ACost recommends podcast's we love. Hi, Sabina Brannan here, host of Superbrain, the podcast for Everyone with a Brain. I have a passion for people and a fascination for the human brain. That's why I became a psychologist and neuroscientist. On Mondays, I pick the brains of inspiring guests about thriving and surviving in life. And on Thursdays I share insights and hacks to help you to understand and unleash your inner superbrain to join me each week. Simply search for Superbrain on Apple Akehurst or wherever you get your podcasts.

Ecorse powers the world's best podcasts, including the two journeys I'm Grandmama's and the one you're listening to right now.

Hello, everybody, welcome to Dan Snow's history. At 175 years ago this month, a terrible potato blight was detected. It's astonishing to think, but within four years, a quarter of the Irish population had died or emigrated. And a number of times the Irish population has never recovered from this catastrophe. This is a podcast all about the great famine, the potato famine, and how initially the governments in Westminster ordered an unprecedented relief effort, but then transferred the burden onto Irish taxpayers themselves.

This meant a staggering jump in taxation in one area, for example, from a couple of shillings in the pound to over 34 shillings in the pound. And that was calculated on the value of your land from before the famine had destroyed any income coming from that land. So many people were now paying the exchequer, paying the British government to own land because they were paying out more than they were taking in rent. Why was this? Was this deliberate genocide?

Was this racism? Was astonishing incompetence. Charles Reid is an economic historian and he writes extensively about the great financial crises of the of the 19th century British Isles. He has written about the causes, the consequences of famine in this period. And this is a challenging, thought provoking new explanation of the famine and its catastrophic consequences. If you listen to other episodes, this podcast, please go to history hit TV. Thousands and thousands of people are watching tens of thousands of hours of programming every month on that channel is very exciting.

You can sign up because you're a podcast listener with a special introductory rate. Use the code pod 151. You get a month for free and then your second month is one pound euro dollar. But in the meantime, everyone here is Charles Reid.

Charles, thank you very much for joining me on this podcast. Thank you very much. It's a pleasure to be here and thank you for having me. First of all, do you start looking into the history of the Great Famine with a certain amount of trepidation? It feels like a topic that is still the third rail of Anglo Irish history.

Well, this is a very emotive period of Irish history, partly because it changed the history of Ireland. So much so. 175 years ago this month, the potato blight was first detected in Ireland within five years. A quarter of Ireland's population had either unexpectedly died or emigrated. There are few events which are more severe in terms of their humanitarian and economic impact in the history of the modern United Kingdom. You'll probably have to go back to the Black Death in the 14th century to find an event which is more severe in its impact, and it permanently changes the course of Irish history and indeed British history as well.

So Ireland is one of the few country areas in Europe which has a smaller population today than it did in 1845. Ireland is a country whose population never fully recovered from this disaster, and also it fueled Irish nationalism and increased support for Irish separatism, which eventually led to an independent Irish state gaining independence from the rest of the United Kingdom in 1922. This is a very big event in Irish history. It's a very big event in British history. And the reason why it's so controversial is that suddenly in the middle of this crisis, after the British government spends a lot of money on a very big relief effort, one of the biggest relief efforts ever mounted by a government in the world, suddenly at the worst possible crisis, it decides to cut central government spending on this crisis.

And this has led to accusations that the British government response was inadequate, that the Irish were left to die, that the British didn't care at all about what was going on in Ireland. And this has fuelled an Irish nationalist interpretation of events. And it has always proved a thorny issue in Anglo Irish relations ever since and continues to present day.

And your work is so fascinating on the nature of this change in direction by the British government. Was it fuelled by ethno almost genocidal urge on behalf of Whitehall or not? So we will explore this in this podcast. But let's talk about the less contested bit. In fact, as you say, the bit in which the British government won enormous credit, even from many in Ireland. The potato blight is identified under 35 years ago this month. There are widespread crop failures two years harvest fails consistently, doesn't it?

