantities of grain, dried fish, dairy goods, wine, beer, and other necessities or desirables. The ability of the Hansa merchants to exploit these opportunities meant that the years around 1400, often characterised as a period of deep post-plague recession, were for them, as for merchants in many other parts of the Atlantic and Mediterranean, a time when it was possible to reap handsome profits and to answer back to rulers who, up to then, had seen them as rather troublesome creatures, valuable as sources of supply of prestige items, but otherwise greedy and unreliable. It comes as no surprise, then, that within a few years of the Black Death the Hansa merchants began to organise themselves much more tightly, holding regular Diets, or Hansetag (which were also an opportunity for Lübeck and some other leading cities to throw their weight around). This has generally been characterised as a shift from the ‘Hansa of the Merchants’ to the ‘Hansa of the Towns’, even the true creation of what one might call a ‘Hanseatic League’.32 The first Diet was held at Lübeck in 1356, mainly to deal with the growing threat of piracy; by 1480, 72 Diets had been held. It is no surprise that 54 of these gathered in Lübeck; and, apart from a single meeting in Cologne, they were always held in towns next to or quite near the sea.33 This development did not mean that the Hansa had become a state-like body; it remained a loose super-league, bringing together groups of allied cities from regions as diverse as the Rhineland, where Cologne dominated, the southern or ‘Wendish’ Baltic, which was Lübeck’s informal imperium, and the newer cities of the eastern Baltic, of which Riga was the most important. Minutes of the Diets were kept, but there was no administrative super structure, and there were no formal treaties that members signed to gain entry to the Hansa. Maybe, indeed, this was one of its sources of strength. On the other hand, the lack of a constitution allowed the citizens of Lübeck to turn their ‘de facto’ leadership of the Hansa to their advantage, and, despite grumbles from Danzig and Cologne, the special status of Lübeck was never really in doubt. Its size, wealth, and location gave it formidable advantages. Including every city that at some stage was regarded as a Hansa town, the total comes to about 200, far too many to fit in the assembly hall provided by the good burghers of Lübeck. Most were far too small to exercise any political influence, and what they sought was tax advantages and trading opportunities. This was particularly true of the horde of inland towns, such as Hameln, of Pied Piper fame, or Berlin, as yet not a place of great significance.34 After 1356 the Hansa did show much more muscle, resisting predatory pirates known as the Vitalienbrüder who made a nuisance of themselves at the end of the fourteenth century. The Vitalienbrüder preyed on Hanseatic and other vessels in the Baltic. The herring fisheries were placed in danger, and for a few years supplies to the rest of the world faltered. Over the centuries the

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Erasmus Forum Bulletin / Volume I 2018 29 Vitalienbrüder have acquired a more romantic image; plenty of novels and films present one of their pirate leaders, Klaus Störtebeker, in a better light than he deserves. Before they were checked, they were well enough organised to grab hold of Gotland for a time and then, when conditions in the Baltic became too risky, they decamped to the East Frisia in the North Sea and carried on marauding there. Störtebeker was captured, and in 1401 he and his close companions underwent a grim execution at the hands of the resentful citizens of Hamburg. Such problems meant that the Hansa Diets did have matters of real political and military (or rather naval) importance to discuss, and this helped it to coalesce as a ‘Hansa of the Towns’; but there was no sense in which the cities sought ‘ever-closer integration’ after the manner of the European Union. Beneath the level of the grand Diet, there existed other regional groupings of Hansa towns that met regularly, and here, as might only be expected, petty local rivalries transcended the major issues such as relations with Denmark or the competition of Dutch and English merchants.35 In addition to internal tensions, there was the problem that the Hansa Diet expected to make its decisions unanimously, and that delegations would often insist that they had no authority to support a particular position. The Diet was not a parliament where common problems were aired, discussed, and resolved, but a place where decisions (often those of Lübeck and its major allies) were recorded and announced — that, indeed, was how a good many late medieval parliaments functioned. Cities might or might not bother to send delegates to the Hansetag, though not surprisingly the larger and more powerful ones were more careful to do so. But this did not make it easy to address the issues that were in the air. It must, at the time, have seemed that this was Lübeck’s opportunity to show off its commanding position. The effectiveness of the Hansa lay in the expertise of the merchants who inhabited its cities rather than in its institutional structure, which remained fragile. VI The different communities that made up the Hansa were bonded together by the presence of travelling merchants, some passing through briefly and others settling alongside their fellow Lübeckers (or whoever they were). Members of the Hansard family felt at home in the ports of a great swathe of northern Europe. In the early fifteenth century, two brothers, Hildebrand and Sivert von Veckinchusen, worked with family members and agents in London, Bruges, Danzig, Riga, Tallinn, and Tartu (also known as Dorpat), as well as Cologne and distant Venice, sharing the same work ethic, business methods and cultural preferences. In 1921, a mass of over 500 letters between members of the family was found buried in a mass of peppercorns within a chest that is now in the State Archives of Estonia at Tallinn. In addition, their account books survive. No other Hanseatic family is as well documented. The Veckinchusens are of interest precisely because they were not always successful, and their careers show clearly the risks that needed to be taken if the trade routes were to be kept alive at a time when piracy remained a constant threat, when the Danes were still flexing their muscles in the Baltic, when English sailors were trying to carve out their own niche in the market, and when internal tensions within the Hansa towns threatened to upset the apple cart.36 The Veckinchusen brothers originated in Tartu in what is now Estonia, although they eventually became citizens of Lübeck.37 They are known to have been based in Bruges in the 1380s. They therefore operated between the two most important trading centres of northern Europe, which were linked by the Hanseatic sea route through the Øresund.38 The Hansa community in Bruges operated rather differently from Novgorod, London, and Bergen, where the German merchants possessed a reserved space and were closely concentrated together. The concentration of merchants of different backgrounds provided Bruges with its raison d’être. Although a very large city by medieval standards, with up to 36,000 inhabitants on the eve of the Black Death, Bruges itself was not the prime target of all those traders who came there, though the arrival of large amounts of Baltic rye and herring did help to keep the citizens well fed. Particularly in the fifteenth century, one of the main functions of the merchant communities in Bruges was quite simply to settle bills. The city became the major financial centre in northern Europe, which meant that even as its port silted up and fewer goods actually passed through the city, there was, for a time, still plenty of work for those well practised in the art of accounting. The Veckinchusens were

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Erasmus Forum Bulletin / Volume I 2018 30 primarily dealers in commodities, but currency exchange and the provision of letters of credit was a source of profit for them and their peers, even though the Hansards left the creation of international banks mainly to the Italians—the Medici had an important branch in Bruges.39 Generally, the Hansards showed a suspicion of reliance on credit that meant their financial methods never reached the sophistication of those achieved by the Florentines and Genoese. Even so, late medieval Bruges was to the economy of large swathes of Europe what modern London has become within the global economy.40 The Veckinchusens were not wedded to Bruges. Indeed, when Hildebrand found a bride, she was a young woman from a prosperous Riga family.41 Going to Riga for his wedding, which had been arranged by one of his brothers, gave him the chance to experience the route to Novgorod, where the Hansa Kontor continued to flourish, and where he brought thirteen bolts of Ypres cloth for sale, the total length of which would have been about 300 metres—in other words, a sizeable quantity of some of the best woollen cloth Flanders looms were producing. This he sold for 6,500 furs, which gives some idea not just of the high value of Flemish cloth but of the easy availability of squirrel, rabbit, and finer skins in fifteenth- century Russia.42 In good years, the Veckinchusens could hope for profits in the range of 15% to 20%.43 Meanwhile his brother, Sivert, now living in Lübeck, warned him that he was taking too many financial risks, “I’ve warned you again and again that your stakes are too high”, which led him to send his wife and children to live in Lübeck; but he was convinced he could make money by staying put in Bruges.44 This obstinacy in his business dealings was to cost him dearly over the next few years. Hildebrand returned to Bruges and tried to keep himself afloat with Italian loans, but he began to realise he could not repay them, and fled to Antwerp in the vain hope of escaping his creditors. Lured back to Bruges by promises that his friends would help him sort out his affairs, he soon found himself in the debtor’s prison, where he lingered in misery for three or four years.45 Conditions in the prison were not too bad, if means could be found to pay for food and the rent of a private room, but by the time he was released, in 1426, Hildebrand was evidently a broken man. One of his old partners wrote in pity, “God have mercy on you, that it has happened to you this way”.46 He set out for Lübeck but he died within a couple of years, no doubt worn out by his trials.47 His ambitions had never been matched by his success. By the end of his life Hildebrand had been let down by his family, but family solidarity was the key to the success of these Hanseatic trading families. None is quite as well documented as the Veckinchusens, but there is no reason to suppose their rise and fall was unusual; trade was about risks, and in an age of piracy and naval wars the chances of always making a profit were slim. Interestingly, the places that attracted the strongest interest of the Veckinchusen clan were cities on or close to the sea, with the exception of the Hanseatic outlier Cologne and their mistaken ventures overland through the south German cities to Venice. This suggests that the routes across the sea carried the lifeblood of the Hansa, and that the many towns of northern Germany that became members were mainly interested in the goods that traversed the Baltic and the North Sea. In other words, when the Kaiser’s historians laid all the emphasis on the Hansa fleets and ignored the inland towns, they were not completely distorting the character and history of the German Hansa. VII The Veckinchusens differed from many Hansard contemporaries in their lack of strong interest in fish and grain. Making a fortune from fish was possible outside the Baltic too, and success did not depend entirely on humble herring. The cod fisheries of northern Norway, and the opportunities for catching the same fish out in the open Atlantic off Iceland or even Greenland also brought prosperity to the willing partners of the Hansa and the Norwegian monarchy. There were several types of dried and salted cod, but the development of wind-drying in little harbours along the coast of Norway, where Atlantic winds turned the supple flesh of these large fish into leathery triangular slabs, created an article of trade that lasted for years without rotting, and that satisfied the increased demand for high-protein foodstuffs that the smaller post-Black Death population found itself able to afford. Norway also became a good source of dairy goods as grain production was poor, while mountain pastures were abundant, and dairy products were exchanged for imported rye and wheat. As diet improved, so did the revenues

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Erasmus Forum Bulletin / Volume I 2018 31 of the Hansa merchants and the king of Norway. But even before that, the German merchants had identified Bergen as the obvious centre in which to concentrate much of their North Sea business. It was the seat of a royal palace, and not much could be achieved without the king’s protection. The town had emerged by the twelfth century — tradition recorded its foundation by King Olaf the Tranquil in 1070, but evidence from excavations shows that the wooden structures that lined the shore began to be constructed around 1120, though again and again (even in very modern times) fire has laid waste this cluster of buildings, the Bryggen or ‘wharves’ that became the home to the Hansa merchants in the city. Judging from this evidence, it is now clear that the prosperity of Bergen was not created by the German merchants, but that they chose this site as their base because it was already a flourishing centre of exchange for furs, fish, seal products, and all the other products of the forests, fjords, and open sea further to the north. As has been seen, it was already the harbour to which ships moving back and forth to Iceland would come, a ‘natural gateway’ and ‘nodal point of trans-shipment’, to cite a Norwegian historian of the city’s origins.48 By 1300, the German community in Bergen consisted not just of those who arrived by sea each spring, but the ‘winter-sitters’ who took up residence over the winter, and alongside them there were shoemakers and other German craftsmen who had been settling in the town since at least 1250. By 1300 the Hansa merchants in Bergen had learned how important it was to work together in the face of the combination of suspicion and welcome that they faced in their dealings with the kings of Norway. Within Bergen, a corporate identity emerged, and this was recognised by the crown. In 1343, for the first time, the Hanseatic traders were described as ‘the merchants of the Hansa of the Germans’ (mercatores de Hanse theotonicorum). What came into being over the next few years (certainly before 1365) is known as the Kontor (Counter), a tightly controlled organisation that negotiated for and managed the lives of the German merchants trading through Bergen. It was, in effect, a body of Lübeckers, operating under the commercial law of Lübeck, though there were also members from Hamburg, Bremen, and elsewhere; ‘the counter was a branch office of Lübeck’, in effect, an extraterritorial enclave.49 The fact that the Germans lived under their own law is just one sign of their separation from the other inhabitants of Bergen, but after the middle of the fourteenth century the great majority of Hansa merchants lived in Bryggen, in closely-packed wooden houses right by the harbour that formed a German enclave.50 The Bryggen area was a tight fit; in 1400 there were about 3,000 Germans in a city of 14,000 inhabitants, but of course some were seasonal visitors. Many were quite young apprentices and journeymen who faced a tough life during the seven to ten years that carried them up a strict hierarchy from the modest status of Stubenjunge through the honourable status of Meister. Living conditions were strictly controlled, and for part of the year apprentices were largely confined to the house where they were attached. They were male-only settlements, and the apprentices lived in narrow dormitories, working a twelve-hour day, excluding mealtimes. The fact was that many crept out at night, finding their way to the red light district that lay just behind the Hansa quarter, but to do so meant avoiding massive guard dogs that were placed around the outer edges of the Bryggen houses, to deter not just intruders but escapees. Fear of liaisons with Norwegian women was stimulated by the assumption that people living in the Kontor would give trade secrets they had learned away to local wives or whores; they might ‘tell the native woman under the influence of her charm, as well as that of liquor, things she had best not know’. The fine for being found with a ‘loose woman’ was a keg of beer—the woman suffered much worse, by being thrown into the harbour. Journeymen were subjected to brutal initiation rituals, which might include such wholesome entertainment as being roasted by a fire while suspended in a chimney,being half-drowned in the harbour, or being ceremonially flogged.51 Life in the Kontor can best be described as harsh and hard, but not insufferable. The Kontor was a place where German merchants learned the art of honest trade, and where they were made fully conscious of the fact that they were Hanseatics (mainly Lübeckers) first, and inhabitants of Bergen second. Moreover, as in Novgorod, the Bergen Kontor provided access to lands and products far beyond the intricate network of Hansa members. Novgorod, Bergen, London, and Bruges were not members of the Hansa, but these and smaller centres outside the Hansa area were vital components in the Hanseatic system.

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Erasmus Forum Bulletin / Volume I 2018 32 VIII London, by far the largest city in England, was, not surprisingly, their headquarters. There, they operated from their Kontor next to the Thames at what was known as the Stahlhof (Steelyard). The name seems to be a corruption of the term Stapelhof, ‘courtyard for trading staple goods’, and has nothing actually to do with steel. The site of the German Kontor in London has been covered over by Cannon Street Railway Station, constructed in the middle of the nineteenth century; the builders swept away the entire steelyard down to its foundations. There were three gateways, the largest of which was rarely used, and there was a great hall; there were warehouses and sleeping quarters, as well as administrative offices. Nonetheless, the steelyard was not a particularly imposing place, compared to the courtyards and quadrangles that existed elsewhere in London, such as the Inns of Court, by now an enclave for lawyers. Rather, the steelyard was a packed space, a business quarter where hardly an inch of space was wasted. The Hansards wanted privileges, not fine buildings. As in Bergen, the London Kontor formed a privileged enclave, enjoying both royal protection and self-government. England was a highly desirable market for both Flemish and German traders. The country supplied excellent wool, which was hungrily consumed by the looms of the Flemish cities, while the English developed a taste for Rhineland wines by the late eleventh century, and probably much earlier. Yet wine was by no means the most important item to cross the North Sea from Germany. So strong was demand for English produce that silver flooded into the kingdom, which was able to maintain a high-quality silver currency in the thirteenth century while other parts of Europe constantly devalued their silver coinage by adding base metals. No other European kingdom was as rich in silver and of no other no other kingdom can it be said that the silver content of its coinage remained stable all the way from the ninth century to 1250. By 1200 the influx of silver, mainly from the rich mines that had been opened up in Germany, led to quite serious price inflation that affected basic commodities such as foodstuffs.52 ‘Sterling silver’, today set at a standard of 92.5% , has a long history. There were ugly moments when Germans were accused of piracy against ships bearing English wool across the North Sea, leading to exemplary confiscations of German property in the kingdom. The relationship between the Hansa and the English crown was not, then, a smooth one, and there were quarrels that led to Hanseatic boycotts, or royal arrests of Germans. But on balance the two sides needed one another. In the fifteenth century, the entire space between England and the eastern Baltic was abuzz with trade, and, more than ever, it makes sense to describe this area as the ‘Mediterranean of the North’.53 And what is really striking is that—by contrast with the heavy involvement of the Italian merchants in the Mediterranean in luxury trade—the Hansards were, by and large, making their money out of humbler products where quantity rather than quality was the real source of profit. But in the process they created a commercial network that dominated the seas of northern Europe for hundreds of years. Editorial Note: The editors acknowledge, in respect of the essays by Professors Abulafia, Crafts and Schenk, T. Adamson-Green’s assistance in preparing the texts for publication. References 1. P. Dollinger, The German Hansa (London, 1970), p. 3. 2. Abulafia, Great Sea, pp. 287-369. 3. Dollinger, German Hansa, pp. xix-xx. 4. G. Graichen, R. Hammel-Kiesow, A. Hesse, N. Mehler, J. Sarnowsky, Die Deutsche Hanse: eine heimliche Supermacht (Reinbek bei Hamburg, 2011), p. 115. 5. J. Schildhauer, K. Fritze, W. Stark, Die Hanse (Berlin DDR, 1982); J. Schildhauer, The Hansa: History and Culture (Leipzig, 1985). 6. Graichen et al., Die Deutsche Hanse, p. 6.

