Anton Howes on Trade, Innovation, and the Forgotten History of Salt

SHRUTI RAJAGOPALAN: Welcome to Ideas of India, where we examine the academic ideas that can propel India forward. My name is Shruti Rajagopalan, and I am a senior research fellow at the Mercatus Center at George Mason University. 

Today my guest is Anton Howes head of innovation research at The Entrepreneurs Network, and the historian-in-residence at the Royal Society for the Encouragement of Arts, Manufactures, and Commerce. He is the author of Arts and Minds: How the Royal Society of Arts Changed a Nation and the excellent Substack Age of Invention.  We talked about salt trade in India, the Dutch culture of innovation, the Royal Society of Arts, endogenous versus O-ring theories of growth, why the Industrial Revolution took place in Britain, and much more. 

For a full transcript of this conversation, including helpful links of all the references mentioned, click the link in the show notes or visit mercatus.org/podcasts. 

Hi, Anton. So good to have you here.

ANTON HOWES: Hi, Shruti. Good to be here.

RAJAGOPALAN: One, you’re very hard to get because I’ve been chasing you forever. One of the reasons I’m obsessed with speaking with you is the series that you have on your Substack about unsung materials and, in particular, your salt series. 

History of the Salt Trade and Salt Tax in India

Like most Indians, all I know about salt is that we had this big Salt Satyagraha led by Gandhi—civil disobedience that almost brought the empire to its knees in 1930. But the history of salt and salt-related oppression in India just goes much farther back. Why don’t you start us off with that and then we can talk about how that went away eventually?

HOWES: Sure. One of the big things that I got really interested in, and I never really intended to write about this straight away, but the more I dug into it the more interesting it became, was that salt is extremely crucial to everyday life. If you make salt cheaper, you make all food cheaper. Absolutely everyone needs it.

For ages, salt has been one of those things that most states tax. Because it’s so necessary, because it’s in such small quantities that are quite easy to police, it’s one of those things that most states throughout history have thought, “Great idea, we can just tax salt.” That way you effectively have something approaching a poll tax and, even to an extent, a livestock tax because all livestock needs salt as well. It’s one of those great things that you can do—from the state’s perspective—to tax your population.

The other crucial thing being that it can’t be made in all places. You might have some places that are inland salt mines, you might have salt lakes like you see in Sambhar in India. You can produce salt along the coastline. 

One thing that’s really interesting, and I think is a great context for understanding why salt becomes so controversial, not just in India overall, but specifically in Bengal, in northeast India, in present-day Bangladesh, that whole region, is because there’s so much fresh water coming from the Ganges as well as all the rivers that are coming down from near Everest, the Himalayas, that the salt content of the coastline there is extremely low compared to the ordinary salt content. 

Traditionally that’s not that much of a problem because when you have relatively free trade between different parts of India, you can just import salt from elsewhere in India, which is exactly what they did. They had these huge barges that are reported in the 16th century, 17th century, sending loads of salt down the Ganges all the way from inland India all the way to Bengal. Or you’ve got ships that are taking stuff from the west coast of India where it’s especially dry and salt comes very, very high and taking it to Bengal. Or even places like Sandwip Island, just off the coast of Bengal itself, which seemingly in the late 16th century was one of the only places nearby where they’re actually making salt—not a major producer, but still relatively big because it’s one of just a few places. 

That’s not that much of a problem for ages until you start to see the breakdown of the state system in India. Partly that’s from the Mughal conquests, partly, it seems, also from the Arakanese, which is sort of present-day Burma and there’s that sort of an exclave of India that is along the northeastern state coast—what used to be Arakan. They started raiding the Bengalese coast, often with help from first the Portuguese and then the Dutch slave raiding that pushed people back from the coastlines. 

At the same time there’s this disruption to the internal trade. You see a lot of restriction of salt going into Bengal making it easier for states to tax. So that by the time the English arrive, or the English East India Company arrives, and in the 1760s, takes over Bengal, one of the first things that they do is they think, “Great, we can take over the salt taxes and create a salt monopoly,” originally to pay off the wages of East India Company officials that weren’t being provided for by the directors back in London. It’s their way of using a bit of local tax of their own without control of the actual company so that they can give gifts to themselves, effectively.

RAJAGOPALAN: Here there are a couple of things going on. Let me go back. It’s a little bit like a poll tax, but a tax on salt in those times, if I understand correctly, is also like taxing energy because human and livestock energy is so reliant on a supply of salt. But the other part of it is, it’s like taxing low time preference because you can preserve things for just much longer. Your production processes can last much longer. It’s almost like a weird distortion of interest rates, though that’s not a one-on-one good comparison.

What is a good way to think about salt tax other than the obvious, which is it’s so important and relatively so inelastic in the initial quantities for most households that it’s just very, very easy to tax?

HOWES: That’s really interesting. The title I used for the initial pieces was the “second soul” because there’s these writings from the early 17th century comparing salt entering flesh as though the second soul and keeping it alive, keeping it fresh, keeping it preserved.

Yes, part of it’s about preserving meat and fish in particular, as well as various other things that you can make. Salt is a great food preservative. I guess it’s the early modern and medieval refrigeration is exactly what it is. It’s interesting that you say it’s almost a tax on preservation of food or stocking up of food to an extent.

RAJAGOPALAN: Having a longer production process, basically, right?

HOWES: Yes.

RAJAGOPALAN: Because now people are going to try and catch more and catch it early or harvest more and harvest early and keep it going on longer with or without the aid of salt.