It fails consistently. And the point is, is that most of its failures in history only happen for a year or two and then things go back to normal. The thing about the Irish potato blight says it's persistent. So you see years and years of catastrophic, almost a decade of catastrophic harvest failures of potatoes. In the first year, probably a third of the potato crop rotted away. The second year, it's probably over 95 percent. And it this continues into the 50s.

Even decades later, you see in some years for potato crop completely rotting away. And indeed, this disease has not gone away. Scientists have discovered chemicals which can be used, copper sulfate solutions which can be used to fight this disease. The reason why you see organic potatoes so rarely is that you can't really fight this disease without modern modern chemicals. And so this is a disease which has appeared and it's not never fully gone away around the world.

And the British government, as you point out in your paper, is at the same time the most advanced state in the world. We need to define that slightly, but also by the modern world standards, it's fairly primitive in the levers it's able to pull when confronted with a giant humanitarian crisis. So what does the government do initially?

Initially, the local administration reports this to the prime minister in October 1845 saying there's been a massive harvest failure. We need some help as quickly as possible. And so the British government starts to import food supplies into Ireland. It also sets up a public works scheme to provide alternative sources of employment. So the point is, is that this is sorting out the food availability problem, as well as making sure that people have enough money to buy the food. That's for first year, the famine, the second year of a famine, the governments replaced by Lord John Russell, which then increases the scale of these policies by early 1847, late 1846, early 1847, some 700000 people are employed on public works programs in Ireland and by the middle of 1847, when a set of soup kitchens are introduced.

In addition, some three million people are being fed free food by the British government. So the initial response over the first two years was extraordinarily big, and particularly the first year the famine, it was particularly successful in reducing mortality levels.

What is the driving force here? There are obviously Irish crops. This is post the Act of Union one. So there are Irish champions. Is this an electoral calculation? Is this just high minded new ideas about state intervention, looking after the people and subjects?

I think this was motivated by appeal. And if you look back at people's speeches over the long term, what he is interested in, what drives his politics is, is this good or bad? The labor and poor in that he basically says, you know, every move of economic policy needs to be examined within, is this a good thing or a bad thing for belaboring poor? And in some ways, this is driven by his moral compass. This is driven by his religious leanings.

And in some ways, Peale was Anglican, but he was heavily influenced by the Wesleyan Methodists who emphasized that social economic policy should be in the favor of the poor, not for simple electoral calculation reasons, because the poor votes, but as a result of this is the morally right thing to do. However, his government repeals the corn laws, which is taxes on the imports of food, because he believes you can't spend taxpayers money on buying Irish food for the Irish while at the same time artificially raising the prices with import taxes.

So he gets rid of these. But in the process, he splits his party. The conservatives split in two and his government collapses because it doesn't have enough support in Parliament. So his government ends off after the first year.

You've got a situation where the British government the parallels today, of course, very striking British government undertaking this gigantic intervention in the economy. Interestingly, peel as a sort of liberal conservative who undertakes that.

Why is the British government and that generosity, a popular interpretation is that suddenly a increase in the influence of laissez faire ideas? This is the idea that if you leave everything to the markets, everything will be well, you'll get the best solution. Now, this is a slightly ridiculous explanation of this change, because you go from in the first two years of the famine, having the biggest relief effort of any country in the world to the last years of famine, where the relief effort is put on local Irish taxpayers.

But this is hardly leaving the market alone in the in one place, Bolingbroke, the rates are raised to thirty four shillings a half pm the pound. Now, that's a basically a tax of one hundred and seventy percent on the imputed rental income from property. So raising tax rates over 100 per cent again in the later years of repayment is hardly leaving the market to itself, and that's to pay for Irish famine relief instead. What's the clearer and better explanation of this change in policy is that there's a change in the government's fiscal circumstances and an attempt to raise loans to continue to pay for people's generous policies in 1847 basically triggers a massive financial crisis.

So during the first two years of the famine, they have the money to pay for these generous leave policies. The government by 1845 had a very large government surplus in the first few years. It was basically spending money out of that surplus. But by the start of 1847, that surplus had disappeared. Tax revenues were falling because of a economic recession triggered by partly by the potato blight itself, but also by the collapse of the railway boom while spending was increasing in Ireland because Ireland's needs were going up.