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Erasmus Forum Bulletin / Volume I 2018 33 7. Dollinger, German Hansa, p. xx. 8. See the EU-funded Hansekarte, Map of the Hanseatic League (Lübeck, 2014). 9. J. Sarnowsky, ‘Die Hanse und der Deutsche Orden – eine ertragreiche Beziehung’, in Graichen et al., Die Deutsche Hanse, pp. 163- 81 10. Kasekamp, History of the Baltic States, pp. 12-13. 11. Dollinger, German Hansa, p. 4. 12. Christiansen, Northern Crusades, pp. 29-31. 13. Schildhauer, The Hansa, p. 20. 14. Dollinger, German Hansa, doc. 1, p. 379. 15. Dollinger, German Hansa, p. 22. 16. Dollinger, German Hansa, doc. 1, p. 380; Schildhauer, The Hansa, p. 19. 17. R. Hammel-Kiesow, ‘Novgorod und Lübeck: Siedlungsgefüge zweier Handelsstädte im Vergleich’, in N. Angermann and K. Friedland, Novgorod: Markt und Kontor der Hanse (Quellen und Darstellungen zur Hansische Geschichte, neue Folge, Bd 53, Cologne, 2002), p. 53. 18. Dollinger, German Hansa, pp. 31-35; R. Bartlett, The Making of Europe: Conquest, Colonization and Cultural Change 950-1300 (London, 1993). 19. D. Kattinger, Die Gotländische Gesellschaft: der frühhansisch-gotlandische Handel in Nord- und Westeuropa (Quellen und Darstellungen zur Hansische Geschichte, neue Folge, Bd 47, Cologne, 1999). 20. Dollinger, German Hansa, p. 7. 21. Dollinger, German Hansa, pp. 7-8, 27; North, Baltic, pp. 43-46. 22. M.W. Thompson, Novgorod the Great: Excavations at the Medieval City 1951-62 directed by A.V. Artikhovsky and B.A. Kolchin (London, 1967), p. 12; Hammel-Kiesow, ‘Novgorod und Lübeck’, p. 60; E.A. Rybina, ‘Früher Handel und westeuropäische Funde in Novgorod’, in Angermann and Friedland, Novgorod, pp. 121-32. 23. Dating revised from 1189: A. Choroškevič, ‘Der Ostsee Handel und der deutsch-russisch-gotländische Vertrag 1191/1192’, in S. Jenks and M. North, eds., Der Hansische Sonderweg? Beiträge zur Sozial- und Wirtschaftesgeschichte der Hanse (Quellen und Darstellungen zur Hansische Geschichte, neue Folge, Bd 39, Cologne, 1993), pp. 1-12; also B. Schubert, ‘Die Russische Kaufmannschaft und ihre Beziehung zur Hanse’, ibid., pp. 13-22; B. Schubert, ‘Hansische Kaufleute im Novgoroder Handelskontor’, in Angermann and Friedland, Novgorod, pp. 79-95; E. Harder-Gersdorff, ‘Hansische Handelsgüter auf dem Großmarkt Novgorod (13.-17. Jh.): Grundstrukturen und Forschungsfragen’, ibid., pp. 133-43. 24. Dollinger, German Hansa, pp. 27-30. 25. North, History of the Baltic, pp. 40-43. 26. Fagan, Fish on Friday, pp. 51-56. 27. J. van Houtte, An Economic Hitory of the Low Countries 800-1800 (London, 1977), p. 90. 28. Saxo Grammaticus (c.1150-c.1220), cited by J. Gade, The Hanseatic Control of Norwegian Commerce during the Late Middle Ages (Leiden, 1951), p. 17. 29. Gade, Hanseatic Control, pp. 17-18. 30. Schildhauer, Fritze, Stark, Die Hanse, pp. 99-100. 31. A.R. Bridbury, England and the Salt Trade in the later Middle Ages (Oxford, 1955), pp. 94-8. 32. H. Spruyt, The Sovereign State and its Competitors: an analysis of systems change (Princeton NJ, 1994), pp. 109-29; T. Brady, Turning Swiss: Cities and Empire, 1450-1550 (Cambridge, 1985). 33. Dollinger, German Hansa, pp. 88-93. 34. Dollinger, German Hansa, p. 91. 35. Dollinger, German Hansa, p. 96. 36. W. Stieda, Hildebrand Veckinchusen: Briefwechsel eines deutschen Kaufmanns im 15. Jahrhundert (Leipzig, 1921); M. Lesnikov, Die Handelsbücher des Hansischen Kaufmannes Veckinchusen (Berlin, 1973); M. Lesnikov and W. Stark, Die Handelsbücher des Hildebrand Veckinchusen (Quellen und Darsellungen zur hansischen Geschichte, Band 67, Cologne, 2013); A. Lorenz-Ridderbecks, Krisenhandel und Ruin des Hansekaufmanns Hildebrand Veckinchusen im späten Mittelalter: Untersuchung des Briefwechsels (1417-1428) (Hamburg, 2014), pp. 13, 15, 27, 32-33; Graichen et al., Die Deutsche Hanse, pp. 222, 233 [illustrating the chest full of pepper]. 37. Graichen et al., Die Deutsche Hanse, p. 223. 38. Graichen et al., Die Deutsche Hanse, p. 227; Lorenz-Ridderbecks, Krisenhandel und Ruin, p. 25. 39. Graichen et al., Die Deutsche Hanse, pp. 231-2. 40. Van Houtte, Bruges, pp. 41, 57-8; J. Murray, Bruges, Cradle of Capitalism, 1280-1390 (Cambridge, 2005), pp. 244-5. 41. Graichen et al., Die Deutsche Hanse, p. 229. 42. J. Martin, Treasure in the Land of Darkness: the Fur Trade and its Significance for Medieval Russia (Cambridge, 1986). 43. Graichen et al., Die Deutsche Hanse, p. 234. 44. Gies, Merchants and Moneymen, p. 206. 45. Gies, Merchants and Moneymen, p. 214; Graichen et al., Die Deutsche Hanse, pp. 240-2; Lorenz-Ridderbecks, Krisenhandel und Ruin, pp. 69-95. 46. In modern German: Gott erbarme, daß es mit Dir so gekommen ist: Lorenz-Ridderbecks, Krisenhandel und Ruin, p. 13. 47. Dollinger, German Hansa, pp. 165-6, 173-6; Gies, Merchants and Moneymen, pp. 209-14.

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Erasmus Forum Bulletin / Volume I 2018 36 he German cultural fascination with all things “Shakespearean” started during the playwright’s lifetime. Romeo and Juliet and The Merchant of Venice, published in German translation in 1604 and 1611 respectively, were the very first foreign language versions of a Shakespeare play. These performance texts, prepared for the theatre company which produced the two plays for the stage, were followed by many others. ‘Shakespeare in German’ is, initially, a story of touring companies and their performance needs. Lear, Hamlet, Julius Caesar and Romeo and Juliet, for example, were performed in Dresden during the summer of 1626, and translations of the plays were published there during those months. Two further translations of Julius Caesar (1627, 1631) and of Titus Andronicus (1620) attest to the popularity of Shakespeare’s “Roman “plays in Europe’s German-speaking territories which spread across central and western Europe. Princes, dukes, archdukes, margraves, counts and bishops ruled their localities autonomously while also pledging an allegiance to the ‘Holy Roman Emperor’ elected from amongst their number. His title and federal authority linked this part of Europe with the Rome of classical antiquity. German-speaking audiences knew that the Roman empire had never really gone away and in Shakespeare they discovered a playwright after their own hearts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Erasmus Forum Bulletin / Volume I 2018 37 (#6!Lear*=.!$%)4!4$(*&:!O4!0&3-*&![&8&4/!03&$%&U4!2)-4$!2,''!=)3*-(5%&-!)#!(#.!'(#*,(*&!-&1(-9&6a!YS3!$%&!0&-1(#4/!B%(9&45&(-&!8(4!(!4$(#6(-6!=3-#&!=.!(''!8%3!+31=($&6!(*()#4$!Q-(#+&^:3" 03&$%&U4!45&&+%!(=3,$!B%(9&45&(-&!$3!%)4!2&''387B$-(44=3,-*!&#$%,4)(4$4!6&+'(-&4!$%($a!YS%&!2)-4$!5(*&!32!%)4!$%($!"!-&(6!1(6&!1&!%)4!23-!')2&b!(#6!8%&#!"!%(6!2)#)4%&6!(!4)#*'&!5'(./!"!4$336!')9&!3#&!=3-#!=')#6/!3#!8%31!(! 1)-(+,'3,4!%(#6! =&4$384!4)*%$! )#!(!131&#$^:!"#!-&(+$)3#!$3!Q-&#+%!23-1(')41/! 8%&$%&-!)#!A3-#&)''&!(#6!@(+)#&!3-!)#!V3'$()-&/!0 3&$%&!4&&4!$%&!+-386!32!+%(3$)+!+%(-(+$&-4!$3!=&!1&$!8)$%!)#!(#.!B%(9&45 &(-&(#!6-(1(!(4!Y#($,-('^:!Y"!+-./!#($,-&c!#($,-&c!#3$%)#*!43!#($,-('!(4!B%(9&45&(-&U4!1&#^:!Q(4+)#($)#*'./!&>&#!($!$%)4!>&- . !&(-'.!4$(*&/!%38&>&-/!%&!)4!(='&!$3!2)#6!)#!B%(9&45&(-&!$%&!)#*-&6)&#$!8%)+%!83,'6!)#23-1!%)4!38 #!Faust* 3>&-! (! ')2&$)1&! 32! +31534)$)3#:! YD%($! #3='&! 5%)'3435%&-4! %(>&! 4()6! 32! $%&! 83-'6/! (55')&4! 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S%&!-3'&!32!B%(9&45&(-&!)#!$%&!43+)(')4$!0&-1(#!]&13+-($)+!@&5,=')+!%(4!=&&#!(#('.4&6!)#!(!#,1=&-!32!=3394!4,+%!(4!B$&>&#!0:!l&''1(#!(#6!O#6-&8!`!`+[&(#U4!FIIG!+3''&+$)3#!Redefining*Shakespeare:*Literary*Theory*and*Theater*Practice*in*the*German*Democratic*Republic.*S%)4!;(4$!0&-1(#!$(4$&!23-!B%(9&45&(-&!)4!431&!$)1&4!($$-)=,$&6!$3!%)4!i4&+-&$!(*&#$U!4$($,4:!S%&!5,=')+!=&+(1&!4&#4)$)>&!$3!(1=)*,)$)&4/!-&(6)#*!!

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Erasmus Forum Bulletin / Volume I 2018 39 !!!!!!!!!!!!!!!!!!!!!!!!!!!Rejuvenated, perhaps, by marriage in 1630 to the sixteen year old Helene Fourmont -the model for his Venus- the artist’s brushwork is as exuberant as ever in this masterpiece of the high baroque. Raised in Antwerp, then the centre of the Spanish Netherlands, Ruben’s education was literary-humanistic and his religious formation, Catholic. Learned in the classical and literary sources, Rubens brought a fresh, and very Flemish, realism to his treatment of mythological subjects. A gift for diplomacy was one of Rubens’s many attributes and he brokered the 1630 peace treaty between England and Spain. His portrayal of Venus and Adonis at the moment of the boy-hunter’s farewell, while opulent in style, also communicates a sense of impending tragedy. The smoothness of her white flesh defies age, as befits a goddess. His dark and sinewy torso-caught up in movement – is energetically human and mortal. Two worlds are about to collide. Shakespeare’s interpretation, it seems, is also that of Rubens. Venus and Adonis, Peter Paul Rubens Photograph, original painted oil on canvas, circa 1630. From the Metropolitan Museum of Art, New York, USA

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Erasmus Forum Bulletin / Volume I 2018 41 1(4$&-.!32!')$&-(-.!23-1!(#6!=.!$%&!&(4&!8)$%!8%)+%!%&!+31=)#&6!43!1(#.!6)22&-&#$!4$.'&4!<!$-(*)+/!&5)+/!+31)+!/!5(4$3-('!(#6!'.-)+7!8)$%)#!(!#&8!')$&-(-.!'(#64+(5&!23-!8%)+%!$%&-&!+3,'6!=&!W,4$!3#&!83-6!<!_>)6)(#:!@&6)4+3>&-&6! 6,-)#*! $%&! @&#()44(#+&/! (#6! 1,+%! $-(#4'($&6! )#$3! $%&! >&-#(+,'(-! '(#*,(*&4/! $%&!Metamorphoses* (55&('&6! $3! (! ')$&-(-.71)#6&6! (#6! %,1(#)4$)+! -&(6&-4%)5:! Q3-! (! 5'(.8-)*%$! 9)+9)#*! %)4!%&&'4!$%&!_>)6)(#!$%&1&!8(4!8&''!4,)$&6/!)#$&''&+$,(''.!(#6!43+)(''./!(#6!)$!8(4!$3!N&#-.!D-)3$%&4'&./!;(-'!32!B3,$%(15$3#!<!%)4!&#$-&g &!$3!(#!(-)4$3+-($)+!(#6!+3,-$'.!1)')&,!<!$%($!B%(9&45&(-&!6&6)+($&6!$%)4!i2)-4$!%&)-!32!1.!)#>&#$)3#U!_>)6!%(6!-&$3'6!LeZ!1.$%4!(#6!6)>)6&6!%)4!83-9!(4!(!8%3'&!)#$3!2)2$&&#!=3394:!N)4!(++3,#$!32!Venus*and* Adonis*(13,#$4!$3!(!=-)&2!&#$-.!)#!?339!o!(#6!)#!$%($!2(+$/!4,-&'./!B%(9&45&(-&!4(8!%)4!3553-$,#)$.!$3!1(9&!%)4!38#/!6)4$)#+$)>&/!1(-9:! N&!83,'6!%(>&!-&(6/!5-3=(='.!)#!$%&!;#*')4%!$-(#4'($)3#/!(!+3#>&#$)3#('!4$3-.a!Venus*and*Adonis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a!!O#6! $%&#! $%&! 5-35%&$)+! 1,4&! 6&4+&#64:! V&#,4! 6&4+-)=&4! $%&! 2,$,-&! %)4$3-.! 32! '3>&! )#! (''! )$4! $-(*)+!+3#$-(-)#&44a! !S%)4!)4!('43!$%&!(-$)4$!8%34&!5&#!8)''!2)#6!431&!32!)$4!*-&($&4$!$%&1&4!)#!$%&!)#$&-5'(.!=&$8&&#!)#6)>)6,('!+%(-(+$&-!(#6!$%&!5,=')+!83-'6:!N)4!V&#,4 !$%&-&23-&!9#384!$%($!'3>&a! !O#6!$%&#!($!$%&!53&1U4!+3#+',4)3#!$%&!$%&1&!32!1,$(=)')$.!-&$,-#4!(#6!$%-3,*%!)$!$%&!&P5&-)&#+&!32!(!9)#6!32!-&4,--&+$)3#a! i!B%&!4$()#4!%&- !2 (+&!8)$%!%)4!+3#*&('&6!='336!U!!(#6!$%&#!iB%&!')2$4!$%&!+322 &-7')64!$%($!+'34&!%)4!&.&4/!D%&-&/!'3!c!$83!'(154/!=,-#$!3,$/!)#!6(-9#&44!')&4!i!!i!S%&!4$-3#*&4 $ !=36.!4%(''!)$!1(9&!134$!8&(9!!B$-)9&!$%&!8)4&!6,1=!(#6!$&(+%!$%&!233'!$3!45&(9!i!!i:::!4%(''!=&!+(,4&!32 !8(-!(#6!6)-&!&>&#$4U!!"$!8)''a!i4&$!6)44&#4)3#!U$8)P$!$%&!43#!(#6!4)-&!!B,=W&+$!(#6!4&->)'&!$3!(''!6)4+3#$&#$4/!O4!6-.!+31=,4$)3,4!1($$&-!)4!$3!2)-&U!!

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Erasmus Forum Bulletin / Volume III 2019 ohn Hales, Fellow of Eton College, was born in Bath in 1584. He died at Eton on 19 May 1656 and was buried in the graveyard outside the chapel. A notable scholar, Hales was at the centre of a group of Anglican intellectuals during the Civil War. Their posthumous influence would be profound and for that reason alone light ought to be shed upon him every now and then. He made a deep impression on those who met him and they referred to him as the ‘ever- memorable’. However, in that disputatious age, he did not publish much and the fact is that he is now largely forgotten. During the 1950s, Robert Birley wrote an elegant essay about Hales which was later published in a volume of Birley’s writings collected and edited by Brian Rees, History and Idealism: Essays, Addresses and Letters (London: John Murray, 1990). There Birley says most of what can be said about Hales in a biographical way, though not everything that can be said about Hales as a theologian. Hales entered Corpus Christi College, Oxford, in 1597. After graduating (B.A.) in 1603, his considerable talents were spotted by Sir Henry Savile, the Warden of Merton College, and he was admitted to a fellowship there in 1605. Hales’s early eighteenth century biographer, Pierre Desmaizeaux, explains that “Savile ... being informed of the prodigious pregnancy of his parts, resolved to bring him into the said college; as he was used to do in respect of all young men, who distinguished themselves in the university by their merit.” (Desmaizeaux was a Huguenot author, then living in London, who published his life of Hales in 1719.) Hales worked for Savile on his great edition of John Chrysostom, which was printed at Savile’s own press at Eton in 1610-13, and is one of the finest ornaments of English renaissance humanism. It also seems very likely, though there is no way of knowing for certain, that Hales would at least have advised the company of translators based at Merton and chaired by Savile that worked on the various New Testament sections of the Authorised Version of the Bible, published in 1611 at King James’s command. That said, we do know that from 1603, Hales worked for Thomas Bodley, cataloguing additions to his library, and that Hales gave Bodley’s funeral oration in 1613. Hales took holy orders at about that time, and was already a priest of the Church of England when he took his M.A. in 1609. Savile, who had been appointed Provost of Eton in 1596 (though not in holy orders), installed him as a fellow of Eton in 1613, and two years later (1615) Hales became Regius Professor of Greek at Oxford, a post he held until 1619. In 1616 he became chaplain to Sir Dudley Carleton and, while Carleton served as ambassador at The Hague, Hales attended some of the meetings of the Synod of Dort (about which more below). In 1639, Archbishop Laud gave him a canonry at Windsor, which he held at the same time as his fellowship here, until being ejected in 1642. Hales worked happily with Sir Henry Wotton, who became Provost in 1624, and who referred to Hales as the walking library, ’bibliotheca ambulans’. He lived quietly in College until his fellowship was torn from him in 1650 when he refused to subscribe to the Oath of Engagement which would have bound him to accept the abolition of the monarchy and the House of Lords. In a period of confusion in 1642 after the parliamentarians and puritans took over the College and sacked the Provost, Richard Steward, Hales was spirited away by the other fellows with important documents and keys. He lived in concealment for nine weeks “so near the College and highway”, he later said, “that those who searched for him might have smelt him if he had eaten garlic.” Thereafter, Hales lived in the household of Lady Salter some miles away near Iver in Buckinghamshire, attempting to tutor the boy of the house, a task he found tricky. (The boy is described by John Aubrey in Brief Lives as ‘a blockhead’.) While there, he met and got to know Andrew Marvell, who later praised and defended him in The Rehearsal Transpros’d (1673) as “one of the clearest heads and best prepared brests in Christendom” (as quoted in the Oxford DNB). (Marvell came to Eton in 1653 as a private tutor to a ward of Oliver Cromwell’s.) When danger J"

