I have come to take you home

Space to breathe

It is a blustery winter evening, and I am sitting by the fire, fingers wrapped around a mug of Rooibos tea. I am listening to Marie’s stories. Raised in a coloured household on the remote Moravian mission of Wupperthal, Marie left the Cederberg Mountains of the Western Cape to work for White men during the apartheid era. As a single mother and democracy activist, she fought to give her son access to the education she had been denied. In the post-apartheid era, she has taken great pleasure in witnessing her son’s contribution to educational reform in Cape Town, and when she retired, he invited her to move in with family. Through all the years of her life, Marie had never stopped longing for the wide-open lands of her childhood, so she returned to the Cederberg instead. Now Marie lives in a spartan cottage in the centre of the mission hamlet of Heuningvlei, located at the base of Pakhuis Pass where arid mountain meets agrarian marsh. Known to all in Wupperthal as Tannie Nuus (Auntie News), Marie is famous for her fierce intelligence and neighbourly spirit. Scrambling to survive on her meagre pension, a small hillside crop of Rooibos, and a micro used-clothing enterprise that is more charitable than profitable, she says that life is bitter, but the Cederberg gives her space to breathe.

Ancestral origins

South Africa

In 1999, UNESCO added three paleo-archaeological sites to its World Heritage list. Situated in South Africa, these offer crucial evidence into the origins of our species, for their artefacts show that early hominids began living in Southern Africa more than three million years ago and that human ancestors domesticated fire more than a million years in our past (UNESCO, 1999). In northwest South Africa, the Cradle of Humankind World Heritage Site (2020) claims that our ‘collective umbilical cord lies buried’ in Africa, where the earliest hominids emerged about seven million years ago, invented stone tools more than two million years ago, and evolved into modern humans around 200000 BCE. Although archaic humans, such as the Neanderthal, have been found in other parts of the world, the genetic and fossil evidence points to an African genesis of anatomically modern humans (Relethford 2008). As genetic findings indicate a degree of interhominin mixing, modern human ancestry is mostly, although not entirely, African in origin.

Given its placement at the confluence of two oceans, Southern Africa is a biodiverse and heterogeneous land. Khoekhoe and Sān peoples comprise its original inhabitants (Besten, 2009). Among the most diverse peoples on earth, the gather-hunter Sān historically lived in ethnically defined areas, where they moved according to the seasons in symbiosis with water, plant, and animal life. Sān societies spoke numerous unrelated languages, some of which remain in use (Barnard, 2019). Khoekhoe societies either displaced or broke away from the Sān around 2,300 years ago when these peoples accepted animal husbandry as a way of life (Smith, 2009).

Van Dillen, Johannes Gerard. Bronnen Tot de Geschiedenis der Wisselbanken: (Amsterdam, Middelburg, Delft, Rotterdam). The Hague: Martinus Nijhoff, 1925. (A two-volume edited transcription of many primary sources relevant to the Bank of Amsterdam and other early-modern Dutch municipal banks.).

This chapter surveys the first half-century of the Bank’s history, drawing largely on secondary sources because only limited archival material has survived for this period. The original purpose of the Bank, as stated in its 1609 charter, was to take in various types of coin as deposits, facilitate book-entry (giro) payments among Bank customers, and pay out high-quality coins for withdrawals. Ongoing deterioration in the quality of the circulating coin, largely due to debasement, made it impossible for the Bank to adhere to its original mission. Instead, the Bank developed its own unit of account, the bank florin, which was applied to Bank money and was distinct from the unit of account for local forms of money, the current guilder. Having a distinct unit of account made it easier for the Bank to deter money-losing inter-coin arbitrage. This period also witnessed the development of a secondary market in Bank money to facilitate domestic currency exchanges (bank florins for current guilders). This era closed with the passage of the Dutch Republic’s 1659 coinage ordinance, which granted official status to the bank florin.

This chapter lays out the monetary, financial, and political environment in Amsterdam in the mid-eighteenth century — the high tide of the Bank. The main types of monetary assets within Amsterdam are described, along with the channels by which one monetary asset could be exchanged for another. This chapter also discusses major players in the Amsterdam money markets and their connections to the Bank. The chapter concludes with a discussion of the Bank’s relationship to the City of Amsterdam and fiscal aspects of this relationship.

This chapter covers the Bank’s introduction of its receipt (quasi-repo) facility in 1683 and its simultaneous transition to a fiat-money standard. Data extracted from the Bank’s ledgers (which survive from 1666) show that before the introduction of receipts, the Bank routinely executed large purchases of silver in order to maintain the size of its balance sheet and to ensure an adequate stock of metallic assets. These data also show that the Bank’s open market purchases were curtailed after the introduction of the receipt system, which created greater incentives for Bank customers to deposit trade coins into the Bank. With the introduction of receipts, Bank ledger balances unaccompanied by a receipt lost their rights to redemption in coin—Bank money became fiat money. The archival data suggest that the transition to fiat money was chiefly motivated by a desire to improve Bank accounting, via a reduction in the set of feasible transactions involving precious metal. The chapter shows how the transition to fiat money also stabilized the market value of Bank money. An appendix to this chapter presents a methodology for classifying Bank transactions from entries in its ledgers.

Meditation

Winds of change

On a cool and cloudy evening in the late Baltic summer of 1989, a northern wind was blowing. Protesting the Soviet occupation of formerly sovereign lands, two million people peacefully joined hands on 23 August to form the Baltic Way to independence. Flowing unbroken for 675 kilometres through the capital cities of Estonia, Latvia, and Lithuania, this human chain occurred as part of a Singing Revolution that had been shaped by a series of environmental protests (Darst, 2001). Baltic insurrection generated rapid social change. Alongside its sister states, the Republic of Latvia regained its independence in 1991, enabling Latvians to embark upon a massive project of national reconstruction.

