My new book, The Rise & Fall of the City of Money, starts and ends with a financial catastrophe. The Darien disaster of the early eighteenth century drove Scotland into union with England, but spawned the institutions which transformed Edinburgh into a global financial centre. The crash of 2008 wrecked the city’s two largest and oldest banks – and its reputation.
In the three intervening centuries, Edinburgh became a hothouse of financial innovation, prudent banking, reliable insurance and smart investing. The face of the city changed too as money transformed it from medieval squalor to Georgian elegance.
Who were the people who made this story? William Paterson, the Scotsman who founded the Bank of England, but wrecked the economy of his own country. The two hard-drinking Presbyterian ministers who founded the first actuarially-based pension fund. The son of a Provost of Aberdeen who found riches and then bankruptcy in London’s Exchange Alley.
Sir Walter Scott, who faced financial ruin, but wrote his way out of it. The men who financed American railways and eastern rubber plantations with Scottish money. The directors of a major Scottish bank who went to prison after crashing their bank in 1878 and the directors of the two largest Scottish banks who escaped any penalties after their institutions failed in 2008.
The Rise & Fall of the City of Money, tells their stories and many more.
A few months after posting record results a major Scottish bank goes bust, impoverishing many of its shareholders and depressing the whole economy. Is this 2008? No it is 130 years earlier – and despite the similarities with the 21st century credit crunch, there are differences. One is the speed with which the authorities acted: in 1878 the whole board of directors was arrested, put on trial and sent to prison. Over ten years since the collapse of RBS and HBOS we are still waiting for the official report into the conduct of the directors.Library of Mistakes EICC Live
What can we learn from history?
Looking forward to launching Rise and Fall, first with the Library of Mistakes at EICC Live on Monday 7 October and the following Monday 14 October with Birlinn. More events in November and December at Scotland’s History Festival and Edinburgh Central Library. Details soon.