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Erasmus Forum Bulletin / Volume I 2018 45 accrued to the family because they were harbouring him, Hales moved back to Eton and lodged with the widow of his old manservant in a building near the Christopher Inn, roughly where the building called Jourdelay’s stands today. Aubrey visited him and left this account: “I saw him, a pretty little man, sanguine, of a cheerful countenance, very gentle and courteous; I was received by him with very much humanity... He loved Canarie, but moderately, to refresh his spirits...’ Like many Anglican clergy in those years, Hales’s circumstances were greatly reduced. The disaster was that he was forced to sell his books (for which, over the years, he had paid the astonishing sum of £2500) for £700 to a London bookseller called Cornelius Bee. When he died, his grave monument and epitaph were provided for him by a young man of means, who had been educated at Eton, called Peter Curwen. That Hales was highly esteemed is apparent in the many testimonials that appear in various biographical writings of the time, such as Aubrey’s Brief Lives, mentioned above. The waspish Anthony Wood, in his Athenae Oxonienses, tells how “when the king and court resided at Windsor, (Hales) was much frequented by noblemen and courtiers who delighted much in his company not for his severe or retired walks of learning but for his polite discourses, stories and poetry.” Hales associated with Jonson, Suckling, Davenant and Endymion Porter. He knew John Milton. On one memorable evening at Eton he defended his idea that Shakespeare ‘had expressed the common subjects of poetry better than all other poets’, as reported by Dryden in his Essay of Dramatic Poesy (1668). Hales was also drawn into the orbit of Lucius Cary, Viscount Falkland, who had an estate at Great Tew in Oxfordshire, and who gathered a group of friends who were scholars and wits around him there, several of whom had powerful theological minds. Here Hales met Edward Hyde, later earl of Clarendon, one of the great fixers and survivors of the turbulent years of the mid-seventeenth century. Recalling those meetings, Clarendon later wrote of them as “... one continued convivium philosophicum, or convivium theologicum, enlivened and refreshed with all the facetiousness of wit, and of good humour, and pleasantness of discourse” (Life.) Recalling Hales, Clarendon remembered that nothing troubled him more“... than the brawls which were grown from religion... and he thought that pride, and passion, more than conscience, were the cause of all separation from each other’s communion.” (Life, as quoted in ODNB.) Brian Wormald painted a deft portrait of the Great Tew circle in his renowned book Clarendon: Politics, historiography and religion 1640-1660 (1st edn, Cambridge University Press, 1951; see also Wormald’s preface to the 1976 edition). In it, he described how “This circle developed a strong theological colour.” (p. 244) He quotes Clarendon’s account of their conversations: ‘Here Mr Chillingworth wrote, and formed, and modelled, his excellent book against the learned Jesuit Mr Knott, after frequent debates upon the most important particulars; in many of which, he suffered himself to be overruled by the judgement of his friends...’ (Life, 1.40.) Wormald continues: “Chillingworth was the leading intellect, and Falkland was very close to him in his sympathies and outlook. John Hales, a close friend but less frequent visitor made a third contributor, and between them these three gave the circle of Tew the character of a theological group with distinctive tenets.” (p. 244). Hales’s sermons, letters and other writings were collected by his friend Anthony Farindon (or Faringdon); but it was John Pearson who arranged for their publication as the so-called Golden Remains of the Ever Memorable Mr John Hales of Eton College in 1659 (another edition appeared in 1673). The volume is prefaced with a letter from Farindon and a biographical note by Pearson. It was Farindon who famously wrote of Hales: “You may please to take notice, that in his younger days, he was a Calvinist, and even then when he was employed at that synod, and at the well pressing St.John iii. 16 by Episcopius – There I bid John Calvin good-night, as he often told me.” In the mid-eighteenth century a slightly fuller edition of Hales’s Works was edited and published

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Erasmus Forum Bulletin / Volume I 2018 46 in three volumes by the Scottish lawyer, critic and historian, David Dalrymple, Lord Hailes (Glasgow, 1765). Pearson was at Eton as a boy during the 1620s, and he ended his career as bishop of Chester. He too is largely forgotten now (except perhaps at Trinity College, Cambridge, where he was the Master for a decade); but he was one of England’s greatest theological minds and an early FRS. His Exposition of the Creed, first published in 1659, was required theological reading for members of the Church of England until well into the nineteenth century. He frankly expresses his admiration for Hales, and also describes the affection that was felt for him by his friends: “(Hales) was a man, I think, of as great sharpness, quickness and subtilty of wit, as ever this, or, perhaps, any nation, bred... He was of a nature... so kind, so sweet, so courting of all mankind, of an affability so prompt, so ready to receive all conditions of men, that I conceive it near as easie a task for anyone to become so knowing, as so obliging.” Pearson also tells us that: “As a Christian, none more ever acquainted with the nature of the gospel, because none more studious of the knowledge of it, or more curious in the search... while he lived, none was ever more solicited and urged to write, and thereby truly to teach the world, than he; none ever so resolved (pardon the expression, so obstinate) against it...” I sense a hint of annoyance in that last line. Let’s recall that those who lived and worked in these kingdoms between 1630 and 1660 lived in times of great turmoil. Europe was in the grip of a long period of warfare, the Thirty Years’ War (which began in 1618 and was the drawn-out last act of the Reformation period), and of a process of social and political evolution, often violent, which brought about a new ecclesiastical and territorial settlement in early modern Europe. What did it mean to ‘say good night to master Calvin’ at the Synod of Dort? It implies that, at about that time, Hales ceased to be an orthodox Calvinist (albeit an episcopalian one), and became an Arminian. A full explanation would greatly lengthen this essay, so, to keep it short, Arminians (who followed a Dutch theologian known by his latinized name, Jacobus Arminius) essentially took issue with the central points of Calvinist teaching, particularly on the matters of double predestination, and limited atonement. Hales reported on the synod in a series of lively and informative letters to Carleton, though recent scholarship has carefully sifted Hales’s accounts and scholars have pointed out that Hales was never an officially accredited member of the synod, and that he missed the first meetings, and left before the end. Incidentally, the Arminian controversy ran on in England (and Scotland) throughout the run up to the Civil War. Seventeenth century disputations are incredibly long and unbelievably tedious, you can trust me on that, but I do love some of the titles. My favourite is Richard Montague’s riposte to a Roman Catholic pamphleteer who published a work entitled A Gag for a New Gospel. Montague’s answer is called “A Gagg for the New Gospell?” No. “A New Gagg for an old Goose,” (1624). Theological titles have gone downhill since then. Montague, later to be bishop of Chichester and briefly, before he died, of Norwich, was the son of the vicar of Dorney just up the road from Eton in south Buckinghamshire. He too was schooled at Eton, and he became a fellow there in the same year as Hales. Hales’s theological outlook is worth sketching. You will know that, for complicated reasons, the post-Reformation Church of England, which had settled down during the reign of Elizabeth I after an extremely shaky start, and had rattled along reasonably effectively under her successor, began to unravel during the 1630s. Charles I’s unwise policy of meddling too much with ecclesiastical affairs, and promoting clergy who were ideologically and emotively supportive of his views about kingship, bred a reaction of increasing discontent. A period of repression, his so-called ‘Personal Rule’, i.e. without parliament, from 1628 to 1640, bottled up opposition on the more protestant side of the church, and in that pressurized environment some monstrous creatures evolved and grew.

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Erasmus Forum Bulletin / Volume I 2018 47 They burst into the open during the 1640s and 50s when all kinds of extraordinary church arrangements came into being. Hales despaired of the new climate of hostility. He wasn’t the sort of person to catch the public eye. But in private he was clear, even trenchant, in his views, and at some point in the mid-1630s he wrote them down, as we shall see. However, Hales had formulated his views a good deal earlier, because they appear in a sermon preached at St. Mary’s in Oxford in Easter week 1617 on Abuses of Hard Places in Scripture, and perhaps he felt he had said then all that needed to be said on the matter. The text was from a short passage in the third chapter of the letter which the church knows as “2 Peter”, which is a curious piece of writing whose date and authorship are still mightily puzzling to modern biblical scholarship. There, the writer speaks about the reception by early church congregations of some of the letters of St Paul (whether these are the letters that have come down to us, we cannot tell), and explains how difficult they are to interpret. It is hard to avoid the impression that Paul’s theological views were already being questioned and debated in this early period. The writer, presumably quite late in the first century AD, is reflecting on the conundrum which faced the primitive church, i.e. that Jesus had not returned within the lifetime of the first generation to judge heaven and earth, as seems to have been the initial expectation. So he (assuming the author was male) reassures the recipients of his letter that, though Jesus has not yet returned, eventually he will, so the key thing is to live in such a way that they will be spotless and blameless when he does reappear. And he adds (in the text of the Authorized Version): “even as our beloved brother Paul also... hath written unto you; as also in all his epistles, speaking in them of these things; in which are some things hard to be understood, which they that are unlearned and unstable wrest, as they do also the other scriptures, unto their own destruction.” Now, this passage raises a host of questions that we can’t begin to go into here, but the writer seems to be suggesting that, even at this early juncture, writings that were starting to be considered as authoritative needed careful handling. Hales liked this idea. Remember that he was addressing seventeenth century Christians standing in the reformation tradition now a hundred years old, which looked to the scriptures as the source of authority in resolving all the doctrinal and ethical questions that a Christian might need to ask.“... ever since the gospel was committed to writing”, he asks, “what age, what monument of the church’s acts, is not full of debate and strife concerning the force and meaning those writings, which the Holy Ghost hath left us to be the rule and law of faith?” He wants to suggest that Christians lose their bearings once they start to force their own interpretations upon scriptural texts. He thinks that Roman Catholics do this, and also some of the Puritans (a word whose meaning is, of course, disputed: but, let it pass, I use it here to mean the hotter sort of protestant). Returning to his text, he describes those who ‘wrest of scripture’ when dealing with the Bible texts as “Chimicks deal with natural bodies, torturing them to extract out of them, which god or nature never put in them.” And he continues: “There can be but two certain and infallible interpreters of scripture; either itself, or the Holy Ghost the author of it. Itself doth then expound itself, when the words and circumstances do sound to us the prime, and natural, and principal sense. But when the place is obscure, involved and intricate; or when there is contained some secret and hidden mystery, beyond the prime sense; infallibly to show us this, there can be no interpreter but the Holy Ghost that gave it. Besides these two, all other interpretation is private.” Anticipating the spirit of those Anglican divines who, during the 1660s were some of the great scientific investigators of their day, and whose theological work underpinned the scientific revolution of the seventeenth century, Hales goes on to point out how St Augustine (the text is from de Genesi ad Litteram) “sharply reproves some Christians, who out of some places of scripture misunderstood, framed unto themselves a kind of knowledge in astronomy and physiology, quite contrary unto some part of heathen learning in this kind, which were true and evident unto sense... he charges such to have been a scandal unto the Word, and hinderers of the conversion of some

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Erasmus Forum Bulletin / Volume I 2018 48 heathen men that were scholars: ‘for how’, saith he, ‘shall they believe our books of scripture, persuading the resurrection of the dead, the kingdom of heaven, and the rest of the mysteries of our profession, if they find them faulty in these things, of which themselves have undeniable demonstration?’ Following St Augustine once again, there are times, he says, when we should ‘suspend our belief, and confess our ignorance’... “For it is not depth of knowledge, nor knowledge of antiquity, not sharpness of wit, nor authority of councils, nor the name of the Church, can settle the restless conceits, that possess the minds of many doubtful Christians: only to ground for faith on the plain uncontroversable text of scripture.” Of course, it was much easier to say that, and to think it, in the seventeenth century than it is in the twenty-first. Hales returned to these themes in a short tract he wrote in the 1630s called “On Schism and Schismaticks.” This tract was circulated among friends; but in about 1637 one of them got it printed and someone else showed a copy to Archbishop Laud. Hales was summoned to Lambeth Palace. An important later account of the meeting, by Laud’s irascible biographer, the high churchmen, Peter Heylin, almost certainly paints Hales in a rather bad light (though Lord Dacre thought Hales was pulling his leg). Heylin recorded that Hales said“... he had been ferretted by the archbishop from one hole at another till there was none left to afford him any shelter; that he was resolved to be orthodox and declare himself a true son of the Church of England, both for doctrine and discipline.” The fact is that Laud’s curiosity seems to have been piqued by what he read, and what he heard. Hales must have impressed him, because in the following year Laud promoted Hales to his canonry in Windsor; though it was a post he only managed to hold on to for three years, until a parliamentary garrison was installed in the castle, and Hales, the royalist, the episcopalian, the devoted friend of the Church of England as established under Elizabeth, was ejected. Hales wrote:“... it hath been the common disease of Christians from the beginning not to content themselves with the measure of faith which God and Scriptures have expressly afforded us; but out of a vain desire to know more than is revealed, they have attempted to discuss things, of which we have no light, neither from reason nor revelation... and to strengthen themselves, have broken out into divisions and factions, opposing man to man, synod to synod, till the peace of the church vanished, without all possibility of recall.” He does not want to stop other people believing what they will about Christian faith. He wants to identify an account of the fundamentals of faith that all Christians can accept as a basis for unity. (This word ‘fundamentals’ became a technical term in post-reformation theological controversy. It needs to be distinguished from the idea of ‘fundamentalism’, which is a completely different and much later phenomenon.) This view was never worked out in more detail by Hales. Perhaps he was shy, or sticking to his principles. Perhaps he just didn’t have the stomach for the fight. Perhaps he liked his quiet life by the Thames at Eton, his books, his friendships, and his duties and obligations as Bursar of the College, which post he filled for many years while he was a fellow. The Eton College archives contain account books from the 1630s with fair copies of the figures which we can assume were written up by Hales himself. Incidentally, Wood noted that “when he was Bursar of his Coll: and had received bad money, he would lay it aside and put good of his own in the room for it to pay others. Insomuch that sometimes he hath thrown into the river £20 and £30 at a time. All which he hath stood to, to the loss of himself, rather than others of the society should be endangered.” However, Hales’s views did appear in print because they are closely echoed in the writings of a greater figure in the Anglican theological firmament of the time, his much younger contemporary and good friend William Chillingworth (1602-44). They are stated with great clarity in Chillingworth’s book, The Religion of Protestants [A Safe Way to Salvation...] published in 1638. And this is where we come to Hales’s legacy. Hales and Chillingworth were among the first of the

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Erasmus Forum Bulletin / Volume I 2018 49 ‘men of latitude’. Their followers included many of the bishops of the later seventeenth century and eighteenth century. They influenced the Cambridge Platonists, and they influenced Locke. Like their friends from the Great Tew circle, they admired and looked back to Erasmus, preferring his outlook to that of Luther or Calvin. They were, of course, attacked. In particular, they were accused of Socinianism, essentially a form of Unitarianism. Even John Aubrey in his gossipy way retained this slur on Hales’s reputation, writing that “He was one of the first Socinians in England. I think the first” (though he said the very same thing about Falkland). However, as Lord Dacre showed in his essay on The Great Tew Circle (published in his volume of essays, Catholics, Anglicans and Puritans, London, Secker & Warburg, 1987), though Hales and Falkland read about Socinianism, this charge was manifestly false. Wormald summarizes their view thus: “(I)t was the destruction of the hegemony of the Church of Rome and the consequent and continuing process of dissolution within the new churches which presented the problem which faced them.” In answer to this, Chillingworth (and Hales) proposed (in Wormald’s words) that: “Only that which all Christian men agreed in believing was necessary to be believed. As for those things on which they were divided, they were not of vital consequence and Christian men should agree to differ. If this were true, as these men urged it to be, all the urgency was drawn from the controversy as it was then waged. It was no longer a matter of eternal consequence that men should be persuaded, and still less forced, to accept the whole system of Rome, for instance, or the whole system of Geneva. Plenty of room for contending there undoubtedly was, and it was not necessary to give up doing so. But it must be understood that nobody’s salvation was at stake, and that unity in diversity through charity must be maintained.” (p. 249) The views of Hales and Chillingworth, and others like them, helped create the ecclesiastical atmosphere that existed in England after the Restoration in 1660. They shaped the Church of England through the long period of Anglican hegemony that lasted until the Age of Reform. Their insistence on a faith rooted in scripture, tradition and reason, still moulds the Church of England today. But the latitudinarian ascendancy itself bred faults and vices. It came to be dry and complacent. Its climate of faith was very different from that which nourished Lancelot Andrewes, John Donne, George Herbert and John Hales. It is no surprise, then, that evangelical movements flourished in the eighteenth century, to channel the springs of devotion that the Latitudinarians were apt to quench; or that the Oxford Movement arose in the nineteenth century as an attempt to reconnect English spirituality with its continental roots. In 1845, J.H.Newman published his Essay on the Development of Christian Doctrine. In it, in several significant passages, he takes Chillingworth as the spokesman for Protestantism; and, in another, he quotes Hales. Those, like me, who admire Chillingworth and Hales would have to concede, I think, that Newman moved the argument about authority within Anglicanism into entirely new territory: and, of course, the study of Christian theology has been transformed by all kinds of new influences and insights over the last two hundred years and more. Nevertheless, there is still much to gain from John Hales’s humane, rational, eirenic and scholarly theological vision. The task he set himself, to find common ground between all Christians, surely remains an urgent one for the churches today.

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Erasmus Forum Bulletin / Volume I 2018 51 We may become the makers of our fate when we have ceased to pose as its prophets.’ Karl Popper e know little of Oliver Cromwell’s religious beliefs. As J.C. Davis has demonstrated, he did not leave any statements or credos or detailed records of his discussions with colleagues on matters of religion1. There is no diary. His reading seems to have extended little further than the Bible and Walter Ralegh’s History of the World, from which he derived his stubbornly Elizabethan world view, with its ultimately destabilizing obsession with ‘Black Spain’. We do not even know what form of worship he followed. He was familiar with the Book of Common Prayer, according to which he (and at least one of his daughters) was married and his children were baptized.2 Though it seems likely that he adopted the Directory of Worship, the official legally enforced form of liturgy adopted under the Protectorate, we do not know for sure. Ultimately, as Christopher Hill correctly pointed out, like his closest colleagues in battle – John Lambert, Henry Ireton, for example – whose providential independency was forged amid the arguments and debates of the New Model’s Saints, Cromwell can be ‘identified with no sect’.3 He was an Independent. Therefore, if we wish to explore Cromwell’s religious world view, it may be best to do so by proxy. John Owen, Dean of Christ Church Oxford, and later, the university’s vice- chancellor, was Cromwell’s personal chaplain and adviser to his Council of State as well as Parliament. His theology was, presumably, endorsed by the Protector and was a major influence upon him. Owen has been the subject of much research in recent years, by, among others, Carl Trueman, Tim Cooper, Andrew Leslie and, in particular, Martyn Calvin Cowan, to whose findings this interpretation is greatly indebted. I wish to look, in the light of this recent research, at Owen’s possible interpretations and applications of the book of Isaiah, with which Cromwell was also deeply familiar and referenced in a number of speeches, in order to shed some light on the Protector’s religious beliefs. In particular, his concern with prophecy and providence. Isaiah, a ‘collection of collections’, recounts a number of historical events and processes that took place between the eighth and sixth centuries BC. It is not now believed to be the work of a single prophet. According to the most recent biblical scholarship, it divides into three parts.5 Chapters 1-39, which are largely the work of the prophet Isaiah, consists of oracles and eschatological prophecies; chapters 40-55 are attributed to Deutero-Isaiah and concentrate on the Exile and the future return to Zion, themes which were of particular importance to Puritans, before, during and after the Civil Wars; chapters 56-66, the work of Trito-Isaiah, continue the narrative of the previous author(s), introducing oracles relating to God’s judgment. The intensity of Isaiah’s rhetorical poetry, delivered slowly and emphatically and often mirrored and recalled in subsequent passages, can be heard in some of its most famous phrases, of considerable importance to Puritans: The leading lights of the Protectorate were more comfortable with the language of the Old Testament than the New. i"2!.3,!63#U$!=&')&>&/!.3,!83#U$!4,->)>&U!GaI!i"!8)''!$-,4$!(#6!# 3$!2&(-U!FLaL!iD&!%(>&!1(6&!')&4!3,-!-&2,*&!(#6!)#!2('4&%3 36!8&!%(>&!$(9&#!4%&'$&-U!!LJaFe!!W