HOWES: Yes, interestingly, I hadn’t actually thought of that. I’ve not seen it mentioned in the discussions at the time as that being one of the effects. With livestock, however, you do see it. One of the interesting things is that British officials, since the very beginning of the salt monopoly, start criticizing the salt monopoly and saying there’s a lot of problems and unintended consequences here that we need to sort out. It’s not like the English East India Company is this monolithic thing. There’s actually a lot of disagreement [and] debate going on within it. 

One of the things that certainly emerges by the mid-19th century with the maintenance and increasing effects of this monopoly is a worry that there’s just so little salt going into livestock, which means that they are emaciated. They’re thin. They’re malnourished. They’re way smaller than livestock in Europe or even other parts of India, and that’s nothing to do with the livestock itself. That’s entirely to do with just lack of salt. That’s one of the things that British officials keep coming back to is, this is actually keeping back Indian agriculture in that region because they’ve made it so expensive.

RAJAGOPALAN: Yes, and it’s like a trade-off for them because one of the major things that the East India Company is trying to do in the second half of the 18th century, and this is once they get more direct control over the Diwani of Bengal, now a large part of it is trying to maximize revenues because they’re also fighting wars or proxy wars for the British in various other parts of the country and parts of the world. In the process, allowing some officials to profiteer from salt mines or the control of salt mines or having a very high tax on salt almost reduces the amount of tax that overall the Diwani could collect if their livestock and humans, basically energy supply, could increase because of an increase in salt. It’s almost like there’s some very perverse incentives going on within the industrial organization of the East India Company, which you can see when you read these letters and things like that.

HOWES: Yes, and actually, I think the most perverse incentive of all, and this is something that I hope comes across in those pieces—one way to frame this even is that one of the things you often see in a lot of modern literature about industries in India will be a decrying of the loss of certain industries and one of those is salt in Bengal. There’s quite extensive literature that says the British, in later in the 19th century, ruined the Bengalese salt industry, which was this great big local thing that was going on for a long time.

Actually, I think it’s the exact opposite that this great sin of the British, or of the English East India Company before the British Empire takes over in the 1850s, the big sin is actually keeping the Bengalese salt industryalive because it’s a horrible, horrible, horrible industry. It’s extremely dangerous. The rates of death from the industry are so ludicrously high. Though I think I worked out, I can’t recall exactly what I wrote.

RAJAGOPALAN: I think you said 6%, which is insane.

HOWES: Yes, 6% per year.

RAJAGOPALAN: Yes. Why don’t we back up a little bit? For most of us, the way we think about salt is the way it’s portrayed in Richard Attenborough’s “Gandhi.” You have a long march to the coast, and this is the coast of Gujarat where it’s relatively dry, and you just pick up salt from the coast, and you made salt. That’s just one way to make salt in a place where there’s very high saline content in the water and relatively dry coastline. Bengal, as you point out, has low saline content, lots of humidity. Let’s start with what is the actual process of making salt in Bengal because it sounds horrible.

Harvesting Salt in Bengal

HOWES: It’s salt sleeching. Because it’s so humid, because the saline content is so low, what you need to do is you need to have a way of collecting up some of that salt through natural evaporation. What happens is you have these great big tidal marshes where the salt water, during high tide, will come in. It’ll get trapped there when the water recedes. Then over a very, very long period of time, it’ll start to evaporate and leave some salt crystals in the sand.

Now what then has to happen is you need to send people, lots and lots of people because it’s an extremely labor-intensive process, to dig up all that sand, cast [it] into these great big heaps, and then you are going to pour water through the sand to try and extract some of the salt from it. Then that brine that you produce from passing the freshwater, or even salt water, through this salt-laden sand—you are then going to burn whatever wood you’ve got from that jungle, at least in Bengal’s case. Salt sleeching is an international thing. It happens globally in different ways, but in Bengal specifically, it’ll be jungle wood. You’re going to have to expend vast amounts of wood just to burn this stuff and evaporate it through boiling.

Now that doesn’t sound so bad. Ok, it’s very labor-intensive. What’s the big deal? The big deal is that you are having to send lots and lots of people to live for very extended periods of time in the jungle where it’s extremely humid, there’s loads of diseases and lots of predators—specifically tigers is seemingly the main cause of death for a lot of salt workers—is that you are forcing them into these camps in the middle of nowhere completely cut off from everyone else where they’re constantly dying from tigers. Some of the East India company officials are a little bit skeptical that it’s all tigers. Some of them suspect that maybe people are actually running away, and that’s maybe happening.

RAJAGOPALAN: Which sounds reasonable given that this is almost like indentured labor. It is only the poorest people at the lowest caste actually take on these jobs. It’s like family servitude, if that makes sense to pay off debts.

HOWES: It’s lowest of the low and interestingly, it’s one of those cases where if people are running away, that is a pretty major problem for the people they leave behind because often, not just family members, but neighbors and so on, will be impressed in their stead if those workers aren’t showing up or they’re not turning up. Anyone who’s ever been a salt worker or knows a salt worker or lived near a salt worker can essentially be press-ganged into being a salt worker as well by, the “contractors” is the best way of framing it. 

RAJAGOPALAN: Or pirates. They were somewhere between contractors, pirates, and kidnappers from the sound of it, depending on which decade you talk about.

HOWES: They’re seen by the English as being the landlords because they’re the people who are in charge of certain villages and districts. The big problem that they have with these people is that very early on, a lot of the East India Company officials want to abolish this kind of servitude, what they see as effectively slavery which has been used in Bengal for quite a while at the time. Often in trying to abolish it, it seems as though they make things worse [in] that they try to ban certain types of contracts, then there’s all these workarounds that people are coming up with instead. Or they just end up turning a blind eye to it. It really varies by how good or officious the officials that they send out to manage the salt monopoly areas are. 