And so the government announced in February 1847 that in order to continue to fund these policies, it was going to raise an Irish loan worth eight million pounds. Now, that's equivalent to 10 percent of Ireland's GDP before the crisis and probably one eight that during the crisis. So this is large amounts of money and they planning to follow that up by another loan of six million pounds later in the year. And this was to continue the rate of spending on Irish famine relief, which was happening before.

So the British government discovers that even the British government in the 19th century does not have the ability to borrow unending amounts of cash.

So it can't. And the reason why it couldn't is there's two reasons. The first reason is because Britain is on something called the gold standard, where banknotes essentially worth a certain amount of gold. And you can go to the Bank of England with your bank notes and exchange it for a certain amount of gold and also something called the Bank Charter Act. So this is the fundamental legislation introduced by Paul in 1844 under which the Bank of England was regulated and parts of it still enforced.

This is the foundation charter of the Bank of England in some way or the charter in force. So the point is, is that the reasons why markets panicked when the government announced it was going to borrow eight million pounds is for the markets and small investors for the British government was going to borrow eight million pounds in banknotes and then convert these banknotes to gold to buy food for America, for the Irish famine relief effort. Now, the issue is that Britain didn't have a very large amount of gold reserves and it only had a few million more than more than this amount.

And so people thought, well, the government saying there's a trade deficit anyway, the Bank of England is leaking money anyway. Well, if this eight million pounds is taken, is borrowed and then converted into gold, there's going to be only a very low amount of reserves left. So people running on the Bank of England, they are saying, well, I'm going to convert my banknotes. Stay while they're still worth something, and while I can get my gold rather than waiting in a few months time when the Bank of England might have to suspend convertibility.

One problem is that you have people running on the Bank of England trying to convert their banknotes into gold. At the same time, the Bank Charter Act insists that the amount of banknotes in issue has to be related. The bank thing is above a certain level, has to have a certain amount of gold in its vaults in order for it to issue a banknote. So it means that if gold reserves start falling, the Bank of England starts having to take banknotes out of circulation.

And it's, you know, it's Kushan, which it could help credit markets when there is a lack of credit massively fell. This when the government tried to borrow eight billion pounds in the market. The Bank of England was having to reduce the amount of credit available. And this caused a credit crunch, which does cause banks to collapse until the autumn of 1847. And the point is, this first panic of 1847 was only calmed when the British government announced several things.

Firstly, that the British government would only borrow Valone and only spend Valone very gradually. So in smaller installments over a longer period of time. So rather than its original intention, which was to borrow this money and spend it quite quickly, it was limited in how much it could borrow and how much it could spend. This reduced the worries for the Bank of England was going to run out of gold. The second thing it did, which comes for crisis almost to the day and of course, some of the gold returned to the Bank of England was it announced that rather than half a relief effort being paid back by local Irish taxpayers and half the spending being paid for by central government, that the entire burden relief effort would be put on local Irish taxpayers?

And the markets thought that that would mean that the spending would be more careful in the future, that if the Irish taxpayers who were administering the relief effort knew that they're going to have to pay this back in the future, that they would be more likely to be careful with taxpayers money.

Basically, the loan repayments for the Napoleonic wars were in same proportion of government spending. And this crisis that in the moment, even with the money we're borrowing, we're still projecting less than one percent of what you tell me.

But dealing with the repayment on the loans at the moment aren't that scary. Whereas the British government in the mid 19th century was looking at gigantic debt repayments from the cost of servicing the loans. The Napoleonic wars were extraordinary.

Exactly. So now we're in a situation where we don't have a currency which is linked to gold. But if necessary, the Bank of England can print more money for the government to spend. And this is exactly what happened at the depths of the pandemic in March and April when the Bank of England started what's known as deficit financing. Essentially, the Bank of England was printing money to give to the governments. In addition to that, interest rates are very low because there are few other very safe assets in a world where the pandemic has destroyed the businesses, many other business investments.

But there's very few other places where investors can put their money. Britain in the 40s is in a different world. Firstly, the amount of debt interest payments is absolutely huge. So today, British government only spends a very small percentage of government spending on servicing its debts. The British government in the 40s spending well over half on servicing British government debt each year.