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Erasmus Forum Bulletin / Volume I 2018 52 They were men of war, adjusting with some difficulty to peace. Victory on the battlefield was viewed as a ‘significant declaration of God’s favour’. If that were so, then the parliamentary armies were blessed, having won two civil wars, conquered Ireland, largely pacified Scotland and driven Charles Stuart into exile. This was the victorious verdict of providence. The victories at Dunbar on 3 September 1650 and at Worcester on the same day a year later (surely, too, of considerable significance) were the defining battles of the new regime, particularly Dunbar, which was achieved against the odds (and was arguably due more to the tactical skill of John Lambert, Cromwell’s only serious political rival, than Cromwell himself). In both battles, God’s ‘presence, power and providence’ had never been so clearly displayed. Simply, to obey or conform to God’s will granted victory. To disobey ended in defeat. Evidence of God’s providence had already been on display in Cromwell’s Irish campaign during the summer of 1649, which was analysed in some detail by Owen. The enemy in Ireland saw five former rivals united in their hostility to the parliamentary forces: the Scottish Covenanters based in Ulster; traditional supporters of the Prayer Book and prelacy, whose Royal Irish Army was commanded by James Butler, Duke of Ormonde; Catholic Irish Confederates (who had been Ormonde’s opponents); those merchants and traders, mainly in Munster, who had turned their back on Parliament for opportunistic reasons in early 1648; and the native, Catholic Irish. Though these five groups had spent seven years in conflict with one another, they were now brought together as one menacing and formidable ‘Hydra’, which could only be defeated by a godly force. Their defeat by the parliamentary forces would be further evidence of God’s providence, and so Cromwell proved. Owen, in his account, found providential patterns in contingency. In the summer of 1649, the parliamentary forces were supposed to land in the port of Kinsale on the south coast of Munster, but instead they disembarked in Dublin, which turned out to be a fortuitous change of plan, which Owen, naturally, attributed to God’s providence. The consequences of the amendment had been profound. First, it meant that Ormonde’s army was divided; its skillful and experienced commander, Murrough O’Brien, Earl of Inchiquin, had been ordered south to Munster to confront the expected force that never arrived. Second, Colonel Michael Jones defeated the Royalist army under Lieutenant General Purcell at Rathmines just outside Dublin, losing as many as 4,000 men more than half that number captured, along with their artillery and intelligence. News of this ‘astonishing mercy’ reached invading troops before they arrived. Third, Henry Ireton’s smaller force, intended for Kinsale, set course for Dublin, where the whole invading army now assembled. The city of Drogheda, to the north of Dublin was taken, following a notorious siege that lingers in Irish memories, and the same army then marched south to combine with forces under Lord Broghill, whose adept management of a series of mutinies against Inchiquin had served to make conquest of Ireland inevitable.6 Owen, in his reading of Isaiah, viewed the Irish campaign as revenge for the bloody but bitterly exaggerated Irish rebellion of 1641: ‘For the day of the Lord’s vengeance, and the year of recompenses for the controversy of Zion’ 34:8 Owen painted the victories of the parliamentary armies as one that overcame all odds and, therefore, proof of God’s manifest support. The enemies of Parliament throughout the Civil Wars were an ‘enraged, headless, lawless, godless multitude, gathered out of inns, taverns, alehouses, stables, highways and the like - nurseries of piety and pitty’.7 That they were multiple only served to emphasise their strength and, therefore, the unlikely, providential nature of their defeat.

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Erasmus Forum Bulletin / Volume I 2018 53 The Irish were the worst, rebels in 1641, avenged eight years later: ‘followers after the Beast’, who were to be forced to drink a ‘Cup of Blood’, like that of Amalek, in the Book of Exodus, who had disobeyed God’s instruction to ‘touch not mine anointed’.8 Owen seems to have taken an especial interest in Isaiah 60.9 There are 26 references to this chapter across nine of his sermons. Isaiah 60 prophesises the future glory of Israel and is perhaps reflective of Owen’s – and Cromwell’s – support for the ‘Tabernacles’ or gathered churches, a commitment to religious toleration and liberty. Jews were to return to England and the antichrist destroyed. Though Owen also believed in an inner spirituality. God’s kingdom, he wrote, was ‘First, and Principally: in that which is internall and spirituall, in and over the soules of men’. In that, he was close to Cromwell: ‘Lift up thine eyes round about, and see: all they gather themselves together, they come to thee: thy sons shall come from far, and thy daughters shall be nursed at thy side.’ 60:4 Unlike some contemporaries and former colleagues, such as the apocalyptic Fifth Monarchists, whose role in the Nominated Assembly was important if overplayed, Owen (and, we can infer, Cromwell) had a deep commitment to forging a strong and stable temporal polity, albeit one based on the precepts of moral reformation and religious tolerance. If a new heaven and earth was to be reconstructed, as Isaiah prophesised, then the suggestion was that it was the earthly that most required urgent attention: ‘For behold, I create new heavens and a new earth: and the former shall not be remembered nor come into mind’. 65:17 And ‘For as the new heavens and the new earth, which I will make, shall remain before me, saith the Lord, so shall your seed and your name remain.’ 66:22 England would be that heaven upon earth, as had been prophesied: ‘He that is left in Zion, and he that remaineth in Jerusalem, shall be called holy, even every one that is written among the living in Jerusalem.’ 4:3 As Independents seeking to create an empire of religious liberty and toleration, a beacon in a dark world, Isaiah offered a vision attractive to Owen and Cromwell: ‘And the Lord will create upon every dwelling place of mount Zion, and upon her assemblies, a cloud and smoke by day, and the shining of a flaming fire by night: for upon all the glory shall be a defence.’ 4:5 In 1659, unaware of the impending collapse of the political system, he had prayed into being, Owen told Parliament, ‘there are now many dwelling places, many Assemblies of mount Zion’.10 They would persist, though the Protectorate that nourished them did not. ‘And they shall go forth and look upon the carcasses of the men that have transgressed against me; for their worm shall not die, neither shall their fire be quenched; and they shall be an abhorring unto all flesh’. 66:24

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Erasmus Forum Bulletin / Volume I 2018 54 Owen’s concept of prophecy and providence was rooted in a striking interpretation of history. Like most puritans who adopted a somewhat Manichean, Elizabethan world view, Owen thought of the papacy in the bleakest terms: ‘the greatest part of men amongst us do look upon the papacy as the antichrist foretold in Scripture’.11 For Owen, the Bible was a tool through which one could unravel the thread of history. His, was a Whig interpretation avant la lettre. Owen regarded the Roman Empire as a pagan power that persecuted the early Christians, yet despite the onslaught, by the second century, Christianity had found widespread acceptance, a religion, as Paul preached and proclaimed, that liberated the poor and oppressed (Ruden + Brown12.) Britain’s relationship with the Christian faith, according to Owen, was a deep one and went back further than the narrative propounded by the Church in Rome. Like the martyrologist John Foxe and the antiquarian William Camden, Owen believed that Joseph of Arimathea had converted Britain long before Augustine of Canterbury had arrived on the same Kentish shore in the late sixth century. Owen cited Tertullian and Origen in his claim, both of whom had declared that the Britons had embraced the Christian faith before the arrival of the Germanic invaders. But the arrival of the Anglo-Saxons meant that the process of Christianisation had to be repeated. In wider Christendom, the Roman Church had been corrupted by paganism and charted new territory from around 600AD, when the Byzantine emperor Phocas granted the title of universal bishop to Pope Boniface III. In 751, in another development which increased the power of Rome, the French monarchy was transferred from the Merovingians to the Carolingians. Pepin, the founder of the new dynasty, had fought for the papacy against the Lombards. Pepin’s son Charlemagne presented further gifts of land to the papacy, culminating in Leo III’s crowning of him as Imperator Romanorum on Christmas Day 800. The papacy, ever devious, and increasing considerably in temporal power, had betrayed the Carolingians by supporting the new Capetian dynasty, founded in 987. England did not escape the treachery of Rome. The Norman Conquest took place under a papal banner: Pope Alexander II had excommunicated Harold and granted the right to the throne to William of Normandy. Papal power was consolidated by Gregory VII. The pope became kingmaker. Owen cited the example of Duke Rudolf of Swabia, whose crown presented to him by Gregory in 1080, was inscribed with the words ‘Petra dedit Petro, Petris diadema Rudolfo’ (The Rock gave the crown to Peter and Peter gives it to Rudolf).3 As well as John Foxe, Owen drew on John Knox’s Histories of the Reformatioun of Religioun within the Realm of Scotland for instances of papal perfidy, which continued to flow along history. Examples of more recent papal tyranny included the Albigensian Crusade, the Hussite War and the Waldensians, whom Milton lamented and defended when they were attacked by the Catholic forces of Savoy in 1655, the height of the Protectorate. The debt to the language of Isaiah is apparent: O>&#*&/!_![3-6/!$%.!4'(,*%$&-&6!4()#$4/!8%34&!=3#&4![)&!4+($$&-&6!3#!$%&!O'5)#&!13,#$()#4!+3'6/!:::!S%&)-!1(-$. -&6!='336!(#6!(4%&4!438!_U&-!(''!$%U!"$(')(#!2)&'64!8%&-&!4$)''!63$%!48(.! S%&!$-)5'&!$.-(#$b!$%($!2-31!$%&4&!1(.!*-38!!O!%,#6-&623'6/!8%3!%(>)#*!'&(-#$!$%.!8(.!;(-'.!1(.!2'.!$%&!?(=.'3#)(#!83&:!!

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Erasmus Forum Bulletin / Volume I 2018 55 The massacres of the Waldensians in Piedmont came at a challenging time for Cromwell and his regime, when Providence appeared to be mislaid if not lost. The Protector owed an intellectual debt to the New England Puritan John Cotton, with whom he corresponded regularly. Cotton argued, in language forged in that of Isaiah that the ‘power of Romish Babylon, supported by the Kings of the Nations’, needed to be ‘shaken and dryed up’.14 In other words, the time had come for the all conquering elect nation of England to step up to its rightful mission. In utter control of Britain and Ireland, at peace with the Dutch after a long conflict and warily at ease with France, it could turn its attention outward to global conflict and challenge Spain in the New World. The Western Design, Cromwell’s attempt to capture the Spanish Caribbean island of Hispaniola, ended in dismal failure: a hubristic project, poorly planned, it brought Cromwell to the depths of despair, from which he and his regime never fully recovered.15 Once providence was gone, the regime, domestically secure, turned inward, looking for moral fault among the wider population who had remained stubbornly loyal to the via media of the Elizabethan Prayer Book. The short-lived experiment of the Major-Generals only alienated further the local gentry and anticipated the split between the military and civilian components of the Protectorate, which would reveal itself in the offer of the Crown to Cromwell. The Protector refused the ‘bauble’ with reference to the Old Testament: ‘I would not seek to set up that which Providence hath destroyed and laid in the dust and I would not build Jericho again.’ Cromwell, like his theological mentor Owen, sought patterns in contingencies. But they became less clear as illness and fatigue took hold of him after the failure of the Western Design. ‘For upon all the glory shall be a defence.’ It was reckless attack that brought defeat. Editor’s Note. The full text of this essay will be published separately on the website of the Erasmus Forum. Notes All passages From Isaiah are taken from the King James Version, familiar to Owen. 1 J.C. Davis ‘Cromwell’s Religion’, in John Morrill (ed) Oliver Cromwell and the English Revolution (Longman, 1990) 2 ibid 3 Christopher Hill, Oliver Cromwell, Historical Association, 1956 4 Carl Trueman, “The Claims of Truth: John Owen’s Trinitarian Theology” Send the Light, 1997; Tim Cooper, John Owen, Richard Baxter and the Formation of Nonconformity (Routledge, 2011); Andrew Leslie, The Light of Grace: John Owen on the Authority of Scripture and Christian Faith (V&R, 2015); Martyn Calvin Cowan, John Owen and the Civil War Apocalypse: Preaching, Prophecy ad Politics (Routledge, 2018) 5 Luis Alonso Schoekel, ‘Isaiah’ in Robert Alter and Frank Kermode The Literary Guide to the Bible (Fontana, 1989) 6 Cowan, p. 40, Patrick Little ‘Cromwell and Ireland before 1649’ in Patrick Little (ed) Oliver Cromwell: New Perspectives (Palgrave, 2009), p. 135 7 Cowan, p. 39 8 John Owen, Steadfastness of Promises, 35-6, quoted in Cowan p 49 9 Cowan p. 53 10 Owen, The Glory and Interest 4, viii, 459 11 Owen Anmad version on a Treatise Entitled Fiat Lux 1662, quoted in Cowan p. 8 12 See, for example, Sarah Ruden Paul Among the People The Apostle Reinterpreted and Reimagined in His Own Time (Image Books, 2011) 13 See Eamon Duffy Saints and Sinners, A History of the Popes (Yale, 2014)

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Erasmus Forum Bulletin / Volume I 2018 58 On the night of 7 June 1780, rioters made a number of attempts to storm the Bank of England. Their failure was no reflection on the lack of numbers or passion but was rather, a measure of the strength of the defence force that fought for the institution. That force included a troop of Horse and Foot Guards, the Northumberland Militia, the voluntary London Military Association and willing members of the general public, including John Wilkes, the radical journalist and politician. Indeed, Wilkes was clearly very active in the Bank’s defence, recording in his diary: ‘Fired six or seven times at the rioters at the end of the Bank. Killed two rioters directly opposite to the Great Gate...’ The Bank’s own staff also turned out in its support. Legend has it, that their guns were loaded with bullets cast from the melted-down ink stands from their desks, although it does seem rather unlikely that the Bank would have had to resort to such measures since it kept a reasonably well-stocked armoury. It was, nonetheless, thanks to the efforts of the staff, the protection of men like Wilkes, and the Foot Guards, who kept up a constant fire thus dispersing the rioters, that the Bank remained safe and, indeed, opened for business (although a much reduced business) the next day. Their actions originated in Lord George Gordon’s invectives against Catholicism and, in particular, the presentation on 2 June, of a petition to the House of Commons calling for the dissolution of the 1778 Act by which some of the disabilities against Roman Catholics had been removed. On that day, a crowd of some 60,000 people gathered in St George’s Fields in Southwark, to hear Gordon speak and join the march on Parliament to present a ‘Protestant petition’. The crowd, although certainly containing disorderly and possibly criminal elements, comprised largely ‘well-dressed decent sort of people’. Once at Westminster, it made its presence felt; Westminster Hall was invaded, the Court of the King’s Bench forced to adjourn, and peers were attacked on their way to Parliament. Gordon succeeded in getting the House to consider his petition and made periodical, and rather inflammatory, reports on the debate to the waiting crowd. His actions, all but ensured that when the petition against Catholic relief was rejected, the mob would become violent. The initial targets were chapels and properties used and owned by Catholics but surrounding properties were often damaged in the confusion and, as the week went on, the rioters turned their attention to symbols of authority including prisons and the houses of those magistrates most active in the attempted suppression of the violence. On 7 June, a day dubbed ‘Black Wednesday’ by Horace Walpole, the rioters targeted shops, businesses, offices and two Catholic schoolhouses. As night drew in, the tolls on Blackfriars Bridge were destroyed and further attacks were made on London’s prisons. The climax to the day’s events were those ill-fated attacks on the Bank of England. We can’t spend too much time investigating the motivations of the crowd but it is clear the rioters were not just spurred on by rumours that the Bank contained a quantity of popish money. Arguably, since the Bank was regularly active in the courts, as it sought to protect both its business and the financial system against the activities of coiners and forgers, it was itself viewed as a symbol of both authority and repression. Historians also acknowledge a strong ‘class’ bias in attacks on Catholic and other targets. As Rudé suggested, there was, in the actions of the rioters, ‘a groping desire to settle accounts with the rich, if only for a day’. In this respect, the Bank was a natural target. It had, for a long time, been the focus of resentment among those of London’s middling sorts who were losing ground to the monied men supposedly making their fortunes in the financial markets. It had also attracted the ire of a broader section of society who suffered the burden of taxation that resulted from the wars of the period. Moreover, while it is certainly going too far to suggest that the mob understood that ‘whoever is master of the bank and the tower will soon become master of the city, and whoever is master of the city will soon be the master of Great Britain’, the rioters must have seen the Bank as a strong symbol of political and economic power. The attacks

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Erasmus Forum Bulletin / Volume I 2018 59 on the Bank, therefore, were not merely an anomaly in a set of actions more properly directed at the symbols of state repression. The Bank was, in fact, a legitimate target for the mob. Fortunately for our story, it was also seen as worthy of strong protection and, as we have seen, the defence force with which it was provided was more than a match for the rioters. My aim is to investigate why and how the Bank of England became worthy of such protection. How did a hastily- constructed, temporary solution to the funding of a late seventeenth-century war turn into a great engine of state; a symbol of oppression to some but a symbol of trust, solidity and British geopolitical power to others. A brief history of the Bank Let’s start by returning to the late seventeenth century, a time of significant political and economic change. It was also a time when there was much support for the idea of a public bank. There were very few banks in Britain at this point and all were small and limited in scope. But, some projectors looked overseas for examples of different ways to stimulate the economy and, in particular, pointed to the advantages conferred by larger public banks of Venice, Genoa and most prominently, in the minds of Englishmen at least, Amsterdam. They also argued that a public bank was necessary to regulate and stimulate the increasingly complex English economy. Specifically, William Paterson, one of the Bank of England’s founders, suggested that a public bank was needed ‘for the convenience and security of great Payments, and the better to facilitate the circulation of Money...’ He went on to assert that such a bank would bring down the rate of interest and increase the availability of capital, “which for some time past hath born no manner of proportion to that of our Rival Neighbours [a situation that was inexplicable] considering the Riches and Trade of England, unless it were the want of publick Funds; by which the Effects of the Nation, in some sort, might be disposed to answer the Use, and do the Office of Money, and become more useful to the Trade and Improvements thereof.” But not everyone was in favour of the creation of such an institution. Notably, important questions were raised about its potential relationship to the Crown. This was a particular concern because, following the Glorious Revolution of 1688, the English Parliament had gained greater powers. It used those powers to impose a restrictive financial settlement on William III that was intended to ensure his continuing dependence. It was argued that a public bank might be used by William to circumvent this financial settlement and thus, undermine the power of Parliament. But although these arguments are interesting and provide the context for discussions about what a public bank might look like and do, the Bank of England was not a response to any of these points. It was quite simply a product of war. The Glorious Revolution of 1688 deposed the Catholic James II and brought the Dutch William and his wife Mary, James’s daughter, to the throne. Although William had been invited to England for the preservation of Protestantism at home, the new king had larger ambitions in mind. He wanted to check the power of Louis XIV’s France and thus, one of his first acts was to take Britain into a European war. The Nine Years’ War raged from 1689 to 1697. It was indecisive and it was expensive. Public spending rose from under £2m per annum to over £6m per annum. Where was the money to come from? At first, it was raised through increased taxation and through short-term borrowing, which was facilitated either by funds raised from a few rich individuals or by paying contractors in ‘IOUs’ instead of cash. By 1692, however, the funds were running dry as was the collective patience of the state’s creditors. Other means of raising money had to be sought and essentially what was needed was the ability to access funds from more (many more) willing lenders and to secure a much longer time to pay them back.