Really the worst thing is that because they’re trying to restrict salt, because they’re trying to control the supply of salt, the fact is that they keep this industry alive, this extremely dangerous, this lethal industry alive. As I said, it’s not just that the people are dying of lack of provisions and tigers and so on, but they’re keeping it going even though it doesn’t need to exist because if they just allowed imports from anywhere else, or they unrestricted imports, or they didn’t tax imports quite so highly, this whole thing would’ve disappeared decades and decades and decades earlier, which is what happens in the 19th century.

The moment they do decide this enough is enough, we need to just create [a] national-level way of doing things or [an] India-wide level way of doing things, it all disappears. 

You can also compare it to other presidencies of the East India Company where the west coast effectively doesn’t have this at all. The southeast coast or southern coast has it to a limited extent, but nowhere near as bad, and Bengal is by far the worst. I think part of that is just because of the fact it’s so difficult, so expensive to make it there.

RAJAGOPALAN: They didn’t control Odisha. It’s basically once they also managed to control Odisha that it can integrate, and they can allow salt import. There’s a lot of this going on as the East India Company is also taking over one territory at a time.

HOWES: Yes. Seemingly, as far as I could tell, and I couldn’t find direct confirmation of this, but there was quite a lot of suggestion from the literature around the conquest of Orissa that it’s conquered basically to get rid of the smuggling because they keep sending stuff inland upriver and then into Bengal, that route. The English control the coasts pretty well because of the Navy, but anything inland is a bit trickier. 

It sounds as though the early 19th-century conquest is effectively to crack down on smuggling because they can’t reach agreements with the local officials there to try and stamp this stuff out. They are otherwise contracting with the rulers there, with merchants there, for certain quantities of salt that’ll be done their own way. Also, a lot of officials are seemingly taking fees as part of the transference of that salt into the region.

The Great Hedge of India 

RAJAGOPALAN: One of the weirdest things, if you look at India from the early 19th century, is what they call the Great Hedge of India. It’s literally a hedge. It’s a bunch of bushes and trees that are planted, I want to say somewhere starting in Punjab and going down up to the Vindhya mountains. It basically separates the north and the western part of the subcontinent from the central and the eastern part of the subcontinent. This great Indian hedge is basically set up only to prevent salt smuggling, and it’s around for about 40, 50 years. It’s not trivial, right?

HOWES: No.

RAJAGOPALAN: When you look at that map, even today, places to the west of that are richer today than places to the east of that. I don’t want to draw a direct thing from one line on the map, but what is going on with the great hedge? One, why is it needed, and why does it disappear?

HOWES: The great hedge is an informal name for it. It’s effectively the customs line. This is the inland customs line effectively separating Bengal or the regions that’ll have the same salt monopoly. Anything that’s in and around Bengal, that’s brought into that same economic regime, is on the east. It pretty much dissects India down the middle and cuts off bits to the south and southwest of Bengal and Orissa and various other provinces that are brought within its orbit. 

The hedge is effectively originally just a customs line. You have customs houses. You have guards going along it. It’s originally just the places that people are supposed to check in when they’re crossing the border. That’swhere you check for salt, and it’s not just salt. There’s a few other things. I think there’s cotton, a few other small things, but salt is by far the most important revenue source from the customs line because it’s essentially the main thing that they’re taxing that’s going through.

There’d be a graveled walkway, and then they’d patrol it. They would rake it after each patrol, and if they went the next time, and there were footsteps along it, then they would find people and punish them for not having patrolled it properly. There’s all sorts of ways you can do it. 

Then, increasingly, in certain parts, they start creating a wall [and], in many places, [what] ends up being the cheapest way to do it, is create this great big, extremely high, extremely thick and thorny hedge.

There’s a book called “The Great Hedge of India” and it traces all these things down. I think if you want to go read about it in detail, that’s the place to go and look. In terms of its genesis, it effectively goes back to the 1760s origin, which is that they’re trying to monopolize salt. They’re trying to stop salt from coming in, and if it is coming in, they’re trying to tax it so that they can keep that monopoly going as long as possible to extract as much as they can from Bengal.

There is a perverse incentive going on here as well, whereby, obviously those revenues become very large, and so trying to keep those revenues large also creates the impetus to keep the hedge going. 

Then, in the 19th century—and you asked me, how does this come to an end? Effectively, under British rule, once it becomes a British empire rather than just the East India Company in charge, there’s a move by British civil servants to rationalize this whole system. They see that it has a lot of problems. They don’t think it’s fair. It’s just a rationalizing mood. They think it’s bad for the agriculture of Bengal itself, and so what they do is they start phasing it out. 

They essentially create a single custom zone for the whole of India, in stages, and then they try to work out where they can have alternative sources of salt. It turns out that using the railways, especially coming from the Sambhar [Salt] Lake, which they lease for a very long time and then eventually come to own themselves, that ends up being the main provider for all of India, including Bengal, which is a return to the pre-16th century Golden Age for Bengal, which is when they’re having these great big boatloads of salt being sent down from exactly that same place before it ends up being disrupted by wars.

Because the Sambhar Lake, I should have mentioned in the earlier—

RAJAGOPALAN: It’s close to Jaipur, and then you take the salt from Jaipur to Agra, and from Agra on. Between the Yamuna and the Ganges, there’s this big internal navigation system, and there’s just barrels and barrels of salt coming.