An equally powerful wind was blowing at the southern tip of Africa. Less than two weeks after Latvians participated in the Baltic Way, South Africans converged in Cape Town on 2 September 1989. Demanding an end to White supremacist rule, thousands of activists took to the streets in a peaceful demonstration of civil disobedience that soon became known as the Purple Rain Protest (Smuts and Westcott, 1991). The police sprayed a volley of purple water onto protestors to mark people for arrest, and so the following day, graffiti sprung up around Cape Town stating ‘The Purple Shall Govern’. In less than a year, South Africa began transitioning to multiracial democracy, with the anti-apartheid movement’s revolutionary leader, Nelson Rolihlahla Mandela, assuming the presidency in 1994 (Kök Arslan and Turhan, 2016).

The state apparatus was powerless to halt these winds of change. The final Soviet president, Mikhail Gorbachev, had opened the door to democracy by embarking upon perestroika in the wake of the Chernobyl nuclear disaster of 1986, but his plan to reform the Soviet Union was overwhelmed by populist demands for more revolutionary change (MacKinnon, 2008).

This chapter discusses categories of precious metal assets (bullion, trade coins, and local coins) and their roles within eighteenth-century Amsterdam. Bullion was valued for its fine content, but failed to meet the modern definition of a “safe asset,” because its use as a means of payment was limited by the need for assay. Popular varieties of high-denomination trade coins, on the other hand, did function more as safe assets because they circulated freely, often cross-border, at premia above the value of their advertised fine content. The Bank’s archives show that these trade coins were seen as safe enough to value by “tale,” that is, by enumeration. Trade coins were the major form of collateral held at the Bank. However, the Bank also occasionally dealt in low-denomination local coins. Local coins were rarely employed in international trade but were commonly used within the domestic economy of the Dutch Republic and nearby areas. The chapter explains that players in the Amsterdam market, the Bank included, always viewed these categories of precious metal as distinct types of assets.

This chapter offers an example of the role of the Bank in European state finance. The kingdom of Prussia made heavy use of the Bank during the Seven Years War (1756—1763). Public finance in Prussia during this period was primitive, lacking basic features such as a bond market or central bank. Under heavy financial pressure, Prussian King Frederick II chose to finance much of the war through the production of debased coinage. The task of minting debased coins was outsourced to private contractors (“mint entrepreneurs”), who purchased much of the necessary silver in Amsterdam, making use of credit which was abundant in the Amsterdam market. Details of these transactions are revealed in the Bank’s ledgers. Frederick also relied on gold subsidies from Great Britain, which were paid via Amsterdam and can also be matched to Bank records. Finally, at the end of the war, Frederick called upon his entrepreneurs to engineer a reverse debasement (reinforcement). This activity once again relied heavily on Dutch resources, including remote smelting furnaces, Amsterdam credit, and Bank money. Traces of the entrepreneurs’ activity can again be seen in the Bank’s records.

South Africa’s multi-ethnic heritage

African science articulates a cosmology of interconnectedness like that of the Baltics. According to Mathias Guenther (2020), the Sān peoples of Southern Africa shared a common perception of the universe as unbounded and changeable. Roaming an arid landscape alongside the other species they depended upon for subsistence, the ancient Sān believed humans and animals flowed into one another through spacetime. These social interactions brought meaning and order to the chaotic impulses of a participatory universe. In contrast to the gather-hunter Sān, who recognized the right of all life to a free existence, the pastoral Khoekhoe possessed livestock and paid tribute to tribal leaders (Smith, 2009). While Khoekhoe societies introduced a degree of hierarchy into the self-other relationship, animal welfare was a shared value among all Indigenous Southern Africans, who often shifted between herder and hunter lifestyles and Khoe-Sān identities (Barnard, 2008).

Across Sub-Saharan Africa, Bantu-speaking societies teach a similar worldsense. Experiencing the cosmic web of life as a divine Vital Force, Bantu-speaking peoples recognized the rights of other species to wellbeing, with cultural philosophers appointing the spirits, ancestors, and living human elders as ecological guardians. During the colonial era, the Bantu concept of Vital Force merged with Christian notion of God, giving rise to African Christianity, in all its cultural, linguistic, and ethnic forms (Kaoma, 2014).

Ubuntu is a pan-African moral philosophy. Although the term derives from the Xhosa and Zulu languages of Southern Africa, Ubuntu concepts undergird moral thinking across the continent. As a distinctly African science, Ubuntu challenges the Euro-Western discourse on human rights, which places individual and collective rights into opposition rather than recognizing their interdependence. In The Lessons of Ubuntu, Mark Mathabane (2018) identifies the hostile and nihilistic ideologies undergirding racial and ethnic relations within the neoliberal world-system. The survival-of-the-fittest theorem buttressing modern rational discourse reduces human agency to a stark choice: ‘to hate or be hated, to oppress or be oppressed, to kill or be killed’ (p 9).

This introductory chapter describes salient features of the Bank of Amsterdam and proposes that these were sufficiently advanced to qualify the Bank as a modern central bank. Sophisticated central banking, however, was not the Bank’s original mission, which instead was to apply contemporaneous information technology (double-entry accounting) within a limited-purpose institution to facilitate the movement of safe assets (trade coins) through Amsterdam. By the eighteenth century, the Bank had moved well beyond its original design and evolved into a de facto fusion of two banks, active and passive, linked by a common liability — fiat ledger money. This chapter outlines this evolution, which is explored in greater detail in subsequent chapters.