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Erasmus Forum Bulletin / Volume I 2018 60 These innovations, the details of which are summarised in table 1, encompassed a number of experimental schemes and some proved to be more successful than others. The Million Adventure lottery, with its £10 tickets, offer of large prizes and guarantee that all players would at least get their money back, went down very well. The tontine loan, with its complex rules, was rejected by the, perhaps, too cautious British investor. If we judge it by its longevity, the Bank of England was one of the most successful of these innovations. And indeed, it appeared to be a success from the very start; it was in April 1694 when the promoters of the Bank were granted the right to raise £1.2m by a subscription that was open to all: ‘Natives and Foreigners, Bodies Politick and Corporate’. The subscription books were opened on 21 June 1694 and, despite some expectations to the contrary, filled rapidly. Date of royal assent to Loan Act Amount raised £ Interest % Loan details Jan 1693 108,100 10 until midsummer 1700, then 7 Tontine Jan 1693 773,394 14 Single life annuities Feb 1694 118,506 14 Single life annuities Mar 1694 1,000,000 14 Million Adventure lottery Apr 1694 1,200,000 8 Subscribers to the loan were to be incorporated as the Bank of England Apr 1694 300,000 10,12 and 14 Annuities for one, two and three lives Apr 1697 1,400,000 6.3 Malt lottery; this lottery failed and the government subsequently issued the tickets as cash July 1698 2,000,000 8 Subscribers to the loan were to be incorporated as the New East India Company 6,900,000 Table 1: Government long-term borrowing, 1693-1698 Source: P. G. M. Dickson, The Financial Revolution in England: a study in the development of public credit, 1688-1756 (London, 1967), pp. 47-49. By 2 July, the full amount had been subscribed by 1,268 individuals. By early August, it had opened its doors to new business. Imagine that... a new bank established, funded and opened in a matter of weeks. Moreover, by 1 January 1695, the Bank had honoured its pledge to transfer it’s capital to the Exchequer. Yet, in spite of the enthusiasm of the subscribers and the prompt fulfilment of its promise to the state, the new Bank of England remained merely a temporary measure. Indeed, its impermanence was enshrined in the terms of its first charter, which extended for a mere 12 years or, more properly, until 1 August 1705, at which time, the Bank could be wound up at 12 months’ notice and on the repayment of the capital. This was no brave new world; it was a sticking plaster for a wound that was expected to quickly heal. The Bank of England was to remain vulnerable throughout most of the early eighteenth century, beset by rival schemes such as the proposed Land Bank, and the much more threatening rival, the

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Erasmus Forum Bulletin / Volume I 2018 61 South Sea Company. It lived in a rented home until 1734. Moreover, while the Bank served the state, its relationship with Parliament was not always easy; despite the Bank’s longevity, security took time. Its charter was subject to periodic renewals until well into the nineteenth century. It took many years for the Bank to establish its reputation and secure its place at the heart of Britain’s finances. It also had internal struggles about what its role might be. What secured the Bank’s position and ensured that it survived into the late nineteenth century while the other key companies of the seventeenth and eighteenth centuries, the East India Company and the South Sea Company, were eventually wound up? Figure 1 sums this up for us; the costs of war. Britain was at war for a little over half the period between 1688 and 1815. When not fighting, resources were often employed in preparing for war. Moreover, the financial cost of sustained conflict was immense. By 1819, the total unredeemed capital of the public debt stood at a little over £844m. This was a staggering sum for an industrialising nation and Britain’s ability to sustain such a high burden of debt without descending into political and economic chaos, forcibly demonstrates, both the effectiveness of its system of state finance and how much the British war machine owed to the willingness of investors to lend to their government. And, this is where the Bank’s primary purpose lay throughout the eighteenth century. This is why it survived and why, by the early nineteenth century, it was unassailable: its management of state debt; its role as banker to the state; and its role as mediator between the state and its creditors. It is through these tasks that the Bank made the majority of its profits, on which it built its reputation and where it saw its own purpose. Figure 1: Levels of public debt, 1691-1815 (in millions of £s) Source: Mitchell, B.R., with Phyllis Deane, “Abstract of British Historical Statistics” (Cambridge, 1962).

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Erasmus Forum Bulletin / Volume I 2018 62 The Bank as a symbol of trust in the state’s financial promises The consequences for the Bank of England were not just the development of proficiency in the practicalities of managing the national debt, although that certainly came. Glance through any of the Bank’s beautifully-preserved ledgers and you will find very few errors and seemingly, meticulous record keeping. Given the scale of the work, this was no small achievement. But, the nature and scale of the work undertaken by the Bank also meant that over the course of the eighteenth century, the institution became embedded in public life and in the life of the City of London. If we look at some of the very many records kept by the institution we can see indications of the crowds that gathered and can witness the extent to which the Bank was part of the rhythms of city life. The clerks who reported to a 1783 audit noted the crowds who arrived on dividend day, the stockbrokers all tended to come to the Bank to make their transfers at a certain time. Equally, the notaries came to inspect the ledgers, in order to certify the sums standing in particular names. In addition, the keepers of the cash books noted that extra facilities were laid on ‘towards evening when the Bankers come in’. There are hints that the crowds were so large, at certain times, that prostitutes found the Bank’s environs a good place to find customers! Sources also contain several mentions of thieves operating there. A report in 1783 noted the activities of a pickpocket who had robbed a lady of 30 guineas. The Old Bailey Proceedings Online offers a report of John Smith, a stockbroker who, while going about his business at the Bank of England at ‘about twelve o’clock [when] there is generally a very great croud [sic]’, was robbed of a silk handkerchief. The frequent mentions of great crowds should not surprise us. The amount of business managed by the late eighteenth- century Bank was staggering. For example, the issue of 4% annuities during the War of American Independence resulted in the need to open 19,500 new accounts in one day. Around the same time, it was estimated that the work of compiling a list of unpaid dividends for the Exchequer was so time- consuming that it could take up to five or six months. More than 65,000 dividend warrants were issued for payment on 5 January 1783 and nearly 59,000 in April 1783. The clerks who kept the K cash book, in which were recorded notes in long lists for the Exchequer, other public offices and some bankers, estimated that they made up around 20,000 notes a month. Mr Isaac Pilleau estimated that 137,000 bills of exchange had been discounted in the course of 1782. The clerks effectively worked in two shifts to ensure that all the work got done. The business day was from around 9am to 5pm. An evening shift started at around 4pm and extended sometimes late into the evening to ensure that all records were updated for the start of the next working day. As the business grew, so did the Bank itself. It opened with a staff of just 17 in 1694. The number of clerks had expanded to over 100 by mid-century; more than 300 by 1783; and by 1815 there were over 900. The space the Bank occupied naturally expanded as the number of staff grew. Its first permanent home was in Threadneedle Street on the site on which it now stands. The house had belonged to Sir John Houblon, the first governor, and was left to the Bank in his will. But the house was surrounded by St Christopher Le Stocks church and other houses. Thus the Bank’s directors took a number of measures during the mid to late eighteenth century to buy up the surrounding buildings and land. In doing so, they made much of the need to enlarge the streets and passages around Threadneedle Street, making them more ‘commodious’ for visitors and customers. But, when this issue was raised during the 1760s, the risk of fire was also observed: ‘buildings, papers and property...may be in danger of being destroyed to the irretrievable loss of the public’. Those fears were heightened by fires in Cornhill in 1748, when around 100 houses were destroyed, and in Sweetings Alley near the Royal Exchange in 1759. When contemplating these actions, we must conclude that the Bank was a predator during this period. It was aggressive in its control of its surroundings. It eventually bought up the whole block,

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Erasmus Forum Bulletin / Volume I 2018 63 destroyed St Christopher Le Stocks church, and pushed out residents from the area. It was resented for doing so; but what the Bank was doing served a greater purpose. It was protecting the public creditor and that presented quite a problem because here was an institution acting in an aggressive way to push out one set of people, but not just to protect the state, it was also protecting public credit; an act which affected another equally ordinary group. Indeed, we must remember that the Bank was the servant of two masters – the state and the public creditors – and the public creditors were a very large group of people who may have included the greatest in the land but also included very ordinary people who might have kept their life savings in the funds. If some saw the Bank as a symbol of oppression, what did the public creditors see when they went to the Bank of England? The architecture of the Bank was redolent with strong messages for the public and when designing the new buildings that made up the institution during the eighteenth century, there is evidence to suggest that both its architects and its directors were concerned not just with mundane security matters but also with the image its buildings and their adornments presented to London. The historian of the Bank’s architecture, Daniel Abramson, argues that the Bank was designed along lines that represented corporate virtue and connections to the state. Thus, overt ostentation was eschewed, although the aesthetic of the building was considered important and did surpass that of the Exchequer and, at least, equal that of the grand new buildings of the Treasury and the Admiralty. The classical stone façade of the Bank was in obvious physical contrast to the high and narrow brick, wood and stucco buildings that surrounded it. Because of the need for security, there were no windows facing the street at street level, thus passers-by were presented with an elegant but essentially blank façade. Iain Black labels those windowless walls ‘exclusionary’, linking them to the Bank’s aggressive protection of its privileges and monopoly position. Yet, while the building may have been in some ways reminiscent of a fortress, it did send another clear message to those who used its services; capital invested will be secure here. The iconography within and outside of the building underlined that point and emphasised the Bank’s usefulness to the country and its government, and its connections to the same. Thus, the entrance to the Pay Hall was topped by a figure of Britannia pouring out the fruits of commerce from her cornucopia, while also carrying the shield and spear which symbolised the defence of the nation. While the exterior of the Bank communicated a message of security, the fortress analogy cannot be pushed too far because the Bank was essentially a public space. By the later part of the eighteenth century, it had more square foot of space open to the public than closed off and despite the doormen and porters, whose job it was to keep undesirables out, there is plenty of evidence that all manner of individuals did enter the Bank. We have already seen the emphasis in some of the sources on the crowds and confusion in the public spaces of the buildings. Despite the undesirable company that might have been kept at the Bank, when the public did visit, for whatever purpose, the external messages of security were reinforced in the interior of the buildings. Britannia was prominent inside the building too; stamped on every ledger, visible on every note. Visitors witnessed a set of interiors that were grand and decorated with royal iconography as reassurance of the Bank’s probity and connections with the state. It is interesting here that royal iconography was prominent. Despite our understanding of the chief connections of public credit being between the individual and Parliament, the Bank did, and indeed had since it’s foundation in 1694, emphasised its connections to the Court as well as Parliament. But, the wider point that is intended here, is that in all its design, the Bank was making a statement of probity and security.

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Erasmus Forum Bulletin / Volume I 2018 64 This message was also demonstrated in how the Bank’s directors thought about their roles and the role of the institution they managed. Again, from the 1783 audit of the Bank’s functions, in their final report the auditors noted a ‘religious Veneration for the glorious fabric [of the institution and] a steady and unremitting attention to its sacred Preservation’. It was their view that given: “the immense importance of the Bank of England not only to the City of London, in points highly essential to the promotion & extension of its Commerce, but to the Nation at large, as the grand Palladium of Public Credit, we cannot but be thoroughly persuaded that an Object so great in itself & so interesting to all Ranks of the Community, must necessarily excite care & solicitude in every breast, for the wise administration of its Affairs, but principally and directly in theirs who are entrusted with the immediate management of them.” This message was not just one that found approval within the Bank. In essence, it can be found, in perhaps, the most famous image of the Bank from the late eighteenth century and the one which gave the institution its nickname ‘The Old Lady’, James Gillray’s Political Ravishment. Here we have in Gillray’s portrayal, the Bank as a fragile elderly lady who was in need of protection herself from the unwelcome overtures of Pitt the Younger, who is after her gold reserves. Here is the Bank in danger again and worthy of protection. Criticisms of the Bank So far, I have focused on demonstrating the importance of the Bank to the process of establishing the integrity of public credit and its operation as a symbol of sound finance. I have offered you a view of Gillray’s Old Lady of Threadneedle Street as a warning to public creditors that increased scrutiny was warranted and a message to Pitt’s government that it’s actions put, not just the Bank, but the entire edifice of public credit at risk. Yet, it would not be true to say that all shared the conviction that the Bank must be protected. Over the course of the eighteenth century there were many vocal critics of the institution. During the charter renewal of 1781, for example, the Bank’s close relationship to the state was deemed problematic, its monopoly was dangerous, it’s control of the system of public debt too expensive to maintain. Sir George Savile argued that the ‘public had an estate to sell’ and was selling it too damned cheap. Whig MP David Hartley also challenged the Charter renewal, arguing it had a value and should, therefore, be offered to the highest bidder. These views were coupled with a general feeling, especially in the aftermath of the loss of the American colonies, that public finance had grown impossibly corrupt and that the men at its heart were making money from the state’s bellicose nature and thus encouraged reckless and lengthy wars instead of prudent husbanding of resources. An equally interesting battleground was the issue of the Bank guard, the military force that was stationed at the institution following the Gordon Riots every night for nearly 200 years; another symbol of the connection between Bank and state. Given the occasional complaints made by the Bank about the quality and attentiveness of the Guard, one might be forced to wonder whether they would have always been in a fit state to respond in an emergency. In April 1793, for example, a complaint was made when two gentlemen who had come into the Bank to dine with the Guard’s officer became abusive, broke bottles and glasses and started a fight with the officer himself. But, it was not this sort of behaviour that made the Guard a bone of contention in the city, resented by both the City Corporation and the local populace. It was resented, in part, because on their march from Westminster via the busy streets of The Strand, Fleet Street and Cheapside, they went two abreast jostling the public out of their way. In 1787, their march was satirised by Gillray who presented an arrogant Guard trampling over those who dared to get in their way, whether men, women or indeed infants. This negative view was reinforced the following year when, one evening, a guard named Joseph Mitton bayoneted and killed a member of the public who was too slow to

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Erasmus Forum Bulletin / Volume I 2018 65 get out of the Guard’s path. Mitton was arrested and tried for murder but convicted only of common assault because the judge deemed his actions to have not arisen from any pre-conceived malice. Leaving aside specific grievances against the Guard, resentment also centered on the mere presence of a military force protecting what was supposed to be a civilian institution. In particular, the Corporation of London considered the Guard both unconstitutional and an infringement of the city’s ancient privileges. As such, the Lord Mayor and Court of Aldermen wrote to the Bank’s directors in July 1788 asking for the Guard to be replaced with a militia from the City of London. The Bank’s directors were not sympathetic, replying: “that [they] could not be induced to say, they thought the Guard unnecessary as they had great reason to believe it was highly approved in foreign countries, and there considered as a great security to the property of the Stock-holders; who deemed a Guard, established from the King’s own Guards, as a greater security than any private Guard. And that the majority of the Proprietors [shareholders] appeared to be pleased with it.” There, it seems, was an end to the argument. Shareholders and public creditors, both domestic and foreign, approved of the Guard and thus it would stay in spite of the city’s objections. Other elements of Bank policy directed at preserving the institution’s property were equally resented. The ruthlessness with which it was perceived to pursue suspected bank note forgers, for example, was regarded as highly problematic. This was a particular problem after 1797 when, as a means of protecting its gold reserves, the Bank suspended the convertibility of its notes. The suspension resulted in a significantly increased note issue and extended that issue, for the first time, to small denomination notes. One of the unintended consequences was a rising tide of forgery. The newly-issued £1 and £2 notes were a magnet for criminals but the peculiarities of the eighteenth-century’s legal system made the Bank not only victim but also detective and prosecutor. This required a significant operation to manage not only note issue but also identification of forgeries and detection and capital prosecution of the forgers.1 The response of some to the Bank’s seeming zeal in the pursuit of forgers is exemplified in George Cruikshank’s Restriction Note, in which the Bank has been transformed from a vulnerable elderly lady into a vicious baby-eater. Here we are offered the Bank as the bringer of suffering and death in the protection of its interests. The questions being raised here were about the role of this most complex of organisations; a private company answerable to its shareholders which viewed itself as the mediator between the state as borrower and the public as lenders but was still dependent on that state and the taxpayer for its existence and the chief of it’s profits. How should this Bank behave? What should it contribute? If we return to what was mooted as its original purpose, the circulation of credit, did it fulfil that promise? Arguably the privileges offered to the Bank of England, as banker to the state and manager of the public debt, had compromised that purpose. Particularly problematic was the fact that the Bank of England had been granted a monopoly over joint-stock banking in 1708. Despite numerous campaigns, its monopoly was not rescinded until 1826 and, up to that point, it certainly acted to retard the growth of a national banking system. The consequence was that by the mid-eighteenth century, when banking in Britain was already more than a century old, provision of banking services was still predominantly concentrated in London. Indeed, as Leslie Pressnell’s seminal study of the country banks in Britain notes, in 1750 there were still not even a dozen bankers outside London. Having said that we should acknowledge that it is not quite the whole story, there is evidence of a vibrant financial services industry which emerged out of existing business enterprises. I’ll offer you just a couple of examples. One interesting case is that of the drovers’ banks which evolved out of

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Erasmus Forum Bulletin / Volume I 2018 66 the need to finance the cattle trade between South Wales and London. The textile manufacturers of the West Riding of Yorkshire form a better-known example. Pat Hudson’s study found that bank and industry connections formed a framework of trade and credit. Indeed, she cites many examples of the banker-industrialist, in other words men who were simultaneously involved in trade, industrial production and the provision of banking services. The latter activities grew from connections to London and other parts of the country and permitted remittances to be made and bills of exchange to be discounted. In return, deposits taken could be ploughed back into the non-banking sides of the business. Although admirable in its adaptability and innovation, the financial services sector of the late-eighteenth and early- nineteenth century was subject to frequent crises.2 The relatively small scale of financial service providers meant that they were vulnerable to panics in their customer base and to potential runs. Localised banking problems could easily spread and led to banking collapses which impacted on the wider economy. These problems were compounded by the Bank of England’s own business agenda, which was very much focused on the provision of services to the state and to the public creditors in London. By 1815, it had grown very large and was remarkably efficient but it did not need to focus on the provision of services to industry or to entrepreneurs; its eyes were turned to other more familiar prizes. It did not create a branch network until the mid-nineteenth century. While it did accept a role in bringing stability to the financial system, its route to becoming a mature ‘central bank’ was long and arduous. But that is hardly a surprise. The Bank of England had to break new ground. It was the first of its kind to operate in a complex industrialised country that had significant international obligations and commitments. Conclusions Did the Bank of England let down the British economy in the eighteenth century? Perhaps. The measures it took to protect its monopoly and position arguably had negative economic consequences outside London. The Bank’s monopoly certainly retarded the development of the banking system. But, there is also strong evidence to suggest that an efficient and trustworthy system of public debt with the Bank of England at its heart met the needs of both the state and those who wished to use that debt for the disposal of savings and the provision of nest eggs, retirement funds, dowries and legacies. A sound national debt also created a virtuous circle as that debt went to mobilise resources for the waging of wars which sought to protect existing markets and claim new ones. Those markets in turn yielded the fiscal and financial returns which supported the state.50 References 1 Ian Gilmour, Riots, Rising and Revolution: Governance and Violence in Eighteenth Century England (London, 1993), p. 355; W. Marston Acres, The Bank of England from Within, 1694-1900 (London, 1931), pp. 208-209. 2 Quoted in Daniel Abramson, Building the Bank of England: Money, Architecture, Society, 1694-1942 (New Haven, 2005), p. 83. 3 In fact, the proposed repeal was not very radical and could only be granted to those Catholics prepared to take a special oath of allegiance. Gilmour, Riots, Risings and Revolution, p. 345.