HOWES: Also, seemingly, the Rajas of Jaipur and Jodhpur, both of which I think share custody of the lake effectively because it’s on their border, they end up becoming powerful and throwing off Mughal rule as a result of the control of the salt. It’s one of the main things they’re able to fund that way, but then it’s the disruption that you get from their struggle that is one of the reasons that Bengal ends up suffering quite a bit.

I don’t know about the long-term effects as to whether or not you could blame it on that regime having taken this very, very, very long-term toll. Maybe. I think I have more optimism about economies’ ability to bounce back once restrictions are lifted relatively quickly, but it’s possible that there have been some long-term economic scars.

RAJAGOPALAN: I would draw the relationship not in terms of, it’s impossible to bounce back from the great hedge, but more as, let’s say, for a 50-year period, there was one side of the hedge where salt was much easier to produce and relatively plentiful and could be used to export. You could levy enormous taxes on it, and you could just invest more in the trading routes and the ports, and the navigation systems in those areas.

On the other hand, you have places like Bengal where they’re sleeching, and it’s just such a ridiculous way and high-cost way of producing salt that it’s beyond the point. It doesn’t make sense to make investments in the public infrastructure of that area that can also be used for other trades. I would think that is more likely the relationship. It’s the state-capacity relationship more than it is the, “Oh, salt seems to have gone away, and the custom seems to have gone away.” Does that make sense?

The Rationale for Taxing Salt

HOWES: Yes. I think there’s something to that. It’s interesting also to look into the rationale for taxing salt, which comes up again and again, is that there’s a kind of catch-22 or chicken-and-egg problem, which is that from the get-go, the East India Company officials say, “Well, we’ve got to tax something,” because you need to pay for public goods or what they see as public goods. Even just the basic maintenance of all the state officials and all that kind of stuff. They say these things need to be paid for, but Bengal is so poor—since the 17th century, it’s had that decline where it’s raided by the Arakanese. The whole coastline has been depopulated. People have had to move inland. It’s had this cut-off from trade, in general.

RAJAGOPALAN: They’re taxing agriculture about as much as they can.

HOWES: Right. They’re already taxing agriculture, which is also an energy tax because it’s grain. It’s directly your calories [that] have been taxed. You’ve got land taxation, and so they think, “Okay, what’s the best way of taxing something where you are not just taxing the farmers but also taxing the towns and cities, and they think something approximating a poll tax, something close to a salt tax is maybe the way to go.”

Then, of course, a salt tax is actively keeping back the region at the same time when under the English it should have been bouncing back because you’ve now stopped having all these border raids and slave raids along the coast. All of that disappears once the British—or even before that, during the early 18th century—that should have already been on the decline.

I think it stultifies them and keeps them held back. From a political economy perspective of having created that structure, the incentives have been created for the government of Bengal, the EIC presidency. It was extremely perverse.

The Western European Salt Trade and Land Control

RAJAGOPALAN: This is not just like a British folly and the East India Company having terrible incentives and profiteering from the colonies. You see salt tax or salt tariffs pretty much everywhere, especially in Europe. 

The second part of your series talks about how this basically affects the northwestern and the Baltic trade, even the southern states actually, but pretty much all of Western Europe is in some sense impacted by whoever decides to tax the salt, whoever can produce it the cheapest, whoever can use it the best, whoever can transport it the fastest and cheapest. 

What’s going on in Europe, which is different from India, now that we don’t have these bad East India Company incentives?

HOWES: This is why I started by saying that rulers for all history have taxed salt because it’s a good thing to tax. Again, it’s not like they weren’t already taxing it to an extent in India. It’s very difficult to find really good accounts of what exactly that tax looked like or how exactly they were doing it. From what I could tell from pre-EIC Bengal, they effectively had a state monopoly on salt mines, which the Mughals then farmed out to certain merchants, typically, it seems, Catholic Armenian merchants, which is very interesting. A whole dynasty of them seemed to be in control of the salt. 

What’s unclear from that is exactly how much they were taking in terms of the tax wedge. How much of what they were charging versus how much it cost were they are actually taxing people? You can’t just say, “Oh, there’s a particular rate.” It’s a bit more complicated than that, given different regimes tax it more directly than others. But, yes, basically everywhere is using salt taxes. 

I think a lot of the form that European states take is itself predicated on salt control. For example, France. France makes its salt up in the Normandy coast, where they have a version of sleeching. Cotentin town in northwest Normandy. Then you’ve got salt on the Bay of Biscay, but particularly the Bay of Bourgneuf, which is often called “bay salt,” which is solar salt on the Atlantic coast. So not just the sun, but also the wind there is extremely good at promoting evaporation to get more salt. Then, you’ve got the Aigues-Mortes down in the southeast, near Nice—that area in the Mediterranean.

What’s really interesting about those is that whoever controls those salt sources—but particularly the western and the eastern one, the Normandy one is small, so less so—also controls the entire inland hinterland. Control of France is predicated on who controls those coastlines. In a way that you really see this with the French Wars of Religion when you’ve got the Protestant faction, the Huguenots versus the Catholics, usually under the Dukes of Guise. We could call them the Guises but we’ll just call them the Catholics.

There’s about eight Wars of Religion over a very short period of time, about 50 years. I can’t always keep track of all of them, but if you actually look in detail at which bits they fight over from the second one onwards, the Huguenots will go immediately for the western and often the southeastern salt sources. When they get them, they manage to get concessions from the Catholics. When they don’t get them, or problems emerge, then there’s a disaster. At one point, there’s a defection from one of their leaders to the Catholic side, which loses them the whole of the southeast. 