So thanks to the money that was spent in the long 18th century, winning this kind of hegemonic battle against the French for global supremacy, the British government spending more than 50 percent of its revenue on servicing that debt. That's extraordinary.

Exactly. So the British government needed to keep interest rates low because if interest rates rose, that meant that the amount it was going to have to spend on interest debt repayment went up. That would raise the interest rate the government was paying further, which would again increase the deficit. And you get this negative debt interest spiral going. So keeping interest rates low was a key priority of the government to maintain financial stability. But you might go, well, you know, yes, this is a problem.

Even if the government needed to balance its books for alternative policies, which could be followed, one of which is, you know, cuts cut spending on other things, well, you can't cut that interest spending until you balance your books. So you can't cut that. The government has already laid off a third of the Royal Navy. So military and naval expenditure that wasn't had already been cut to the bone by people before 1845. And the rest of it, a fifth of government spending was on was actually on Ireland during this period.

So it was the thing which in an emergency situation, which could be cut faster and quicker.

So the government can't borrow any money. It can't make deeper cuts. What about raising taxes?

So the government did try to increase income taxes and basically failed during the Irish famine to make up the money, which they failed to. Through issuing loads now, but the problem that they faced was that from 1846 onwards, this was not a majority government. Whigs did not have a majority in parliament and rather like Theresa May and the last the last parliament where Brexit ended up in parliamentary deadlock because there was no government, had no majority in parliament, something very similar happened to the government.

It needed the votes of the followers of Sir Robert Peel, the Perlitz, the liberal conservatives or the Irish nationalists under Daniel O'Connell to get legislation through and income taxes. One of all the issue of raising income tax was one of the issues which reached deadlock in this in this parliament. So the reason why is that Ireland had an exemption from the income tax. So people, residents in Ireland did not have to pay income tax. And the point is, is that the British MPs said that, well, if we're going to raise income tax on British taxpayers, it's unfair that the Irish aristocracy whose peasantry are starving on their estates shouldn't have to contribute something as well, that if they're going to raise the income tax by a certain number of pence of the pound, this has to be that has to be increased on both British taxpayers and Irish taxpayers.

The thing is, the Irish MP, on the other hand, refused to allow this to happen because only the rich could vote in this period. It was and only for rich paid income tax in this period or would be eligible under the changes for to pay income tax. Raising income tax was political suicide for any Irish MP to vote for. And so the British MP refused to raise British income tax pay for Irish family without getting rid of the Irish income tax exemption.

And the Irish MPs refused, was happy to vote for income tax to go up in Britain, but refused the Irish income tax exemption. The result was gridlock, and the chancellor actually took several budgets to parliament in 1848 and couldn't get them passed. And he ended up having to write several different budgets until until he got one which passed, but unfortunately did not include a increase in income tax. So that was one alternative policy. Another was alter or amend the bank charter act.

So the problem is the bank charter act is restricting amounts of credit. And if these restrictions are loosened, the British government might have been able to raise the loans it needed to pay for famine relief. The problem is, is that this piece of legislation was very much Peel's political legacy. He saw it as one of his main achievements as prime minister, and he made it clear to the Whigs that the Perlitz would not vote to alter or change this legislation and therefore it wasn't changed.

Very interestingly, there was a member of the cabinet who did suggest changing this piece of legislation. This was Earl Grey, who was actually the colonial secretary at the time. Yet he was outmanoeuvred in the cabinet because Ireland did not fall under responsibilities for Klingel office. It was run by the Home Office and the Treasury as a constituent parts of United Kingdom. While the colonial office was saying saying at the same time, well, the answer here is to change this legislation and enable these loans to be raised.

And there was another part of the British Empire which faced a famine as big as Ireland, and this was Mauritius. The sugar crop failed and sugar prices collapsed in 1847 in Mauritius and it couldn't import the food it needed. And the colonial office actually changed the legislation, changed the banking and currency legislation there in order so government could raise more loans to spend on relief. So this was not an alternative suggestion, but it could not be implemented in the United Kingdom because there was not a majority in parliament.