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Erasmus Forum Bulletin / Volume I 2018 67 4 G. F. E. Rudé, ‘The Gordon Riots: a study of the rioters and their victims’, Transactions of the Royal Historical Society, 6 (1956), p. 95. 5 Gilmour, Riots, Risings and Revolution, p. 349. 6 Rudé, ‘The Gordon Riots’ 7 Rudé, ‘The Gordon Riots’, p. 109; Gilmour, Riots, Risings and Revolution, p. 361. 8 Watson, biographer of Lord George Gordon quoted in Abramson, Building the Bank, p. 84. 9 See for example J. H. Clapham, The Bank of England: a history (Cambridge, 1966), pp. 184-5; Acres, Bank of England, pp. 208-210. 10 William Paterson, A Brief Account of the Intended Bank of England (London, 1694), p. 1. 11 Ibid., pp. 1-2. 12 For further discussion of this issue see C. Roberts, ‘The constitutional significance of the financial settlement of 1690’, The Historical Journal (1977), 20, pp. 59-76. 13 Clapham, Bank of England, vol. I, p.17. 14 For an account of the Glorious Revolution and its consequences see Steven Pincus, 1688: the first modern revolution (New Haven, 2009). 15 P. G. M. Dickson, The Financial Revolution in England: a study in the development of public credit, 1688-1756 (London, 1967), p. 46. 16 John Giuseppi, The Bank of England: A History from its Foundation in 1694 (London, 1966), p. 12. 17 Bank of England Archives (hereafter BEA), M1/1, List of initial subscribers. 18 Clapham, Bank of England, vol. I, p. 20. 19 Broz, J.L. and R.S. Grossman, ‘Paying for privilege: the political economy of Bank of England charters, 1694-1844’, Explorations in Economic History, 41 (2004), pp. 48-72. 20 BEA, M5/213, Minutes of the Committee of Inspection, vol. II, fos. 68-69. 21 BEA, M5/212, Minutes of the Committee of Inspection, vol I, fo. 91. 22 BEA, M5/213, fo. 120. 23 Old Bailey Proceedings Online, John Davis, theft, 29 October 1783 t17831029-41. 24 BEA, M5/213, fos. 43-44. 25 Ibid., fo. 62.

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Erasmus Forum Bulletin / Volume I 2018 68 26 Ibid., fo. 126. 27 BEA, M5/212, fo. 91; fo. 99. 28 Anne L. Murphy, ‘Learning the business of banking: the recruitment and training of the Bank of England’s first tellers’: Business History, 52 (2010), pp. 150-168; Giuseppi, Bank of England, p. 56; David Kynaston, The City of London, Volume I, A World of its Own (London, 1995), p. 30. 29 See, for example, BEA, G4/23, Minutes of the Court of Directors, fo. 167. 30 Acres, Bank of England from Within, I, p. 191. 31 Ibid., I, p. 191, n1. 32 Abramson, Building the Bank. 33 Ibid., p. 57. 34 I. S. Black, ‘Spaces of Capital: bank office building in the City of London, 1830-1870’, Journal of Historical Geography, 26 (2000), p. 357. 35 BEA, M5/213, fo. 179. 36 Ibid., fos. 178-79. 37 Clapham, Bank of England, vol I, p. 181. 38 David Hartley, Considerations on the proposed renewal of the Bank Charter (London, 1781), p. 19. 39 Acres, Bank of England from Within, p. 222. 40 Ibid., p. 223. 41 Ibid., p. 224. 42 BEA, M6/19 Memorandum on the introduction of the King’s Guard. 43 Clapham, Bank of England, vol. II, p. 5; E. Newby, ‘The suspension of the gold standard as sustainable monetary policy’, Journal of Economic Dynamics and Control, 36 (2012), pp. 1498-1519. 44 R. McGowen, ‘The Bank of England and the Policing of Forgery, 1797-1821’, Past and Present, 186 (2005), pp. 81-116; R. McGowen, ‘Managing the Gallows: The Bank of England and the Death Penalty, 1797-1821’ Law and History Review, 25 (2007), pp. 241-82; C. Wennerlind, ‘The Death Penalty as Monetary Policy: The Practice and Punishment of Monetary Crime, 1690-1830’, History of Political Economy, 36 (2004), pp. 131-161. 45 L. S. Pressnell, Country Banking in the Industrial Revolution (Oxford, 1956), p. 4. 46 R. O. Roberts, ‘Banks and the economic development of South Wales before 1914’ in Barber C. and Williams L. J. eds. Modern South Wales: Essays in Economic History (Cardiff, 1986).

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Erasmus Forum Bulletin / Volume I 2018 71 ong Kong has developed a reputation for open markets, opportunity and free trade from its founding in 1842, when the British took the “barren” island to function as the headquarters to open up the trade between China and the rest of the world in order to escape the constraints of trading through Canton and Macao. Hong Kong is persistently ranked as the world’s most economically-free market by the Fraser Institute (1970-2015) and by the Heritage Foundation (1995- 2015). Thus, it forms a kind of benchmark for free market capitalism and seems, at first sight, to conform to the idea of laissez-faire, or leaving businesses and markets to do what they do best without interference. Moreover, Hong Kong is an important case study to understand the components of effective regulatory reform. While many states struggled with banking regulations in the new era of integrating capital market in the 1970s, Hong Kong carved its own path to establish a regional, and then global, international financial centre in the absence of a central bank (the Hong Kong Monetary Authority was formed in 1993). Milton Friedman once lauded Hong Kong as a preserve for free markets, even when its imperial master, Great Britain, was at its most interventionist, promoting nationalised industry, strong labour unions, and a large and generous welfare system.1 Among Friedman’s final publications (a month before his death in November 2006) was a contribution to The Wall Street Journal where he described Hong Kong as “a shining symbol of economic freedom”.2 In 1998, Friedman specifically attributed the relatively poor economic growth of Britain compared with Hong Kong to “socialism in Britain, free enterprise and free markets in Hong Kong”.3 In 1960, Hong Kong’s per capita income was less than a third of that of the UK, but by the time of the handover of sovereignty to China in 1967, per capita income in Hong Kong was more than 10% higher than in the UK. The characterisation of unfettered markets is certainly true for international capital flows and the foreign exchange market, which operated more freely than almost any other centre in the world in the 1950s.4 But how well does this characterisation conform to more detailed historical evidence? Certainly, Hong Kong’s post-war economic development was remarkable and demonstrates a wealth of entrepreneurship, resilience, and appetite for trade. Despite Britain’s imposition of protectionist tariffs on Hong Kong’s export of textiles in the 1960s, entrepreneurs in Hong Kong were able to nimbly shift production to new areas and deploy new models such as subcontracting for large US and European distributors to follow markets. Looking at Hong Kong’s history more closely reveals a more complex system, vulnerable to bargaining between big businesses and the state. A stylised version of Hong Kong’s post-war economic success is that the colony thrived originally on the principles of free trade as an entrepôt for Chinese trade with the West. After the Communist revolution on the mainland in 1949, China’s trade was disrupted, throwing Hong Kong into a new and challenging environment. Partly through the influx of manufacturers and labour from across the border, labour- intensive industry was quickly established in the colony to replace the traditional entrepôt role. The persistence of free markets then supported the rapid industrialisation of Hong Kong during the 1960s and 1970s through export-led growth. Low tax rates, freedom from controls on investment, openness to trade, and competition led to a resilient and vibrant economy that flourished in an environment of predominantly cheap labour, the English language, the strong British legal tradition, and advantageous geographical position. The growth of labour-intensive production of textiles, toys, and other light manufacturing led to rising incomes per capita. When local wages began to rise after the 1960s, exports began to lose their competitiveness, but Deng Xiao Ping’s launch of China’s Open Door Policy at the end of 1978 provided the outlet for Hong Kong firms to shift their production to the low-cost Special Economic Zones on the mainland. The H

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Erasmus Forum Bulletin / Volume I 2018 72 subsequent rise of the international financial centre, logistics, and tourism sustained the economy through the difficult decades of the 1990s and 2000s. On the eve of the handover of sovereignty to China in 1996, the colony’s per capita income had soared to 10% higher than that of the UK. But this stylised view of Hong Kong’s success is open to question when viewed in greater detail. The sections that follow will challenge the assumption that economic relations with China were suspended from 1950 to 1978, that markets were free, and that the state did not intervene in the economy. Evidence of Hong Kong’s Economic Success Figure 1 shows the dramatic rise in per capita gross domestic product from 1961 to 2013. The consistent and accelerating growth from the 1980s to the 1997 Asian Financial Crisis is particularly striking, although nominal output per person fell. Figure 1 Figure 2 shows how output changed each year from 1961 to 2014 in constant dollars, which shows that the only years in which output fell in real terms were the 1997 Asian Financial Crisis and the 2008 Global Financial Crisis. This emphasises the vulnerability of Hong Kong to global factors, partly because of the openness of its economy. What is also striking is the higher average rates of growth during the years 1962 to 1989 (8.4% per annum) compared with the period 1990 to 2014 (3.9% per annum). Hong Kong joined other so-called East Asian “economic miracles”, much praised for their rapid development.5 A few years of slower growth in the mid-1960s were associated with local political disturbances. This was followed by another brief slowdown at the time of the first Organisation of the Petroleum Exporting Countries (OPEC) oil crisis and again a decade later during the negotiations for the transfer of Hong Kong to Chinese rule in the early

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Erasmus Forum Bulletin / Volume I 2018 73 1980s. In the early 2000s, the Severe Acute Respiratory Syndrome (SARS) outbreak interrupted tourism and business travel to Hong Kong, which adversely affected economic activity. Nevertheless, Hong Kong grew quickly relative to most of its neighbours and certainly much faster than Britain during the 1960s and 1970s. Figure 2 Figure 3 shows the dramatic transformation of the economy that was achieved by integration with the mainland economy. What is particularly striking is the absolute decline in the value of manufacturing output from the end of the 1980s, as production was shifted across the border to Shenzhen and other coastal centres. Hong Kong has continued to be by far the largest source of foreign direct investment into China. The decline in manufacturing in Hong Kong was more than matched by an upward surge in the value of production in the service sector, particularly financial and commercial services. That this restructuring was achieved without faltering rates of growth or employment is a testament to the resilience and vitality of Hong Kong’s economy, and the importance of economic integration with the mainland two decades before the handover of political sovereignty. Figure 4 confirms the increasing role of mainland China in Hong Kong’s trade. Before the Open Door Policy, only about 10% of Hong Kong’s trade was with the mainland, but by 2008 this had increased to close to 50%. Almost all of the increase in the intensity of the trade relationship has been through imports and re-exports, most of which is related to the export processing industries located on the east coast of mainland China. China’s international trade and investment are thus, closely related, and Hong Kong’s trade is increasingly dependent on the vibrant mainland economy.

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Erasmus Forum Bulletin / Volume I 2018 75 Figure 5 By the time of the Global Financial Crisis, Chinese companies represented over half of Hong Kong’s stock market capitalisation and although this share has subsided, it is still significant at over 40%. Thus far, the evidence supports the traditional story of Hong Kong’s rapid economic growth as a free market economy, first through trade, then manufacturing, and the importance of integration with the mainland starting in the 1980s. The following sections look more closely at the evolution of cross-border relations and then at the extent of free market capitalism. Integration With China Before 1978 It is important to recognise that the economic relations between Hong Kong and the People’s Republic of China were crucial to Hong Kong’s development, not only well before the 1997 political handover, but also during the early decades of Hong Kong’s post-war economic development. This economic integration persisted despite the political isolation of China from the 1950s to the 1970s. The embargoes on trade with China imposed by the US in 1949 and then by the United Nations in 1951, did not end Hong Kong’s dependence on trade with the mainland. During the 1950s, recorded (re)-exports to China certainly tailed off (although there was considerable smuggling), but imports from the mainland were still 15–25% of Hong Kong’s total imports. Even more important was the nature of those imports; Chinese food, including vegetables and pork, were staples in the diet of the low-wage industrial workers of Hong Kong. About 80% of Hong Kong’s food was imported and about half of this came from Mainland China. The ability to source cheap food was an important factor depressing the cost of living and therefore the cost of labour during the period of labour-intensive industrialisation that drove Hong Kong’s “economic miracle”.6 The second main link between Hong Kong and China before 1978 was financial. During the 1960s, twelve PRC-registered, or controlled banks, operated in Hong Kong, ranging from the powerful Bank of China to the small Po Sang Bank, which mainly traded in gold. Together, this group held 14% of deposits in Hong Kong in the mid-1960s. Moreover, after the American authorities blocked

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Erasmus Forum Bulletin / Volume I 2018 76 the use of US dollars in 1950, the Chinese state relied on sterling and other currencies to purchase essential imports. China’s trade surpluses with Hong Kong generated much-needed foreign exchange that could be converted in the free exchange markets in Hong Kong. Figure 6 shows the monthly sales of sterling to the Bank of China, which equate to between £350–£600 million per month in today’s money. This essential flow of foreign exchange covered between a quarter and a third of China’s total import bill at the time. 8 The ability to run a trade surplus and to use this surplus to import food and capital goods from third countries was an important boost to China’s development planning during the decades before the Open Door Policy. Trade and financial relations between Hong Kong and China were, therefore, of significant mutual benefit despite the relative isolation of the People’s Republic of China during these decades, well before the Open Door Policy linked China more strongly to western markets from 1978. Laissez-Faire and Positive Non- Interventionism As noted in the introduction, Hong Kong’s exceptional reputation for free markets makes it an important benchmark to understand the nature of capitalism. But, the way that relations between the state and the market have evolved in Hong Kong is quite nuanced and contested. Certainly, in the early post-war years the state, and in particular, the Financial Secretary, J.J. Cowperthwaite, was strongly averse to interfering in markets even to the extent that pressure from London to regulate markets or even to collect financial statistics was resisted.9 In the 1970s, the Financial Secretary, Sir Philip Haddon-Cave, coined the phrase “Positive Non- Interventionism” and this awkward form of words has come to dominate perceptions of Hong Kong’s successful post-war economic development.10 The phrase was meant to express the deliberate (positive) effort by the state not to intervene in the allocation of productive resources. This attitude was in marked contrast to the “governed market” approach that prevailed in other newly-industrialising East Asian economies in the 1970s such as South Korea, Singapore and Taiwan, where the state had a strong influence over the direction of economic development.11 It also diverged strongly from the British Labour government’s approach in the UK in the 1970s, as noted by Milton Friedman. But Haddon-Cave drew a distinction at the time between laissez-faire and non-interventionism, noting that there was a positive role for government to overcome market failure,

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Erasmus Forum Bulletin / Volume I 2018 77 i.e. when the public good was not best served by unfettered market forces. One of the clearest private expressions of positive non-interventionism is in a letter from Haddon-Cave to the famous entrepreneur and businessman Li Ka-Shing in 1981, months before Haddon-Cave demitted his post as Financial Secretary to become Chief Secretary. After thanking Li for an entertaining evening at his home, Haddon-Cave expresses the difficulty of sticking to his commitment to free competition: “...the way in which so many in the market place, in these scratchy times, damn us if we even suggest something and simultaneously damn us if we do nothing is beginning to get me down! I am determined, for as long as I am here, to keep the economy, and all the markets within it, free and that means free from unnecessary and clumsy Government intervention, free from fiscal discrimination, free from the stifling effects of excessive taxation and an over-large public sector and free from all other influences which inhibit competitive forces.” 12 Haddon-Cave’s successors embraced his philosophy although the death of positive non-interventionism has been announced several times, as early as 1992 by Financial Secretary Hamish Macleod, then by Chief Executive Donald Tsang in September 2006, and again in August 2015 by his successor Leung Chun-Ying.13 Nevertheless, the slogan has survived despite a turn to “big market-small government” in the mid-2000s. But, how non-interventionist was the Hong Kong government during the period of high speed growth? And how influential were Haddon-Cave’s adversaries “in the marketplace”? Indirect State Subsidies A first important qualification of Haddon-Cave’s own assessment is to note that the state played an important role in promoting the economic and business environment of Hong Kong in ways that went far beyond allowing market forces to operate freely. Firstly, the state controls the scarcest resource in the economy; land.14 Through leasing, zoning and other allocations of land, the state had considerable influence over the nature and distribution of economic activity across the colony during the period of high-speed growth in the 1960s and 1970s. Secondly, the state is very active in subsidising the cost of living in Hong Kong (and therefore the cost of labour). From 2005 to 2015 housing absorbed only about 6% of government spending, which may not sound like much, but in 2015, 30% of the population was able to take advantage of subsidised public housing, which represents either significant income foregone or government competition with the market. During this period, rents in public housing were less than a quarter of the cost of smaller private flats on Hong Kong island (only 14% in 2015).15 Access to cheap accommodation keeps down the cost of living, and therefore, the cost of labour for industry and services. In this sense, the state has been indirectly subsidising the labour-intensive industries that were the foundation of Hong Kong’s successful industrialisation. Tight Controls On The Banking System Even more striking than this positive support for markets, however, was the extent of controls on the banking system that restricted free competition. The financial sector is often a target for regulation, even by most adherents of free markets, because of the prevalence of market failure due to information asymmetry. Thus, depositors do not usually know the purpose to which their funds are put by banks (how liquid or risky the banks’ loan portfolios are) and therefore, they cannot measure the risk of not getting back their deposits. Banks, in turn, do not have perfect knowledge of the likelihood of default by their customers. Private information is a key asset of banks so they

