The Alchemical Roots of the Financial Revolution


by Carl Wennerlind

When the philosopher Baruch de Spinoza received word of a successful transmutation of lead into gold in December of 1666, he quickly sought to quell his skepticism by personally visiting the adept, and the visit left him fully convinced of the veracity of the adept’s account. Spinoza was just one of many seventeenth century intellectual luminaries who seriously engaged with alchemical thought and practice: others included John Locke, Robert Boyle and Isaac Newton. In England, confidence in the utility of alchemy was widespread. It was therefore unsurprising that metallic transmutation was pursued as a solution to the stubborn scarcity of money problem that had severely curtailed England’s commerce for decades.

Numerous ambitious projects were launched; some were undoubtedly motivated by personal enrichment, while others were designed to generate a more flexible money stock. Despite many reports of successful transmutations, efforts to find the lever that would give mankind control over the money stock failed to materialize. At this point, the same social reformers who had pursued alchemical transmutations switched their attention to the promotion of a generally circulating credit currency, authoring some of the first proposals for such a currency. The similarity between alchemy and credit was far from lost on them, with one person suggesting that a well-functioning bank is:

Capable of multiplying the stock of the Nation, for as much as concernes trading in Infinitum: In breife, it is the Elixir or Philosophers Stone.

Casualties of Credit argues that there was indeed a link between alchemy and credit, but one that goes deeper than credit money replacing alchemy as the solution to the scarcity of money problem. I suggest that the new political economy that laid the foundation for the Financial Revolution was greatly influenced by the Scientific Revolution, which included alchemical, as well as, Baconian and probabilistic thinking.

But before I discuss the emergence of a new political economy, let me offer a brief account of the school of political economic thought prevalent during the first half of the seventeenth century. Instead of using the traditional term, mercantilism, which is fraught with all kinds of problems, I employ the term neo-Aristotelian political economy to refer to Gerard Malynes, Thomas Mun, and Edward Misselden, some of the most prominent figures to write during the 1620s in response to the devastating commercial crisis that had emerged as a result of the drastic scarcity of money.

Drawing directly on the early modern Aristotelian worldview, the neo-Aristotelians argued that money’s primary responsibility was to facilitate justice and maintain balance and harmony between people and classes in society. When money plays its proper role as a measure of value and medium of exchange, society’s finite wealth flows to its appropriate place in the social hierarchy and the balance of power between different segments of society was maintained. When the proper balance is reached it is also possible to uphold the traditional social and moral order of the body politic.

However, when there is an insufficient amount of money in circulation, money loses its capacity to perform its principal responsibilities, thus jeopardizing the social hierarchy and the moral order. To avoid such a dangerous destabilization, it was necessary to replenish the money stock as soon as possible. This was best done, the neo-Aristotelians believed, by attracting money from abroad.

Reversing the nation’s balance of trade was easier said than done. The failure of neo-Aristotelian political economy to provide a solution to England’s troubles motivated a number of suggestions for how to expand the money stock. Some of the most creative and influential proposals were articulated by members of the Hartlib Circle, the period’s premier scientific and social reform group. Apart from Samuel Hartlib himself, the group included John Dury, Jan Comenius, Robert Boyle, Henry Oldenburg, William Petty, Benjamin Worsley, Henry Robinson, Gabriel Plattes and George Starkey, many of whom would later become part of the Royal Society. Taking advantage of the relative void in political and religious authority during the Civil War, the Hartlibians articulated a radically new political economy that embraced the period’s optimistic and progressive Zeitgeist.

Contrary to the neo-Aristotelian emphasis on restoring hierarchy, order, and balance, the Hartlibians were convinced that infinite progress was possible through the continuous pursuit of knowledge, innovation and industry. Central to this new progressive mentality were the scientific philosophy formulated by Sir Francis Bacon and the alchemically informed worldview that nature’s inherent development can be accelerated by human intervention.

Sir Francis Bacon

The Hartlibians were fully committed to the Baconian project of using knowledge to gain control over nature for utilitarian purposes. For that to materialize, the practice of science had to become more systematic and the results had to be disseminated more widely. Inspired by Bacon’s proposal for Salomon’s House, a campus with libraries, orchards, gardens, laboratories, mines, observations towers, hospitals and machines, the Hartlibians sought to generate the same effects virtually by pooling knowledge from scientific experimentations throughout Europe. By making new knowledge available to the relevant people, mankind would be able to accelerate the speed whereby science became, in Bacon’s words, “the propagator of man’s empire over the universe, the champion of liberty, the conqueror and subduer of necessity.”