And this is because for Perlitz refused to vote for it, because this was seen as the great achievement of people's time in office.

Acasti recommends podcast's we love Hi Sabina Brannan here, host of Superbrain, the podcast for everyone with a brain.

I have a passion for people and a fascination for the human brain.

That's why I became a psychologist and neuroscientist. On Mondays, I pick the brains of inspiring guests about thriving and surviving in life. And on Thursdays I share insights and hacks to help you to understand and unleash your inner superbrain to join me each week. Simply search for a super brain on Apple, a caste or wherever you get your podcast.

ACRS powers the world's best podcast, including the two journeys I'm Grandmama's, and the one you're listening to right now is returning to the worst of both worlds because it was part of the UK, but it was a part of the UK that was very distant from the locus of political power.

And do you think this would have been different if this had been massive crop failures in East Anglia or. Well, it's worth remembering that there were massive crop failures in Great Britain as well. There was a severe potato famine in Cornwall. There was a severe one in the Scottish Highlands and that Britain's trade deficit increased because Britain itself was also having to import large amounts of food for itself as well as Ireland. The issue is essentially that you would have reached a financial crisis if Britain was hit as badly as Ireland was by the blight, it would have reached a financial crisis much earlier.

Would this have forced them to change the legislation? Well, I think you can easily underestimate how attached people was to his banking and currency policies, but he fervently believed that these policies were the best thing for the poor in around the entire United Kingdom, including Ireland. And the thing was, is that this is not really a case of intention that he intended that he thought his policies were the best ones to save as many lives as possible. It was simply that this was an economic policy mistake, that he didn't realise quite how the economy works.

It took until the 1960s and 1970s for economists really to work out how international macro economics worked. And so he believed that these policies were good, even if the outcome wasn't so good.

We have got a loan now. The British government raised loan for Ireland. The problem is its repayment is falling on the shoulders of the Irish gentry, the Irish taxpayer that drive this kind of essential, economically powerful, politically powerful class into the arms of nationals because they just they see they've been lumped with this problem, right?

Exactly. So, I mean, it's difficult to underestimate the scale of the tax burden pushed on Irish taxpayers in this period. In 62, Paul or unions' rates rose above 10 shillings in the pound in Balarabe robe, it increased to over 34 shillings, three and a half pm, the pound, that's 170 percent. And many Irish gentry, many of the wealthier people in Ireland felt the only thing they could do to escape from this is to essentially take their money abroad and emigrate.

And this is what occurs after 1847. There's a big increase in emigration of wealthier people from Ireland, the gentry of rural middle classes, and they left and they took a lot of financial capital with them. So this is a disaster for Ireland in terms of reduction in the amount of human capital it had, the reduction in the amount of financial capital that they had. And many of these wealthier people fled to America because you could be chased payment within the British Empire, but you couldn't be chased for payment within the United States because it was a foreign jurisdiction.

And this is one of the origins of this very anti British pro nationalist interpretation of the famine from Irish Americans in that basically, for reasons which are not really understood by British politicians, Norvan themselves, they've been lumped with paying this crisis and they can't really understand why or what's happened, what went wrong. And they're very resentful of it. And you can clearly see in many Irish nationalist ballots in this period that they feel that they've been exiled from Ireland because of these huge tax burdens imposed by the imposed by the British state.

So the typical immigrant from Ireland during the famine. Was not a starving laborer whose potato crop had collapsed, but a member of the rural middle class was like, screw this. There's a disastrous famine on. And now the rapacious government in distant London is asking me to pay for it myself whilst not reaching into their own pockets.

I think that it's a bit more complex than that. There are two different types of immigrants now. Let's be the first wave of emigration is actually the Irish poor and the evidence is substantially that they mostly came to Britain. It was very cheap to come to Britain. If not, you could often get free passage. And so this is the primary reason why actually in one recent study found that 22 percent of the DNA of people who live in Britain today comes from Ireland.