At another time they do manage to lose a bit of the western salt source because what they would do is they would seize the salt. They would then immediately sell it to the English or the Dutch or to whoever else was going to buy it, typically the English or the Dutch, who were again Protestants. [They would sell] not just whatever was stockpiled there but often the next years or a few years’ worth of salt production to fund the war effort. 

It’s like whoever gets this stuff is in control to the extent that in the 1620s, when it looks like newly unified in power of France under Cardinal Richelieu, famous for being the key figure, sort of villain in the “Three Musketeers”—Cardinal Richelieu’s big thing in the 1620s is that a strong France had a strong Navy so that it can control its own salt supply, but particularly that western coast bit. He puts himself as being the guy who’s going to be in charge of stamping out the final bits of Huguenots resistance in the west, where they fortify La Rochelle, which is the main city that controls the salt supply on the western Atlantic coast. There’s a fantastic 19th-century rendition painting of Richelieu looking out at the siege of La Rochelle because it’s almost emblematic of the final conquest of France internally that allows you to have Louis the 14th and that absolutism. 

The English have a last mad-ditch attempt. They see that this is what’s going on, and they try to send a relief force to La Rochelle to help the Huguenots to stop this from happening. It looks like a really weird war. It’s one of those wars in English history that no one’s heard of in the 1620s where they invade, and you think, “Why on earth would they have done that?” There’s actually a very, very good strategic reason. The one thing they had over the French was, if they could use their Navy to go into the west coast, they could grab them by the balls, so to speak. The moment they lose La Rochelle and the moment they lose all of these—there’s a few islands nearby that could be fortified too—that’s it. Once France controls it themselves, they also control the rest. So you see that in France. 

A good counterexample would be Germany. Germany famously throughout the 15th, 16th, 17th, 18th centuries is very much split up. You have the Holy Roman Empire, but effectively you have lots in separate princelings, lots of platenates and dukes and kings and all this other stuff under the umbrella of the empire, where the emperor doesn’t really have a great deal of control over what it is exactly that they’re doing. I guess it’s a bit like a federation in many ways.

I think the reason for that is if you look at the inland salt sources, they’re extremely dispersed throughout Germany in a way that’s not the case pretty much anywhere else in Europe. If you go even a bit further east, there’s a salt mine near Kraków in Poland, the Veelixers salt mines, which you can still go and visit today. Extremely deep, extremely impressive salt mines. Whereas you don’t see that kind of thing in that middle zone. I think it’s one of the reasons that you end up with these separate principalities, that they have their own control of salt supplies going back very, very anciently. Whereas if it had just been a coastal thing or if you just had a single one nearby, that one person gains control of it they gain control of basically everything else around it as well.

Again, going into that example, think of the Austrian Habsburgs, who have, by the way, a lot of salt mines in Austria. Once they gain control of the kingdom of Bohemia, they never lose Bohemian it seems. I think there’s a very simple reason for that, which is Bohemian has none of its own salt supply. Once they gain control of it, as long as they can shut off competing salt sources, which [are] usually from Bavaria, which they especially do in the early 18th century when they find themselves on opposite sides in a war, it’s something where they can control the supply of it inwards.

Even when you get states where they don’t even necessarily have their own salt, if all the salt is coming inwards from a very particular area, that’s going to mean that the ruler of it can take control of consumption. You see it in Switzerland with many cantons, which also tax salt. You see it with Savoy just to the south of Switzerland where they don’t have their own but they contract with the salt suppliers in Nice. Then there’s just one mountain pass or two mountain passes that you can take to get that salt, and so they can tax it at ingress.

The Dutch Golden Age

RAJAGOPALAN: One of the things that I observed when you were talking about all the in-depth craziness going on in Europe is there are really two ways to get access to salt. One is through trade and the other is through control. This is the typical thing that’s going on in Europe in those centuries. Are you going to war and fighting for it or are you just going to trade for it? The great Dutch golden age seems to coincide with them just becoming better at trading salt and using salt rather than actually going to war for salt. Is that an accurate way of thinking about what’s going on? Is that an important pivotal point in Dutch innovation or Dutch progress?

HOWES: To an extent, yes. I think that part of the reason for it is geographical. I mentioned Bengal being relatively saltless and a body of water that’s all the more lacking in salt is the Baltic. It’s effectively a lake. There’s so much river water coming in that it’s effectively a lake. And it anciently—when I say ancient, I mean millions of years ago—used to be a lake, which then turned into a sea. There’s so much runoff of water from Scandinavia and all these other different places that it’s extremely, extremely low in salt, to the extent that I’ve even seen people writing in the 18th century about how [in] certain parts, and even near the coastline, you can drink the stuff. It’s not nice, but it’s drinkable. I believe you probably still could today but it wouldn’t be necessarily recommended. The further deep out you go, the better it’s going to be or depending on whether or not you are right next to a river. If you’re right next to a river, it’ll be relatively good. 

The salt is relatively lacking in the Baltic, and you lack many inland salt sources nearby as well with a few exceptions. One of them is the town of Oldesloe, which is right by Lübeck. Once the city of Lübeck gains control—so this is in northeastern Germany for listeners who are less aware of the geography of it. They manage to take control of the Baltic fisheries because you need salt to preserve the fish. Salt is absolutely essential for fishing. Then their rivals out in the North Sea, literally just across that bit just to the north of Germany that’s where Denmark is beginning.

On the other side, you’ve got Hamburg, which is on the North Sea, and they’ve got access just a bit upriver to the salt mines at Lüneburg. That’s a much larger salt mine than the one that you have in Oldesloe. They basically get control of the North Sea fisheries. Increasingly Lübeck is starting to import salt from Lüneburg via Hamburg through the straits of Denmark. 