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Erasmus Forum Bulletin / Volume I 2018 78 have an incentive not to disclose commercially-sensitive information to the public. This generates a need for rules to govern bank liquidity, insider lending, minimum capital, and a system of prudential supervision to ensure that the rules are being followed. Prudential bank regulation increases transparency and supports the operation of competitive markets. At first, the Hong Kong Government was very reluctant to regulate the banking system, preferring to allow banks to seek deposits and make loans without restriction or supervision. There was no central bank and currency notes were issued by HSBC, Chartered Bank, and the Mercantile Bank underan effective currency board system operated through the government-managed Exchange Fund.16 Bankers merely registered under the company ordinance and were allowed to collect deposits from the public; by 1947 there were about 250 different banking institutions in the colony. The first banking regulation in 1948 required a nominal license fee to be paid but imposed no prudential controls on minimum capital, no reserve requirements or liquidity ratios, and little guidance on balance sheets. As commercial business in the colony slowed down after the restrictions on trade with China, banks began to compete for deposits by offering higher interest rates and engaging in more risky loans so that, in 1961, Hong Kong suffered its first major banking crisis. This woke the authorities and leading bankers to the dangers of contagious bank runs because of weakly capitalised or corrupt banks. HSBC and Chartered Bank began to draft a new and tighter set of bank regulations that included prudential controls, and they organised a cartel to control interest rates offered on deposits to constrain competition.17 From 1964, a subcommittee of the Hong Kong Exchange Banks’ Association met periodically to set deposit rates that could be offered to their customers. HSBC and Chartered Bank would then adjust their best lending rates in concert to reflect any changes in deposit rates. Interest rate cartels were not unusual in the 1960s; similar arrangements existed in both the US and the UK. However, most countries abandoned interest rate controls in the 1970s, while Hong Kong maintained their Interest Rate Rules in amended form until 2001. The new Banking Ordinance was debated and amended and finally came into force in 1964, just in time for a second, larger, banking crisis which required the government to bail out depositors and led HSBC to take over Hang Seng Bank. The diagnosis from this troubled period was that competition among banks was excessive and needed to be curbed to ensure stability. This view was strongly argued by the leading incumbent banks, but also supported by Bank of England advisors and (somewhat reluctantly) by the Hong Kong state. This diagnosis had long-lasting implications since the medicine prescribed was a set of anticompetitive measures that included not only the cartel on interest rates, but also a moratorium on new bank licences that lasted from 1965 until 1981 (with a brief hiatus for Barclay’s Bank), and limits on the number of offices that new banks could operate until 2001. Foreign banks, in particular, were considered “parasitic” by the Banking Commissioner even though this was the era in which Hong Kong emerged as an international financial centre.18 While the moratorium was aimed at increasing the stability of the banking system, it had the effect of decreasing the regulatory breadth of the government, and reducing incentives for mergers and acquisitions that might have improved governance. Widespread evidence of fraud, immediately after the moratorium ended, showed that it was not a lasting cure for the governance problems of the Hong Kong banking system.19 Even the powers of supervision that were granted under the 1964 Banking Ordinance (and subsequent amendments) were circumscribed in practice. The office of the Banking Commissioner was underfunded and he repeatedly had to fight for resources to hire staff that would allow effective

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Erasmus Forum Bulletin / Volume I 2018 79 inspection of banks. His frustration was expressed clearly in a letter in 1969 to the Financial Secretary J.J. Cowperthwaite: “It is abundantly clear that there is a complete lack of comprehension or knowledge of the duties that my office performs; this is a point upon which I have spoken to you many times in the past and more recently concerning the status and authority of this office. I am asking for an interview with HE [His Excellency the Governor] upon this last point. The time has come, in my opinion, to establish whether the Colony’s banking authority is to have the independence and status which it deserves or not.” No change arose out of this plea and his successors still found the office understaffed 15 years later.20 In the meantime, hundreds of new financial institutions opened and operated outside the Banking Ordinance to avoid the interest rate cartel and prudential capital requirements imposed on banks. The moratorium on new bank licenses combined with the interest rate cartel created a large unsupervised financial sector that increased the fragility of the financial system as a whole. In the 1980s there was yet another series of banking failures and this time the costs were even greater.21 From 1983 to 1986 seven banks collapsed and a further 100 other deposit-taking companies went out of business. Of the seven banks, three were taken over directly by the government to be restructured and sold off and the rest were supported financially to facilitate private acquisition.22 The causes were linked to poor supervision including overexposure to volatile asset markets like property and equity, insider lending and outright fraud. Conclusions This lecture has emphasised the need to be careful about generalisations about policy environments based either on stylised facts or on constrained quantitative indicators such as government spending as a share of GDP or nominal tax rates. Looking closely at how state-market relations actually work in practice, including the obscure and sometimes shady relationships between individuals and institutions, can be revealing. We must also be careful to assess the trade-off between a light regulatory hand and the influence of special interests. Goodstadt, for example, has claimed that rather than promoting a competitive environment, non-interventionism left the Hong Kong public ripe for exploitation by “business cartels and other anticompetitive practices”.23 The anticompetitive controls on the banking system that protected incumbents introduced damaging distortions which contributed to financial instability in Hong Kong in the longer term. While it is challenging to accumulate detailed evidence of the interactions between the state and the market, the economic history of Hong Kong as a benchmark of free markets suggests there may be considerable benefits from closer historical treatment of capitalism(s) through archival research. References 1. M. Friedman, ‘Asian values: right...’, National Review, 31 December 1997; M. Friedman, ‘Hong Kong Wrong’, The Wall Street Journal, 6 October 2006. 2. Friedman, ‘Hong Kong Wrong’.

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Erasmus Forum Bulletin / Volume I 2018 80 3. M. Friedman, ‘The Hong Kong Experiment’. 4. C.R. Schenk, Hong Kong as an International Financial Centre: emergence and development 1945-65, London: Routledge, 2001. 5. See for example, World Bank, The East Asian Miracle: economic growth and public policy, Oxford University Press, 1993. The others included South Korea, Taiwan and Singapore. 6. C.R. Schenk, ‘Economic relations between Hong Kong and China 1945-51’, in Lee Pui-tak ed., Colonial Hong Kong and Modern China, Hong Kong University Press, 2005, pp. 199-218. 7. C.R. Schenk, ‘The re-emergence of Hong Kong as an International Financial Centre 1960-1978: contested internationalisation’ in L. Quennouëlle-Corre and Y Cassis eds., Institutions, Markets and Capital Flows: Why are Financial centres attractive?, Oxford University Press, 2011, pp. 229-253. See also, L. Goodstadt, Profits, Politics and Panics; Hong Kong’s banks and the making of a miracle economy 1935-1985, Hong Kong University Press, 2007, pp. 115-128. 8. C.R. Schenk, ‘Banking and exchange rate relations between Hong Kong and mainland China in historical perspective: 1965-75’ in C.R. Schenk ed., Hong Kong SAR’s Monetary and Exchange Rate Challenges; historical perspectives, 2009, pp. 45-72. 9. L. Goodstadt, Uneasy Partners: the conflict between public interest and private profit in Hong Kong, Hong Kong University Press, 2005, pp. 118-20. 10. P. Haddon-Cave, ‘The making of some aspects of public policy in Hong Kong’ in D. Lethbridge ed., The Business Environment in Hong Kong, Oxford University Press, 1980. 11. R. Wade, Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization, Princeton, 1990. 12. Letter from Haddon-Cave to Li Ka-shing, 11 March 1981. Italics underlined in the original. HSBC AP, Financial Secretary, 1983-86. HKO 196/088 Carton II. 13. Macleod quoted in S. Staley, Planning Rules and Urban Economic Performance: the case of Hong Kong, Chinese University Press, 1994. p. 37. Tsang, South China Morning Post, 13 September 2006. Chief Executive Leung Chun-Ying quoted in South China Morning Post, 15 August 2015. A.B.L. Cheung, ‘Repositioning the state and the public sector reform agenda; the case of Hong Kong’, in M. Ramesh, E. Araral Jr and X. Wu eds,. Reasserting the Public in Public Services: new public management reforms, Routledge, 2010, pp. 79-101. 14. R. Nissim, Land Administration and Practice in Hong Kong, Third Edition, Hong Kong University Press, 2011. 15. Hong Kong Housing Authority, Housing in Figures, 2015. In the New Territories public rents were 42% of private rents in 2005, falling to 20% in 2015. The comparison is to private flats less than 70m2 . https://www.housingauthority.gov.hk/en/common/pdf/about-us/ publications-and-statistics/HIF.pdf 16. Hong Kong is not, therefore, a case of ‘free banking’ in the sense of a competitive market in bank-issued notes. 17. C.R. Schenk, ‘Banking Crises and the Evolution of the Regulatory Framework in Hong Kong 1945-70’, Australian Economic History Review, 43(2), pp. 140-154, 2003. On the origins and operation of the Interest Rate Agreement see, Schenk Hong Kong, pp. 66-68. 18. C.R. Schenk, ‘”Parasitic Invasions” or Sources of Good Governance: Constraining Foreign Competition in Hong Kong Banking 1965-81’, Business History, Vol. 51(2), March 2009, 157-179. 19. C.R. Schenk, ‘Banking Crises and the Evolution of the Regulatory Framework in Hong Kong 1945-70’, Australian Economic History

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Erasmus Forum Bulletin / Volume I 2018 83 abour productivity (output per unit of labour input) is a fundamental aspect of the performance of an economy. Growth of labour productivity underpins increases in wages and living standards. The level of labour productivity reflects the extent of physical capital in terms of machinery and buildings, education and skills, and technology. In turn, at any point in time, the availability of these factors of production is the result of investments of various kinds during previous periods and will reflect required rates of return and the availability of finance. In addition, labour productivity is strongly influenced by the efficiency with which labour and the other inputs are used. In turn, efficiency depends on how well resources are allocated across firms and sectors and also on the effectiveness of management and on effort bargains between firms and their workers. It follows that labour productivity will be affected by institutions and government policies that inform incentives to invest, innovate and eliminate slack. The aim of this paper is to describe and explain British productivity performance during the so-called ‘Golden Age’ of European economic growth which is conventionally taken to be 1950 to 1973. The exposition will consider the British experience in terms of international comparisons. When this is done it is apparent that the period was one of serious relative economic decline which culminated in the UK being overtaken in levels of income and productivity by its European peer group. I regard this as an ‘avoidable but understandable’ failure. I shall argue that there were institutional weaknesses and policy errors which undermined British productivity in this period. Up to a point this will represent a fairly conventional account. Beyond this, however, I shall also explore interactions between institutions and policies which compounded their effects on productivity and develop the point that this unholy cocktail can only be properly understood by placing it in an appropriate historical context. More contentiously, I shall suggest that to a significant extent these unfortunate developments have their origins in Britain’s early start in industrialiastion. Relative Economic Decline The concept of ‘relative economic decline’ relates to international comparisons of the level of real GDP per person. As applied to Britain, it means that over many decades economic growth was slower than in a peer group of other countries with the result that they first caught up and then overtook British income levels. As is reported in Table 1, (All tables can be found at the end of this essay) this describes the period from the 1870s to the 1970s. Relative economic decline was most apparent vis-a-vis the United States from the American Civil War to 1950 and compared with European countries during the 1950s to the 1970s. Thus, while West Germany and France were, respectively, at 61.7 and 74.7 percent of UK GDP/person in 1950 by 1973 they were 9.3 and 6.6 per cent, respectively, above the UK level. Relative economic decline did not mean that British economic growth slowed down after World War II but rather that other countries accelerated more (cf. Table 2). During the ‘Golden Age’, Britain experienced its fastest-ever economic growth but at the same time relative economic decline proceeded at a rapid rate vis-à -vis its European peer group so much so that by the end of the period Britain had been overtaken by seven other countries in terms of real GDP per person and by nine others in terms of labour productivity. UK growth was slower by at least 0.7 percentage points per year compared with any other country including those who started the period with similar higher income levels. Although slower growth can be partly explained by virtue of a higher initial level of income and productivity, being overtaken by France and West Germany is a clear indicator of avoidable failure. A regression analysis suggests that there was a growth failure of about 0.8 percentage points per year cumulating to an income shortfall of almost 20 per cent by 1973.1 L

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Erasmus Forum Bulletin / Volume I 2018 84 As might be expected, slower growth of real GDP per person in the UK compared with France and West Germany is largely accounted for by slower growth of labour productivity.2 Table 2 indicates that the annual average rate of growth of real GDP/hour worked in West Germany was 3 percentage points above that of the UK during 1950 to 1973 and with regard to France the gap was over 2 percentage points. As is reported in Table 3, this meant that by 1973 both France and West Germany had levels of labour productivity about 10 per cent higher than that of the UK even though they had been way behind in 1950. The Proximate Sources of Inferior Productivity Performance The idea of ‘proximate sources’ of labour productivity refers to factors directly related to levels of performance. So we consider questions such as ‘how much did differences in labour quality contribute to labour productivity differentials?’ either over time or between countries rather than seeking to explain why such differences existed. Compared with West Germany which is the most interesting case, to a first approximation relatively slow labour productivity growth resulted about equally from weaker capital per worker and TFP growth (O’Mahony, 1999).3 This implies that the UK invested less and improved its efficiency and technology more slowly than West Germany. In addition, the skills of the German labour force increased more quickly reflecting, in particular, a higher amount of vocational training (Broadberry and O’Mahony, 2007). These points are borne out by Tables 4 and 5. The data in Table 4 show that the UK invested a lower share of GDP than West Germany and had a lot fewer workers with intermediate qualifications. Years of schooling were slightly lower in the UK than in its peer group. A crude indicator of the quality of schooling can be obtained from standardised international test scores in mathematics and science where in the mid 1960s the UK was a little below France and Germany but ahead of the United States (Woessmann, 2016). Empirical evidence predicts that the shortfall compared with West Germany would have had a small adverse impact on growth.4 In Table 5, we see that between 1950 and 1973 West Germany reversed an initial skills gap and moved to a position where superior labour quality was an important reason for its labour productivity advantage. Labour force qualifications increased markedly after World War II. In 1950, 15.1 per cent of the German labour force had intermediate level or above whereas at the end of the 1970s this figure had risen to 65.4 per cent. The UK improved rather less rapidly – the comparable figures were 11.7 per cent in 1950 and 28.6 per cent in the late 1970s. By 1973 this was backed up by also having more capital per worker. A big British lead in TFP in 1950 had more or less been eliminated by 1973. This does not reflect a shortfall in British R & D and is probably mainly a result of improved relative efficiency in the German economy. Maddison (1996) attempted a decomposition of the sources of TFP growth and he concluded that the shortfall in Britain could not be explained away by lower scope for catch-up or the structure of the economy although clearly rapid TFP growth in countries like West Germany did reflect reconstruction, reductions in the inefficient allocation of resources, and lower initial productivity (Temin, 2002). Industrial case studies indicate a high incidence of inefficient use of labour in the British economy in the 1960s and early 1970s (Pratten and Atkinson, 1976). The Usual Suspects It is commonplace and, at one level, quite correct to attribute the British productivity failure to incompetent management, debilitating industrial relations and serious government policy errors. An indictment along these lines can easily be compiled. Commentators regularly highlighted the

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Erasmus Forum Bulletin / Volume I 2018 85 importance of social background and the prevalence of non-technical education among British managers (Acton Society Trust, 1956; Swords- Isherwood, 1980). Prais (1981) conducted case studies of the impact of industrial relations in the 1960s and 1970s on productivity improvement. In 6 out of 10 industries (brewing, metal boxes, motor vehicles, newspapers, tobacco, and tyres) he found that, when technological improvements came along, increases in productivity had been retarded by problems of negotiating manning levels with trade unions. Pratten and Atkinson (1976) reviewed 25 case studies of which 23 reported inefficient use of labour, in 21 cases from failings of management and in 14 instances from restrictive labour practices. Inefficient use of labour and industrial relations problems accounted for a significant productivity gap in multinational companies between British plants and those in Germany or the United States in 1972 (Table 6) which would not have surprised the business respondents to an Oxford survey in the late 1940s who thought such problems were prevalent (Andrews and Brunner, 1950). In a well-known and egregious case, motor vehicles, management completely lost control of effort norms in the switch to measured day work with disastrous consequences for productivity (Lewchuk, 1987). Areas of concern relating to government intervention include the structure of taxation, the performance of nationalized industries, industrial policy, competition policy, and international trade policy. A tax system more conducive to growth would have broadened the tax base, reduced high marginal tax rates, and shifted the balance away from direct to indirect taxation. Tanzi (1969) was highly critical of income tax on the grounds that it featured very high marginal rates – the top rate was 97.5 per cent in 1949 and 88.75 per cent in 1973 – he described the system as the least growth friendly of all the OECD countries included in his study. Another notable failure was the long delay before Value-Added Tax was finally introduced in 1973. By the 1970s, it was clear that nationalisation was an experiment that had failed. In a typical year (1971), the nationalised industries accounted for 18.7 per cent of investment, 7.2 per cent of employment and 10.2 per cent of GDP (Corti, 1976) but the productivity and financial performance of nationalised industries was deeply disappointing. Both inefficient use of labour and excessive investment were serious problems (Vickers and Yarrow, 1988). It became apparent that pricingand investment rules were flouted either by management or through political interference (NEDO, 1976). This amounted to ownership without effective control. Selective industrial policy was used increasingly over time but also with little success. Although ‘picking winners’ may have been the aspiration, “it was losers like Rolls Royce, British Leyland and Alfred Herbert who picked Ministers” (Morris and Stout, 1985, p. 873). Moreover, policies to subsidise British high- technology industries were notably unsuccessful in this period in a number of cases including civil aircraft, which by 1974 had cost £1.5 billion at 1974 prices for a return of £0.14 billion (Gardner, 1976), computers (Hendry, 1989) and nuclear power (Cowan, 1990).5 A horizontal policy such as an R & D tax credit would surely have been more appropriate than vain attempts to create ‘national champions’. Competition policy was largely ineffective and market power was substantial. Competition policy was inaugurated with the Monopolies and Restrictive Practices Commission in 1948, evolved through the Restrictive Practices Act (1956) and the Monopolies and Mergers Commission (1965), but was mostly ineffective (Clarke et al., 1998). Few investigations took place: very few mergers were prevented: the process was politicised: a variety of ‘public-interest’ defences for anti- competitive activities were allowed and there were no penalties for bad behaviour. Only the Restrictive Practices Act had teeth but its attack on collusion was ultimately undermined by cartels being superseded by mergers. The initial impact of the 1956 Act was to boost productivity growth significantly (Symeonidis, 2008) suggesting that weak competition policy was a big mistake.

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Erasmus Forum Bulletin / Volume I 2018 86 Weak competition in product markets was buttressed by protectionism which the UK was very slow to give up by comparison with its European peer group. Delayed entry to the European Economic Community which the UK did not join until 1973 was an important part of this. Accordingly, average tariff rates on UK manufactures were still 14.5 per cent in 1960 and a comparison for 1958 showed tariffs were typically 2 to 3 times the rate for the same industrial sector in West Germany. Whereas trade costs fell dramatically within the EEC in the 1960s. For the UK, this was delayed until the 1970s (Crafts, 2012). I estimate that joining the EEC raised the level of UK GDP by about 8 to 10 per cent notably, through increasing the volume of trade and strengthening competition (Crafts, 2016). The Postwar Consensus In this context the concept of the ‘postwar consensus’ should be understood as the set of policies regarded as feasible by senior politicians and civil servants given presumed political constraints (Kavanagh and Morris, 1994). This implied a high degree of policy convergence but did not connote ideological convergence between the Conservative and Labour parties (Hickson, 2004). In particular, in the aftermath of the interwar experience of high, and in many areas persistent, unemployment, this implied a very strong commitment to maintaining full employment. In the famous 1944 White Paper the government made a commitment to ‘the maintenance of a high and stable level of employment’ (BPP, 1944). Also, it came to be widely believed that Keynesian economics provided policymakers with the tools to achieve this goal.6 Accordingly, postwar governments thought that failure to do so would mean electoral defeat. The influential analysis of opinion poll data by Goodhart and Bhansali (1970) gives substance to this belief. They found that unemployment greater than 400,000 (about 1.8% of the labour force) implied that the governing party had no chance of leading in the polls. Clearly, presiding over a return to interwar levels of unemployment (never less than 1.8 million) would be electoral suicide. The expansionary fiscal-policy response to quite small increases in unemployment suggests that politicians were well aware of this political arithmetic (Mosley, 1984). During the 1950s and first half of the 1960s the unemployment rate averaged under 1.6 per cent and was above 2 per cent in only three years. Achieving very low levels of unemployment without igniting inflation meant persuading the leaders of trade unions not to exploit their bargaining power and to exercise wage restraint. This encouraged successive governments, notably in the 1950s and the 1970s, to seek wage restraint through accepting serious constraints on economic policy (Flanagan et al., 1983).7 The policy worked initially in the sense that the ‘post-war settlement’ reduced the NAIRU quite considerably and permitted the very low levels of unemployment seen in the 1950s (Broadberry, 1994) but in the long run there was a significant cost in terms of inferior productivity performance. As wage bargaining became more decentralised and gravitated to the shop floor, shop stewards rather than trade union leaders exploited their bargaining power. There is then a common element to many of the policy failures of the early postwar decades namely, that reforms were not pursued because of a desire not to upset organised labour and this extended, indeed, even to a willingness to accept an implicit trade-union veto. This includes, for example, retaining insane marginal rates of income tax and expanding rather than contracting the scope of state-owned industries in the 1970s besides, of course, being unable to reform the system of industrial relations.