In addition to their Baconian influences, the Hartlib Circle’s general vision of improvement was deeply inspired by another strand of scientific thinking – alchemy! In Gabriel Plattes’ short utopian tract A Description of the Famous Kingdome of Macaria, which laid out the general principles of the Hartlibian project, the synthesis of Baconianism and alchemy was clearly on display. He outlined an ideal kingdom in which peace, stability, and prosperity reigned supreme. In addition to skillfully managing Macaria’s husbandry, fishing, trade and new plantations, the state’s most crucial role was to encourage the innovation of new ideas and techniques. He saw opportunities for improvement and growth everywhere; in the soil, vegetables, animal husbandry, metals, children, the poor and so on. In particular, Plattes believed that recent breakthroughs in alchemical knowledge offered a treasure trove of new practical ideas that could be profitably implemented. New alchemical insights into the basic composition of matter were particularly promising, as they introduced the possibility of altering the physical world. If these insights could be disseminated widely, the Hartlibians believed that anyone could apply them to their craft, turning simple “Plowmen into Philosophers.”

The Hartlibians were enthusiastically optimistic about alchemy: for them, the possibilities were endless. The alchemists “may command Lead into Gold, dying plants into fruitfulnesse, the sick into health, old age into youth, darkness into light, and what not?” It was about time that alchemy was finally receiving the kind of respect it deserved. “I rejoyce,” one of its members wrote, “as at the break of the day after a long tedious night, to see how this solitary Art of Alchymie begins for to shine forth out of the clouds of reproach, which it hath a long time undeservedly layen under.”

Money was assigned a central role in the Hartlib Circle’s infinite improvement project. However, they employed a very different notion of money than their predecessors. By no longer thinking of the world as comprised of finite wealth and static hierarchies, within which money’s role was to balance and maintain justice, the Hartlib Circle pioneered a different conceptualization of society and role of money with it. By shifting to a worldview in which the only constant was continuous change, growth and improvement, the role and responsibility of money consequently changed. The main challenge now was to find a way to expand the money stock so that it could keep pace with the ever growing world of goods. For this to be possible, a much more flexible monetary system had to be developed.

The Hartlibians’ first attempt at establishing a method to expand the money stock was to employ their alchemical knowledge in the transmutation of lead into gold. The laboratory project they launched in 1649 initially seemed very promising, leading them to believe that they were just on the verge of finding the philosopher’s stone. Their excitement was further enhanced when one of the world’s most renowned alchemists, George Starkey, arrived in London from New England in 1650, and joined the Hartlib Circle. However, this excitement was only temporary, as Starkey refused to join in the gold making project. For him, the only circumstance in which he would be willing to part with his secret knowledge was if it might help to destroy the entire monetary system and the commercial world it supported, which to him constituted the “fulcrum of the Anti-Christian monster.” Soon thereafter the Hartlibians abandoned their transmutational efforts.

The failure of alchemical transmutation to provide mankind with a lever to control the money stock encouraged members of the Hartlib Circle to focus on another expedient promising to generate the same set of benefits as alchemy. They turned their attention towards finding a way to establishing a widely circulating credit currency, either by creating a bank or by reconfiguring the existing network of private credit instruments so that they would circulate more widely. In addition to offering solutions to the same problems, metallic transmutation and credit money shared the same underlying idea of using an expansion in the money stock to facilitate the infinite improvement process. As such, the idea of making money through metallic transmutation or credit were both rooted in the same alchemical and Baconian worldview and were part of the same universal reform project.

The Hartlib Circle’s rethinking of money sparked a vibrant debate on how to best design an English credit currency. While the Hartlibians had carefully considered the potential of credit to contribute to the universal reformation of nature, society, and mankind, they had left perhaps the most essential ingredient of credit, the concept of trust, relatively unexplored. The main challenge facing efforts to create a new currency was thus to figure out how to enable the public to trust that a piece of paper would retain its exchangeability for the foreseeable future. In this process, political economists once again looked towards natural philosophy for help. They were fortunate to find that as part of the Scientific Revolution, a new epistemology had developed, focusing on the formation of knowledge under uncertainty.