This is where the interesting thing emerges, which is that you’d think that Hamburg and Lübeck would’ve been at each other’s throats, but they have a common enemy. They have a common enemy in the King of Denmark who controls the straits called Øresund or “the sound” in English, which is this strait where you have to go between that northeastern bit of Denmark or even Sweden.

RAJAGOPALAN: Between Copenhagen and Sweden basically is where that strait runs.

HOWES: Precisely. That strait is effectively how the Danish are ever powerful at all [in] that they can just take all of the trade coming in and out of the Baltic via the Sound, and they can tax the hell out of it, particularly salt, given there’s this lack of salt in the Baltic. Lübeck and Hamburg, and then various other cities as well that ally with them, they, in the 14th century, take down Denmark. They even gain control of the Sound. They form a league known famously as the Hanseatic League, of which Lübeck is considered the center.

They have various colonies of merchants that they put into various other cities like London and Bergen in Norway, and so on, where they’re like embassies or their own self-contained campuses of merchants. The actual core cities are often ones in the Baltic, including a few in Germany as well. They do all sorts of things like improving the roads between Lüneburg and the Baltic directly, so they don’t even need to necessarily go around the Sound. They share the charges put towards keeping these roads free of bandits, improving the roads. 

Then they start building up canals there to try and connect it. It’s not as good as sending it simply down the normal river, but it means that whenever Denmark starts to try and be a problem again, they can just punch them down again, which they increasingly do to the extent that Denmark and Norway and Sweden all unify into a single mega-kingdom, the Kalmar Union, it’s called. Even then they’re able to defeat the Kalmar Union, which is in the 15th century.

The Hanseatic League becomes extremely powerful. I think the origin of it is to do with that salt relationship and that core alliance between those two cities which then other cities come in on. They get in on the action from it. 

Baltic Salt and New Forms of Sleeching

Now, I mention all that because you asked about the Dutch and listeners are probably wondering, “Anton, why on earth are you going off about the Hanseatic League when this question was very specifically about the Netherlands?” The reason for that is that the Baltic is the key thing here. The access to Baltic salt is the key thing. The Dutch, they get in on the Hanseatic trade. Originally Lüneburg and Oldesloe seemed to be sufficient for the Baltic. But as the Baltic expands and grows and develops, the demand for salt for its fisheries outpaces those supply sources. Increasingly, Hanseatic merchants start going all the way down to the west coast of France, which I mentioned before, the bay. They buy up lots of bay salt from the Bay of Bourgneuf, and often they use Dutch pilots and Dutch ships, some of which are peripheral to the Hanseatic League, to do that.

Increasingly the Dutch think, “Well, actually, we’re a bit closer. We have much better access. We can do the trip going all the way to the bay and bringing it back to the Baltic before the Baltic cities can do it while they’re still locked by ice, and we’re going to get control of that.” They literally call it the “mother trade” of the Netherlands, which is, you basically take things from the Baltic, you send them to the Bay of Biscay and even further sometimes, to Portugal, and to the north coast of Spain, and so on, wherever salt can be made in the Atlantic, where it’s very readily available and very, very cheap because it’s literally just solar evaporation. Then you skim it off the top, right? They’ll take that stuff, and then they’ll bring it back, and that’s the “mother trade.” 

Then what the Dutch have is an added advantage which no one else really has, which is that they have also, for a very long time, been practicing a form of salt sleeching using their peat bogs. They’ve got absolutely loads of peat that they’re sitting on top of. When they dig out that peat, there’s often quite a lot of salt contained within the peat itself, and they come up with a way of refining that away in much the same way as the sand I mentioned before in the Bay of Bengal has been encrusted with salt. They can start removing this stuff. They often use peat to burn away the peat from the peat salt that they can then extract.

RAJAGOPALAN: The peat is not as good as coal, but it’s far better than forest timber, basically. The Dutch are just able to do it far better than them.

HOWES: It’s very energy dense. As long as you’ve got access via waterway, it’s relatively easy to do. They have absolutely loads of waterways, very famously.

RAJAGOPALAN: They have nine or ten cities. I don’t know if all of them are part of the Hanseatic League, but they have lots of these coastal cities where this trade is moving around.

HOWES: Increasingly they’re sidelined from the Hanseatic League as a result of them impinging on this trade. There is a bit of rivalry that starts to emerge. What they soon realize is that rather than just trying to extract salt from their own peat themselves, they can take the bay salt and then they can use the peat to clear out any of the dross from the bay salt and then refine it into a really high-quality white salt.

Bay salt is often called a black, brown—sometimes you even see references to gray or green—salt. Because what you’re doing is simply evaporating stuff that’s from seawater, it’s full of all these bitterns, all these other various chlorides and magnesium and stuff that’s in seawater, which adds something to the taste, adds something to the chemical properties as well. Sometimes you see mention of bay salt as being quite a biting salt for the flesh that it’s preserving, that it’s not necessarily always a good way of doing it.

Then the color of it, this black or gray, is often just from dirt. If you have an unskilled person skimming off the salt from the top. If they get a bit too much dirt with it, then that’s just going to discolor the salt, and it’s not going to be particularly high quality. You’ve just got sand and grit and mud in whatever fish or flesh or butter or cheese or whatever it is that you’re trying to preserve with salt. Bay salt is useful, it still has the desired effect, but it’s an unrefined product. 

For the best stuff, what the Dutch effectively start creating is a refined version where they effectively dissolve the bay salt and then re-evaporate this separated mixture, this purified brine, using cheap peat, which they have in abundance. That becomes, I think most importantly, the basis for the Dutch golden age.