So there was that initial first wave of the Irish poor there. Professor Crops had failed and the and they immediately went to Britain to try to find work in Britain's manufacturing towns. The second wave of emigration was much later after the burden had been placed on Irish taxpayers. And this tends to be the wealthier sort of the Irish gentry, the rural middle classes who tended to go to America to escape the high taxes. And often they sold everything they had and would escape in the middle of the night and leaving lots of unpaid bills behind.

So you get these two waves and in the second wave you get this interesting pattern of the Irish gentry and well-to-do leave and be many of the remaining Irish poor move into the houses which have been left abandoned in the towns. So you get you get these two different waves of Irish emigrations and they have two very different effects.

Was there an element of politicians in London taking this less seriously because it was happening to Irish people?

If you looked to the extent to which the British government went to try to find money to pay for our family. In fact, it shows that they were taking it very seriously. That pill was willing to destroy his own party and destroy his government to repeal the corn laws, to help Ireland in 1846, in 1847, the next government, the British government, to the brink of bankruptcy, probably the closest moment the British government ever in history has got to bankruptcy in order to raise the money to fund Ireland.

They then went, you know, they couldn't get in contact raised. They couldn't get support in parliament to change the bank charter act. And so instead, they tried to find the money elsewhere by raising taxes to levels beyond anything which has been seen ever in our history or indeed the history of the United Kingdom, that there was a huge, unprecedented level of intervention going on in Britain and Ireland. And the point is that this didn't work, but it wasn't a shortfall of good intention which caused this.

This was a misunderstanding of how macro economics works. It was financial crisis is of 1847 and lack of a majority in parliament for the government after 1846. These were the causes of the disaster in Ireland or why so many people died and indeed people the more recent famine. Economists argue this as well, that actually what determines in many places, you know, famines which kill and famines which don't kill is what is the fiscal capacity of the state? Is the government able to pay for it?

And also, to what extent is there political certainty is very strong government with majority which can implement its its famine relief policies, or is the government very weak and unable to implement what it wants to do? And the British government and the Irish famine is an archetype of a weak government unable to push its relief policies through Parliament.

Is this also a very well attested and obvious example of an early modern state attempting to use quite primitive instruments to overcome a massive natural pandemic, the type of which are not uncommon? I mean, we see them, of course, throughout history. There are constant in our human story.

Exactly. So in some ways, both Britain and Ireland were the first industrialised states. They were the first states to to emerge from the poverty were all countries in the world had until the 18th century. But this meant that there was no Sesto precedent. There was just no economic thinking that they could or economic practice in other countries that they could use and implement to deal with a crisis of this scale. It wasn't clear what policies were appropriate for a modern industrial states in terms of fiscal policies, monetary policies, banking regulation, currency, that in some ways they were basically having to make it up as they went along.

And other countries later on learnt from Britain's experience and Ireland's experience. But you have to remove policymakers at the time didn't have this corpus of expertise that later governments had, as one of said, corpus.

If that is the what you're you're the expert on this, can you try and tell the story about what's going on today? We are facing a pandemic, this time not of potatoes, but of humans, a pulmonary. Domecq, just in very simple terms, it turns out that Peale was wrong. There is a magic monetary as long as the government with a good track record of fiscal responsibility behaves itself, we can borrow any amount of money to overcome this, can we?

Is that what's happening?

But the issue is, is that, yes, the British government has that track record today in the British government is probably the only government which hasn't defaulted for several centuries. Britain's never had a particularly high inflation rate. And that you OK, Britain had an inflation rate 25 percent in one year in the 70s. But this is not high compared to many other countries in the world which have suffered bouts of hyper inflation. We now know this today, but investors did not know this in the late 40s.

And the British borrowed huge amounts of money in the 18th century to pay for the expansion of the British Empire to pay for Napoleonic wars. Britain didn't quite have the same track record. And in summary, one of the lessons learnt by Treasury officials from the Irish famine that it was that it needed to build up this track record in that Gladstone founded the Post Office Savings Bank, which is now National Savings Investment, because he wanted a way of borrowing from the public, which didn't involve having to go cap in hand to the Bank of England.

