In the year 1711, Joseph Addison penned one of the greatest satirical lines on the topic of banks. “Methought, I returned to the great hall, where I had been the morning before, but,” wrote Addison in The Spectator, a London-based subscription, “I saw, towards the upper end of the hall, a beautiful virgin, seated on a throne of gold. Her name, as they told me, was Public Credit.”[1] By my calculations, then, this makes 301 years worth of moral outrage over what you and I commonly coin… banks (pun intended).

It is interesting to note that The Spectator saw as its mission to “enliven morality with wit, and to temper wit with morality…”[2] It is also interesting to note, as Robert Reich recently did, that morality still surrounds and infuses the issue of banking. Responding to GOP presidential candidate Rick Santorum’s recent anti-pornography posturing, the former Secretary of Labor and Berkeley professor wrote that “America’s problem isn’t a breakdown in private morality. It’s a breakdown in public morality,” that “There is moral rot in America but it’s not found in the private behavior of ordinary people. It’s located in the public behavior of people who control our economy and are turning our democracy into a financial slush pump. It’s found in Wall Street fraud, exorbitant pay of top executives, financial conflicts of interest, insider trading, and the outright bribery of public officials through unlimited campaign donations.”[3]

Reich’s comments are not quite the biting satirical commentary of Addison’s, however, the point I merely wish to focus on is that three hundred years after Addison’s virginal golden throne moment – banks, and the executives that run them, still earn the ire of the English-speaking world. And the recent bank bailouts of 2008-2010, which involved extensive use of “Public Credit” to bolster their poor decisions over mortgage derivatives, did them no favors.

Samuel P. Chase, Lincoln's Treasury Secretary during the Civil War, graces the $10,000 bill. Andrew Jackson, who killed the Second Bank of the United States, is but on the $20.

Often lost in studying United States history is just how anti-bank Americans are. Alexander Hamilton pushed the creation of the First Bank of the United States into fruition in the year 1791, but the bank died in 1811: opposition to the reauthorization of its charter arrived from nearly every front. After the debt incurred in three years of war (War of 1812), Congress authorized the Second Bank of the United States. Andrew Jackson, ironically depicted on our twenty-dollar bill, road to the presidency with a vow to kill it, and kill it he did (perhaps one of the contributing factors of the Panic of 1837). Not until the Civil War did a USA central bank return, and only then because Lincoln (with his Secretary of the Treasury, Samuel Chase hounding him – Chase is also on the largest US currency denomination, the $10,000 bill) employed his war powers to bring it to life. That bank has been with us ever since.

But it was during the Gilded Age (satirically labeled by Mark Twain – think once again of Addison’s “throne of gold” comment) that America’s modern banking and financial systems took form. The obvious corruption, then (brought to you by J. P. Morgan and company), spawned the Progressive Era much in the way the unfortunate return of America’s Second Gilded Age has given rise to the Occupy Wall Street movement.

Recently, Goldman Sachs executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa resigned – but he did so via an op-ed plastered in the New York Times. Yes, in the age of the internet, Greg Smith’s “Public” resignation instantly zapped through cyber space excoriating the company’s “morally bankrupt people,” that the “firm has veered so far… that I can no longer in good conscience say that I identify with what it stands for.”[4]

And how much did this “public” resignation, this bit of public moralizing upon the pages of the New York Times cost Goldman Sachs?

Back to London for that, according to the Daily Mail, Smith’s public quitting, his moral finger-wagging plunged Goldman’s stock a whopping 3.4% – a loss of $1.3 billion in a single day. Other outlets predict that Goldman could lose another billion before it’s done.[5]

So the moral price to Goldman Sachs now has a dollar figure: $2.3 billion. Reminder – the size of the bailout from the US Treasury to Goldman Sachs, was $12 billion.

Ah, “Public Credit,” indeed a “beautiful virgin, seated on a throne of gold.”

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