You can really outline step by step the chronology of the rise of the Dutch pretty much around their use of salt, and then even moving into the next level, which is that because they’ve got all this access to white salt, they’re then able to send off these huge “herring buses,” they’re called, which are basically factory ships, which will just float off the coast in the middle of the North Sea [and] find the main herring catches. They’ll send out lots of little boats that will take salt and fish to and from these floating towns where they’re then not only catching the herring, but they’re then doing all the processing. They’re gutting it. They start to barrel it up.

They’re preserving. They do an initial preservation, and then once they send it back to shore, there’s a few extra stages where they can repack them in fresh salt, and so on, so forth. They effectively can create this really high-quality herring, which ends up being popular absolutely everywhere to the extent that they’re often sending herring to France to then trade for the salt that they’ve been using to make the herring.

RAJAGOPALAN: They’re also sending herring to England and Scotland from where they caught it in the first place.

HOWES: Right.

RAJAGOPALAN: The last time I saw you I was in the Orkneys. I’d just come off the Orkney Islands before I saw you in Edinburgh, and I’m like, “What do people do here? This place is cold and wet and awful. Why does this even exist?” In large part, it’s part of that herring fishing route, the Orkneys, the Shetlands, all of that.

Maritime Trade

HOWES: Yes, it’s part of the herring grounds. There’s loads of herring off there. A little further north, I think you might even have a bit of cod there back then. I need to double-check that because you’ve got the cod fishery up in Iceland as well or up that ways. Herring is seemingly the main one. Interestingly, red herring seems to be a reference to smoking herring, which is something that’s done off the east coast of England. 

It ends up being an extremely sore point to the extent that a lot of the modern international law that we have to do with maritime law—the idea of the open seas, the “Mare Liberum,” Hugo Grotius’s work on the open seas as being somewhere that you have this lack of restriction—that’s entirely a Dutch invention to justify them going into what the English see to be as their own waters to fish for herring and then selling herring back to themselves because they’re not able to fish it themselves. Because the English are often retorting to those sorts of arguments saying, “No, no, we have our own rights over our own coastlines, and these are actually part of our own domain.” 

It’s a very, very sore point. 1590, 1620, 1610, 1660s, well into the 18th century, you see loads of this stuff saying, “They’re literally stealing our fish and then selling it back to us,” is the argument that you see from English policymakers to an extent that—I haven’t looked into this yet, but it’s a preview of something I might write about in the future—I suspect a lot of the decline of the Dutch Golden Age is actually as a result of England becoming much more assertive over that. Once the English actually start ruling their own waves, which only really starts to happen in the 17th century, but when they properly cracked down on it, and they fight the Anglo-Dutch Wars in the mid-17th century, them taking control of their own fisheries is a large part of why the Dutch do decline in general or at least start stagnating and then declining. 

By the time Adam Smith is writing the 1770s, the Dutch are rich. They’re very opulent. They’re the heights of what you can achieve, but they haven’t been growing for a very long time. I think a lot of it is to do with partly that and also partly restrictions that the French also put on their trade to try and isolate them. Once you undermine the mother trade, I think that a lot of the other dominoes of economic development, or just industries that you see in the Netherlands, start to fall apart as well.

Why Did the Industrial Revolution Take Place in Britain and Not Elsewhere?

RAJAGOPALAN: Why didn’t the Dutch have the Industrial Revolution? When we think about it, it seems like that’s the place it should have happened first and before England. Everything seems to be going right, but they don’t quite have it. Technology diffuses quickly to the Dutch, and they’re very good about adopting things from all over the world, as are the English, but the Industrial Revolution does happen in England. Ex ante if you had to pick a spot in the world, that’s not the one you would pick. What’s happening there?

HOWES: No. I think, ex ante, clearly the place you’d pick in Europe, it’s what is present-day Belgium and the Netherlands. The Netherlands for many of the reasons I outlined, but Liège in Belgium has coal. It is by far the main coal supplier in Europe before the English. The deepest mines with the most going on in terms of the adoption of coal in various industries. Liège is doing it long before the English are doing any of this stuff in the 16th century. 

By far the biggest shock to the system is the Dutch revolt or even the oppression that you get for religious reasons from the Habsburgs for whom the Low Countries had been their capital. Charles V, if I recall, is born in the Low Countries. He’s the main Habsburg emperor who unifies it all. When, due to the reformation, especially under his son who moves the coal to Spain, Philip II, there’s this big crackdown on trying to introduce the Inquisition to the Low Countries, that’s when a lot of the problems emerge. Then the Spanish spend all of their remaining treasure trying to conquer then reconquer, at various stages, the Low Countries.

You have this 80 years of war, of which the Twelve Years’ Truce is part of it, but just [a] constant, constant, constant waste of money that’s going into it to the extent that it probably is what results in Spain and Portugal not being the places that end up seeing a lot of progress earlier on [in] the 16th century like you’d expect because all of their resources are being spent on paying for the army in the Netherlands.

In the early 16th century and in the 15th century as well, the Low Countries are by far the most advanced part of Western Europe, bar maybe northern Italy, but with a lot more of the advantages going for it, not least that it’s relatively unified until that big split and that split turns it into a border zone where there’s constant warfare and so much wasted energy and time and resources and money going to fortifications and just trying to move the needle a little bit this way or that way and have these great big forces of mercenaries, and so on and so forth. Now, you might argue that in some respects, the Dutch Republic emerges as a result of that struggle with many of the quite good institutions that enabled it to fight it. 