And he explicitly went to his officials when he became chancellor in the 1950s. We have to do this because we can't end up in the same situation as 18 47. And you see this continuously throughout the end of the 19th century, that the Treasury view comes from this crisis of 1847, that Britain needs to build up its reputation for fiscal stability in order so that when real crises do hits, it can borrow the money that the British state needs. And so in some ways, that was a lesson taken on board by Treasury officials at the time that they needed to build up Britain's track record.

But I think the big difference between now and then is that the world now has fiat currency. So we've gone away from this early modern view, which ultimately comes from an 18th century and before ideology called mercantilism, that you have to pin the value of paper money to gold or some precious metal, which John Maynard Keynes in the 20th century called absolutely barbaric. And instead, the world now has fiat money. So if you try to go to the Bank of England and ask for your to change your 10 pound notes into ten pounds of gold, they'll tell you to go go away.

That paper money is not linked to the value of precious metals anymore. And this means the government can print more money when it when it needs to, such as during the worst part of the pandemic. And we've now learned that. But that wasn't known in the 1940s. And you get the question of whether, you know, is the answer to this is to get rid of convertibility. Should Britain go off gold completely in the 40s? And the person who ironically, who vetoes this is Prince Albert, who was doing the head of states letters for her while she was having a baby.

And he said this idea of ceasing convertibility won't work because people in Germany won't accept British banknotes anymore if they're not linked to gold, that there is this fear that people abroad would not accept British banknotes if they departed from a very strict gold standard. I think we've now learned that that is unnecessary. But the point is, is that policymakers did not know this at the time.

In the 1940s, during the peak of the pandemic, there was some suggestion, I think, by Deutsche Bank they need to look out for. There might be, for the first time in hundreds of years of British either hyperinflation or sovereign debt problem. But it doesn't let that happen. Right. So why don't we just borrow even more money and fix global warming while it has this not taught us that the ability of modern states to both borrow money and to have their money accepted around the world by people making things is infinite?

Well, I think it's very large. It's not it's not quite infinite. And the reason why this is occurred, why do certain advanced countries why are they able to borrow very, very large amounts of money? This is essentially because interest rates have fallen on safe assets in that there's a recent paper by a researcher for the Bank of England who said actually, the feature of capitalism over the last seven centuries, since the 14th century is actually interest rates have gradually been falling.

So borrowing was very expensive and 40, 50, 60 century, even if you were a relatively fiscally responsible government. So this piece of research took all the evidence faries about rates and loan rates to governments over this period and found that actually secular stagnation has been occurring over the last seven centuries and that interest rates have been getting lower and lower and lower. So today, borrowing is almost free if you're the British government, if you're the American government. But it wasn't if you were the British government in the middle of the 19th century in that while this is true today, interest rates.

Much higher mortgage interest rates, much higher around the world in the middle of the 19th century, and partly this is because arguably institutions of economic, legal and political institutions are stronger in that the mechanisms to get people to repay their money are stronger. Because if you had lent money to a Plantagenet king, if you were a money a Dutch moneylender, how would how would you try to get your money back if they decided not to pay? I mean, I think there was a case of the Scottish king who murdered a aristocrats who had lent him 80000 pounds, I believe.

And he announced after that the aristocrats had died that he was going to pay it back. Now, you can't get away with that in the modern world, let's put it like that. But it takes time for investors to trust institutions that they will get repaid. And Britain was only partway down that pathway by this period. And I think that's the biggest difference between today and one hundred and seventy five years ago, is that investors trust governments far more now than they did back then.

Well, thank you for talking to us on this important anniversary. That's just fascinating because we will tweet out the paper that you've written. Thank you very much for coming on.

Thank you very much for the invite. I mean, that's just a quick request. It's so annoying and I hate it when our podcast do this, but I'm doing it. I hate myself. Please, please go to iTunes, where you get your podcasts and give us a five star rating and review. It really helps basically boost up the chart, which is good, and then more people listen, which is nice. So if you could do that, I'd be very grateful.

I understand if you don't subscribe to my TV channel Understanding Obama, Canada, but this is free. Do me a favor. Thanks.

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