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Erasmus Forum Bulletin / Volume I 2018 87 The British Variety of Capitalism The term ‘varieties of capitalism’ was coined by Hall and Soskice (2001) and refers to the different sets of institutions which govern the workings of a market economy notably, in terms of the way that capital and labour markets operate. Hall and Soskice (2001) describe the archetypal coordinated market economy (CME) as having a set of complementary institutions that deliver patient capital and wage moderation together with high levels of investment in specific human capital in firms and incremental innovation. The basis for this is bank finance with block holdings of shares, corporatist industrial relations, strong coordination of employers, and cooperative inter-firm relations. This can be described as a system of ‘inside control’. By contrast, the complementary institutions of the archetypal liberal market economy (LME) feature equity finance with diffuse shareholdings, general human capital formation in colleges, strong competition between firms, and deregulated, flexible labour markets. This is a system of ‘outside control’ with much greater asymmetry of information between managers and owners, with a tendency to prefer early payoffs to investment. The advantages of these arrangements are in radical innovation and speedy adjustment to new circumstances. Whereas West Germany can be seen as an orthodox CME which sustained high levels of capital formation and vocational training (cf. Table 4), postwar Britain was an LME but had some idiosyncratic features. This was not an economy with a high degree of patience among either investors or workers. First, Britain had a distinctive and unreformed system of industrial relations characterised by craft control, multi-unionism, legal immunities for trade unions, and strong but decentralised collective bargaining reflected in increasing trade union membership and the proliferation of shop stewards (Crouch, 1993). These arrangements in conditions of full employment and weak competition gave trade unions bargaining power and rents to extract while exposing sunk-costs investment to a ‘hold-up’ problem.8 Second, corporate governance in postwar Britain was notable for a strongly increasing tendency to the separation of ownership and control, where strong shareholders became much less common, which also made it a real outlier within Europe. This reflected the demise of family control, the dilution of equity holdings through mergers, and a tax system which discouraged individual but favoured institutional investors (Cheffins, 2008). Given that the market for corporate control through takeovers did not work effectively as a constraint (Cosh et al., 2008), the weakness of competition allowed considerable scope for managerial underperformance. Eichengreen (1996) argued that a route to rapid catch-up growth during the Golden Age could be based on a cooperative equilibrium between workers and firms which sustained wage moderation in return for high investment. These ‘corporatist’ arrangements provided institutions to monitor capitalists’ compliance and centralised wage bargaining which protected high-investment firms and prevented free-riding by sub-sets of workers.9 The central foundation of this cooperative equilibrium is that both sides are patient and take a long-term view of the payoffs to their decisions – unlike postwar Britain! If, as the Eichengreen hypothesis implies, the CME was a favourable institutional configuration during the Golden Age of European growth, then the British variety of capitalism was at a disadvantage. A Malfunctioning LME Strong competition in product markets is a crucial element of a successful LME. Unfortunately, the 1950s and 1960s was a period of very weak competition in the UK. Initially, collusive activity was

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Erasmus Forum Bulletin / Volume I 2018 88 widespread; an examination of the agreements registered in compliance with the 1956 Act shows that only 27 per cent of manufacturing was free of price-fixing and 35.7 per cent was cartelised (Broadberry and Crafts, 2001). Crafts and Mills (2005) estimated that the ratio of prices to costs in UK manufacturing during 1954-73 averaged over 2 compared with around 1.1 in West Germany which is consistent with the finding in Geroski and Jacquemin (1988) that the magnitude and persistence of supernormal profits for large firms during 1949 to 1977 was large in the UK but that significant deviations from competitive outcomes were not observed in West Germany in the 1960s and 1970s. As noted earlier, UK competition policy was largely ineffective and trade policies remained as protectionist as in the 1930s during this period. Competition matters partly because of its impact on managerial performance and productivity when shareholders are relatively weak. Competition is an effective antidote to principal-agent problems within firms that involve managers whose interests are imperfectly aligned with owners failing to minimize costs resulting in adverse effects on productivity. In this context, weak shareholders who face free-rider problems in monitoring management find competition helpful in devising contracts that incentivise managers appropriately while competition also raises the sensitivity of profits to managerial actions (Nickell, 1996). Competition promotes good management practices which in turn pay off in improved productivity outcomes (Bloom and van Reenen, 2007). Additionally, product market competition reduces slack and acts as a disciplinary device fostering the adoption of new technology. Product-market competition also has implications for productivity outcomes through industrial relations. The existence of supernormal profits is the basis on which trade unions can promise rewards for membership (Brown et al., 2008). The profits resulting from market power are typically shared with workers depending on bargaining power (Blanchflower et al., 1996). But workers may also bargain for lower work effort (overstaffing) or resist the introduction of new working practices when there are rents available to be shared. If this is the form that bargaining takes, then it is straightforward to produce models which predict that increased competition will improve productivity levels and growth rates (Haskel, 1991; Machin and Wadhwani, 1989). Thus, we might expect productivity performance in the post- war British economy to be adversely affected by the interaction of its institutional idiosyncrasies in respect of corporate governance and industrial relations with weak competition which exacerbated the downside of this configuration. This would seem to be a recipe for a malfunctioning LME and indeed the empirical evidence lends considerable support to this diagnosis. With regard to control of managers by shareholders, three points stand out. First, greater competition raised productivity growth where firms did not have a dominant external shareholder (Nickell et al., 1997). In this (typical) case, a fall in supernormal profits from 15 to 5 per cent of value-added raised TFP growth by 1 per percentage point per year. Moreover, increases in interest payments relative to cash flow also promoted significantly faster productivity growth.10 Second, greater competition was good for innovation. Geroski (1990) found that, once differences in technological opportunity across industries were taken into account, in the 1970s the positive effects of market power working through expected profits were heavily outweighed by negative effects on managerial effort. Third, competition through the market for corporate control did not work efficiently to discipline bad managers and remove poor performers. Size rather than efficiency or long-term investment was the key to survival (Singh, 1975). Mergers did not generally deliver productivity gains (Meeks, 1977) but were the result of management pursuing its own interests rather than those of the shareholders (Newbould, 1970).

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Erasmus Forum Bulletin / Volume I 2018 89 Turning to the interaction of competition and industrial relations, the best evidence comes from the 1980s’ Workplace Industrial Relations Surveys (WIRS) at a time when competition in product markets increased substantially. The 1980s saw a surge in productivity growth in unionised firms as changes in working practices took place under pressure of competition (Machin and Wadhwani, 1989) and de-recognition of unions in the context of increases in foreign competition had a strong effect on productivity growth in the late 1980s (Gregg et al., 1993). The negative impact of multi-unionism on TFP growth, became apparent from the 1950s through the 1970s when it reduced TFP growth on average by 0.75 per cent per year in industries with this characteristic, evaporated after 1979 (Bean and Crafts, 1996). In summation, the interaction of weak competition with institutional legacies in the corporate governance of large companies and the system of industrial relations was not favourable for productivity performance. It allowed bad management to persist in an era of weak shareholders and provided supernormal profits which were shared with multiple unions in higher wages and lower effort. This implied that the productivity potential of new technology was less than fully realised. History Matters In the tradition of Douglass North (1990), it is widely held among economic historians that there is a strong tendency for institutions to be ‘persistent’. Institutions are frequently slow to change and very difficult to reform and their evolution follows a trajectory from which it is hard to diverge. There is no strong tendency for ‘good’ to drive out ‘bad’ institutions. Existing institutions may be supported by vested interests that can resist change. So, institutional legacies are a major reason why history matters and, on occasion, their roots can be found in quite distant history. In this vein, the idiosyncratic institutions, namely, the British systems of corporate governance and industrial relations, which lie at the heart of Britain’s postwar productivity failure can be seen as the grandchildren of designs which date back to the days of early industrialisation and which differ from those of European countries which industrialised later. Well before the start of the twentieth century Britain was already in an LME configuration which would be long-lived. By the early twentieth century, the British system of industrial relations had developed considerably from the Industrial Revolution era but retained distinctive features inherited from the mid ninethieth century. Many more workers were members of trade unions – almost 25 per cent of the labour force in 1913. compared with 4 per cent as recently as 1890 - and collective bargaining over wages had become quite widespread – 2.4 million workers covered by such agreements in 1910 (Aldcroft and Oliver, 2000). By then trade unionism was spreading to unskilled workers but its defining characteristic remained craft unionism. So in many important industries multi-unionism prevailed and the typical union represented a small subset of the workforce. Despite the founding of the Trade Union Congress (TUC) in 1868, industrial relations remained de-centralised. The continued strength of craft unionism entailed craft control of work on the shop floor and the use of piece rates to elicit effort. This had emerged as a solution to appropriation problems during the Industrial Revolution and was still the preferred management style of many British employers at least partly because they perceived the ‘switching costs’ of imposing greater direct managerial control as too high. There were periodic disputes over the details of these arrangements including, most notably, the engineering lockout of 1897/8 but in the aftermath employers did not seek to end craft control on this and other occasions when they ‘won’ the dispute. Arguably, these institutional arrangements served Britain well through the nineteenth century (Lazonick, 1994). When, however, the Fordist technologies of the second industrial revolution came along with requirements for large sunk-cost investments in fixed capital firms were inhibited from adopting them by exposure to ‘hold- up’ problems. Unions lacked an

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Erasmus Forum Bulletin / Volume I 2018 90 ability to commit to co-operative behaviour and the effort levels required, for example, by mass production methods in the car industry (Lewchuk, 1987). Together with the expansion of the franchise in 1867 and 1884, the value that employers placed on Victorian industrial relations informed the legal privileges given to trade unions in the 1906 Trade Disputes Act which granted complete legal immunity to trade unions from all actions at tort and went beyond the already extensive immunities thought to have been granted in 1875 (Phelps Brown, 1983).11 This gave trade unions considerably enhanced bargaining power and remained essentially unreformed for over 60 years. If winning elections meant wooing the median voter who was a skilled worker, then this underpinned craft unionism, as 1906 underlined. This sustained an equilibrium that precluded a move to a coordinated market economy. It might be thought that persistent high unemployment of the interwar period and the unions’ defeat in the General Strike of 1926 provided an environment in which the British system of industrial relations would change radically. This was not the case, however; neither the employers nor government attempted significant reform so that the key aspects remained unaltered. The 1927 Trade Disputes and Trade Unions Act left intact the main features of the 1906 Act (Lowe, 1987). Employers sought to assert managerial prerogatives on the shop floor but not to make large investments in new systems of production and managerial control (McKinlay and Zeitlin, 1989). Effort bargains were still made under the auspices of craft unionism but with workers’ bargaining power impaired in the years when the labour market was depressed (Lewchuk, 1987). While the conduct of industrial relations was sensitive to labour market conditions, the structure was still shaped by the inheritance from the nineteenth century. More unskilled workers were unionised and trade union density in the private sector had risen to 30 per cent by 1935 when collective bargaining covered 36 per cent of workers. Nevertheless, in the late 1930s, the modal form of bargaining was multi-unionism and more than 1,000 unions still survived (Gospel, 2005). The government maintained an approach of ‘voluntarism’ in which industrial relations problems were to be resolved by bargaining between employers and unions with minimal regulation. By the third quarter of the nineteenth century, capital market arrangements had advanced considerably. Hannah (2014) estimated that Britain had a higher ratio of corporate capital to GDP in 1860 (at least 55 per cent) than the United States, France, or Germany. The underpinning for a relatively high level of corporatisation and shareholding was not only the legislation of the 1850s which allowed joint-stock limited liability companies but also the availability of a wide menu of corporate forms. Banks were relatively unimportant as delegated monitors and Britain was slow to develop investment banking, as might be expected in an economy that was rich by the standards of the time with low interest rates, high levels of private wealth and fairly competitive credit markets (Baliga and Polak, 2004). There is a considerable contrast with the way in which capital markets subsequently developed in Germany which came to rely much more on bank than equity finance and indeed on banks that exercised a significant role in control and monitoring of firms (Guinnane, 2002). Once the two finance systems had been established in the context of different initial conditions in terms of the supply of credit, path dependence was not surprising (Baliga and Polak, 2004). The long-term implication for corporate governance was a much greater separation of ownership and control in Britain than in other countries and there were already precursors of this by the late nineteenth century. Acheson et al. (2015) found that in companies registered between 1881 and 1902 the median holding of the largest shareholder was 6.4 per cent of the capital and companies were exploiting highly permissive legislation to adopt voting rules that increased the power of directors

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Erasmus Forum Bulletin / Volume I 2018 91 relative to shareholders (Guinnane et al., 2014). For very large companies in 1911, Foreman-Peck and Hannah (2012) found that the median value of shares held by the directors was only 2.4 per cent. In the interwar period, the structure of share ownership moved a bit further in the direction of separation of ownership from control under the impetus of the merger boom of the 1920s and of heavier taxation which tended to dilute insider holdings somewhat (Cheffins, 2008). By the 1930s, institutional investors were starting to see the attractions of equities (Scott, 2002), universal suffrage carried the strong possibility of much more progressive taxation and, following the 1931 Royal Mail scandal, accurate disclosure of corporate accounts which would provide the basis for greatly increased merger and acquisition activity was on the horizon (Chambers, 2014). The stage was set for the move to the extreme separation of ownership and control which materialised in the early postwar years. The origins of the systems of corporate governance and industrial relations which ensured that postwar Britain would be an LME can be traced back to the early industrialisation period. If this was the moment when, as the Eichengreen hypothesis implies, the CME came into its own, then this was also the point at which the penalty of the early start came through. Conclusions Productivity growth in the British economy compared unfavourably with other leading European economies during the so-called Golden Age of the early postwar period. This sub- par performance left per capita GDP in the early 1970s about 20 per cent lower than might reasonably have been expected. Disappointing productivity growth partly reflected weaker investment in equipment and skills than in more successful countries like West Germany but was also a consequence of continuing inefficient use of inputs. Weak management, dysfunctional industrial relations, and badly-designed economic policy were all implicated in this unfortunate state of affairs. As it stands, this is a quite conventional but somewhat superficial account of the British productivity failure. Probing a little deeper, it becomes apparent that the policy framework which inhibited productivity growth was to a considerable extent the result of a perceived political imperative to appease organised labour in an attempt to achieve very low unemployment through wage restraint. A key implication of this configuration was weak competition in product markets fostered by ineffective competition policy, nationalisation, and protectionism including remaining outside the EEC. This exacerbated problems of corporate governance and industrial relations inherent in the British ‘variety of capitalism’ as the economic rents that were generated helped to sustain low effort bargains and managerial incompetence. The postwar British variety of capitalism was descended from the institutions established during the early years of industrialisation. Other varieties of capitalism such as the German style coordinated market economy were better placed to take advantage of the opportunities for fast growth in these years but these were not in the feasible set for Britain given its history. End notes 1. The shortfall is calculated after controlling for greater scope for growth in countries which had larger productivity gaps with the United States. It is large enough to be a real cause for concern but it is also fair to say that ‘decline’ is an ideological construct which has been associated with the politicisation of economic policy (Tomlinson, 1996).

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Erasmus Forum Bulletin / Volume I 2018 92 2. The rate of growth of real GDP per person equals the rate of growth of real GDP per hour worked plus therate of growth of hours worked per person. Hours worked per person fell in this period but relatively slowly. 3. TFP or total factor productivity growth is the rate of growth of output per unit of total input. It results from improvements in the efficiency with which inputs such as capital, labour and skills are used and/or the technological knowledge which underpins the output that those inputs can produce. 4. Converted into modern PISA equivalents, the UK was in the low 490s while France and West Germany were around 500 (Woessmann, 2016). The regression estimates in Hanushek and Woessmann (2012) indicate that the UK would suffer a growth penalty of about 0.1 per cent per year. 5. Concorde and the Advanced Gas-Cooled Reactor were egregious policy errors (Henderson, 1977). 6. Even so, already in the late 1930s and early 1940s, Keynesian economists (notably James Meade) worried about the inflationary consequences of using demand management to reduce unemployment to very low levels since this would imply wage-push inflation. Some kind of ‘wages policy’ would be required to deal with this issue (Jones, 1987). In other words, these economists were aware that Keynesian policies would probably entail trying to achieve unemployment rates below the NAIRU (i.e., the unemployment rate at which there would be no acceleration of inflation). 7. A classic example is the abandonment in 1952 by the new Conservative government of the ROBOT scheme to float the pound which was seen by its supporters as integral to strengthening the role of market forces in the economy (Bulpitt and Burnham, 1999). 8. The ‘hold-up’ problem arises when after an investment has been made workers use their bargaining power to extract a share of the profits. This reduces the incentive to innovate and thus the rate of growth. The more unions are involved in the bargaining, the more profits are reduced. The problem can be eliminated if a binding contract prevents re-negotiation or there is no union or if a cooperative equilibrium is achieved with a single union. For a formal model and empirical evidence, see Bean and Crafts (1996). 9. In an empirical investigation, Gilmore (2009) found that coordinated wage bargaining had strong positive effects on investment and growth in Western Europe in the 1960s. 10. This suggests that principal-agent problems were an issue when management was in comfort zone. 11. Contrary to the intentions of the 1875 legislation, the House of Lords had in 1901 ruled in favour of the Taff Vale Railway Company and awarded damages against the Amalgamated Society of Railway Servants which had organised a strike. References Acheson, G. G., Campbell, G., Turner, J. D. and Vanteeva, N. (2015), “Corporate Ownership and Control in Victorian Britain”, Economic History Review, 68, 911-936. Acton Society Trust (1956), Management Succession. London. Aldcroft, D.H. and Oliver, M.J. (2000), Trade Unions and the Economy: 1870-2000. Aldershot: Ashgate Publishing. Andrews, P.W.S. and Brunner, E. (1950), “Productivity and the Businessman”, Oxford Economic Papers, 2, 197-225. Baliga, S. and Polak, B. (2004), “The Emergence and Persistence of the Anglo-Saxon and German Financial Systems”, Review of Financial Studies, 17, 129-163.

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