Seventeenth century natural philosophers, increasingly aware that the search for absolute truths was largely in vain, had come to realize that their efforts would be better spent looking for ways to navigate a world of radical uncertainty. John Locke, for example, recognized that mankind is most often faced with situations in which indisputable knowledge is not attainable. The complexity of the world, combined with the intrinsic limits of human understanding, necessitated that people form their own judgment on the basis of the available evidence. Indeed, it would be next to impossible to conduct oneself in the world without relying on belief and opinion. He warned:

If we will disbelieve every thing, because we cannot certainly know all things; we shall do much what as wisely as he who would not use his Legs, but sit still and perish, because he had no Wings to fly.

To avoid falling into a paralysis of skeptical despair, it is consequently necessary to form propositions about the world and assign them varying levels of confidence.

When considering whether to trust or not, Locke suggested that people tend to form their opinion on the basis of (1) how well the proposition conforms with their own knowledge, observation and experience, and (2) what the testimony of others tells them. When relying on the testimonies of others, confidence in an opinion depended on the number, integrity and skill of the witnesses. That is, if it is possible to access a large number of skilled witnesses of impeccable integrity, the probability assigned to an opinion is all the greater.

This type of probabilistic reasoning played an important role in the debates about the ideal system of credit during the second half of the seventeenth century. Political economists suggested a number of basic mechanisms that they believed would facilitate the formation of trust in money, all of which were implemented during the 1690s, when the Bank of England was formed, more sophisticated securities market emerged, and the modern system of public credit was created.

The most essential confidence inducing mechanism was to give credit money a solid security, which meant that it could be backed by land, silver, merchant inventories, or future tax receipts or profits. Next, transparency was considered key, as it would enable the public to observe first hand the conditions of the credit issuing institution. But even with the greatest transparency, given that it was still difficult for everyone to observe the internal workings of the credit system, it was important to be able to trust the management of the credit issuer. It was not only essential that the managers operated the bank with honesty and integrity; they also had to accurately report the prevailing conditions. Manners, character, virtue and honesty thus mattered greatly, which made it desirable to have gentlemen serve as directors and managers, as a person’s social standing was perceived as the best predictor of integrity and virtue.

Another key ingredient was to make sure that it was near-impossible to over-issue or to forge/counterfeit notes. Various suggestions were made for making the iconography of the notes difficult to reproduce and what kind of paper would be the hardest to duplicate. However, it was recognized that because of the potential rewards of counterfeiting there would always be someone who would try it, which necessitated that harsh penalties were instituted. These penalties were designed to rid the earth of convicted counterfeiters, deter others from trying their luck, and, perhaps most importantly, to communicate to the larger public that the state was serious about protecting the currency. This became a very important feature in the debate about credit after the formation of the Bank of England, when both the silver currency and the new credit currency were threatened by widespread counterfeiting.

Sir Isaac Newton

In 1696, Isaac Newton left Cambridge for London, putting his scientific and alchemical studies on hold to become the Warden of the Royal Mint. His main responsibility was to investigate and prosecute crimes against the English currency. He was relentless in his pursuit of forgers and counterfeiters and famed for his reluctance to offer pardons allegedly on the grounds that these “dogs always return to their vomit.” His conscientious dedication to his responsibility ensured that many currency criminals would dangle from the gallows in order to safeguard the monetary system.

While Newton’s tenure at the mint illustrates the link between the Scientific Revolution and the Financial Revolution, it also plays a central role in another theme of Casualties of Credit; the instrumentality of violence to the Financial Revolution. By exploring the importance of both the death penalty and African slavery to the success of the Financial Revolution, the book adds a number of political dimensions to the debate about the Financial Revolution. By situating the Financial Revolution in the seventeenth century intellectual and political context, the aim of Casualties of Credit is to offer a more comprehensive understanding of the modern culture of credit.

About the Author:

Carl Wennerlind is an Associate Professor of History at Barnard College, Columbia University. Professor Wennerlind specializes in seventeenth- and eighteenth-century Europe, with a focus on intellectual history and political economy. He is particularly interested in the historical development of money and credit, as well as attempts to theorize these phenomena. He recently published Casualties of Credit: The English Financial Revolution, 1620-1720 (Harvard University Press, 2011) and is currently at work on a monograph exploring the changing conceptual nature of scarcity from early modern Aristotelian-influenced thinking to modern neo-classical economics. In addition to his co-edited volume David Hume’s Political Economy (with Margaret Schabas), Wennerlind’s work on Hume’s economic thought has appeared in various journals, including the Journal of Political Economy, Journal of Economic Perspectives, History of Political Economy and Hume Studies.