During the 2008 financial crisis, Prof. Carl Wennerlind was in the midst of writing a book about another pivotal moment in the history of credit: the 17th century. Published last year, as the financial world continued to spiral, Causalities of Credit (Harvard University Press) examines the intellectual and political origins of the English financial revolution that took place between 1620 and 1720. Recently referenced in a Wall Street Journal article dealing with the history of drastic punishments for financial crimes, Prof. Wennerlind's work was also featured in Barnard Magazine. Here, he explores the relevance of history to the current economic picture.
At what point did you realize the similarities between the present day situation and the era you were writing about?
I started working on the book in 2005. In 2008, when things were really heating up with the subprime mortgage debacle and the Madoff scandal, and there was a growing general recognition that the financial world might actually come undone, I realized more clearly that this book was not just about the origins of credit, but about something more systemic and transhistorical. I realized that even though I was talking about the 17th century, my story was capturing integral features of the modern culture of credit.
What are some of the similarities?
In both moments, people – not just academics, but the general community and politicians – became much more aware of the complexity of credit, and more interested in figuring out what makes it function. People became acutely aware of how important well-functioning credit mechanisms are to modern economies and how precarious these fiduciary relations are.
Moreover, credit crises now and then highlight the extent to which the world of “high finance” is not disconnected from the rest of society but is grounded in and has an impact on human experiences throughout the social hierarchy. While the recent crisis revealed how subprime mortgages allowed Wall Street to benefit from predatory lending practices to some of society’s most exposed people, my book details how the death penalty was used to improve confidence in credit and how the slave trade was marshaled in support of the credit worthiness of government bonds during the turn of the eighteenth century.
Has the experience of writing your book influenced the way you approach related courses that you teach?
There is a greater sense of enthusiasm among students to learn about the history of money, because they now truly recognize the importance of credit and money to the world they inhabit. They come to class curious about the role of money, having seen its power and its potential for destruction. It is less abstract and easier for students to see how economics relates to culture and politics and society in general. There is also a greater appreciation for what historians might have to say about the economy -- there are many revealing stories and instructive lessons that we can learn from the past.