I’m skeptical in that some of the institutions that they build upon were already present beforehand. It’s clear that they’re already an industrial powerhouse because England, up until the 16th century or even the mid-16th century, I’d say 1550s or 1560s, is overwhelmingly agrarian agricultural. It makes raw resources. It makes tin. It makes wool. It started making cloth, but it’s always the intermediate type stuff. It’s white broadcloth, woolen broadcloth, which is then exported to the Low Countries to be processed further, to be dyed, to be finished, and to have all these other things going on with it. It’s got coal. It’s got wood. It’s got grain. Usually, those are the things that grow the most as export industries whenever you see changes in the money supply or changes in foreign exchange. So England really doesn’t seem like the place that it’s going to be happening. 

In many ways even, I’d say that London only grows as a satellite city to Antwerp, which is the main 16th-century source of a lot of the economic progress, economic vitality, you might say, of the 16th century. Then the siege of Antwerp is the key thing that brings it down. The Spanish go in. They absolutely sack the place. Eventually the Dutch to the north, the Dutch Republic, manages to then close off the river that gives it access to the sea, and Antwerp ceases to be the major place where everything’s happening. It’s still a major city, still got lots going on, but London gains that opportunity to overtake it quite dramatically.

There [are] other things going on as well in England at the same time, but any extraterrestrial visitor visiting the world and being like, “I’m going to put my money on this region,” and having a bet with their further extraterrestrials, I think they’re going to say the Low Countries.

RAJAGOPALAN: What happens there? There are two parts to the Industrial Revolution. Some of it is just having the institutions, the peace, all of that stuff, a Glorious Revolution. The second part of it is what Matt Ridley calls, “ideas having sex.” That sense of people just talking to each other, tinkerers talking to scientists, scientists talking to engineers, engineers talking to painters and designers, and then something emerges from that. How does that come about in England, which is this place that’s not doing very much for many centuries before that?

HOWES: It’s doing very little for centuries, and even, I would go further than that, it is one of the places to do the worst after the Black Death in the 1350s. Its population recovers extremely slowly, which, from a military perspective alone, is a big, big deal. 

Now, from an economic perspective, it’s a big deal too, in that it’s effectively stuck in this deflationary stagnation for about 150 years, from roughly the 1380s onwards, with ups and downs, of course. Relatively speaking, if you look at price levels and you look at complaints of money shortages, coin shortages, it’s really got this major problem to the extent that England also demographically can’t be anywhere close to how it used to be during the early stages and mid stages of the 100 Years’ War. Because France recovers so much faster in terms of population, having been about three times the size of England, not counting what England owned in the southwest, Aquitaine and all these other duchies that it had very anciently, [France] then, by 1500, is seven to] eight, at least, times the size of England. It’s a huge shift in relative advantage because aggregate sizes do actually matter. It’s not just relative stuff.

Some people say, “The less population following the Black Death should mean higher real wages for everybody,” but it doesn’t seem to be quite as much of a bounce as people had long thought. Some of the latest work that you see—when they contract annually in terms of annual wages there’s really not that much of a bump. What bump there is, is only seen by males and not by women. By 1500, women are back to where they started again after the course of the 15th century, more or less. Yes, it’s really behind. It’s stuck in this deflationary cycle. There are various reasons for that. Some of them I think are partly monetary.

Things start to take off again, I think in the mid-16th century, just after they’ve gotten a whole lot worse. I think what happens is that by the 1540s, 1550s, England is in such a bad state, such crisis levels, that you finally get people coming in who see a potential for things to be slightly different. I’m talking [about] my future book now to paint a picture here: Henry VIII comes to power towards the beginning of the 16th century, or just after the beginning of the 16th century, and he decides that he wants to be like Henry V. He wants to be like King Arthur or Edward III. He wants to be the conqueror. As I’ve mentioned, France is now a hell of a lot more powerful than it used to be, relatively, but he keeps going. 

He’ll fight the Scots just to try and distract them so that he can keep invading France. He’ll occasionally capture a city or two. He captures Tournai in the 1510s and then Boulogne in the 1540s, both of which have to be sold back to the French because they’re so costly just to hold. Because they have to fortify, garrison them, they end up losing 90% of the money even having sold it back given just how costly it was both times.

You have this constant, constant, constant effort to try and conquer bits of France, none of which result in anything and actually result in them completely alienating the Scots in the 1550s, to the extent that the French send an army to Scotland and pretty much take control of all of the fortifications. France ends up being in control of both the landholders: the landlord of the north, being that was Scotland, the landlord of the south, being that around Calais, which was, for this entire period, in English hands. Then in the 1550s, Calais has finally lost. That land border is closed.

In order to pay for all these wars, Henry VIII not only taxes the hell out of his people to an extent that is absolutely shocking. It’s completely unprecedented. The way in which these taxes are levied is either you pay it as a proportion of your rent, the rent you’re receiving as a landlord, or if you are anybody else, you pay it as a proportion of your assets. It’s effectively these quite large wealth taxes at a time when people don’t really have that much coin as a proportion of their wealth. Every time there’s a war, there’s this deflationary spiral because everyone has to sell things off just to try and pay the tax.

You see goods just being dumped on the market because people are having to pay. When I say assets, I’m talking the value of their lease, of their goods, of their stock and trade. The value of everything, including household furnishings, but not including the clothes that they wear. We are talking a really quite severe wealth tax, and it’s not just the rich paying them a lot of the time. He’s constantly subjecting the country to not only this but all the wastage of lives that you are seeing in the 16th century.

Then the worst bit is that in the 1540s, they basically run out of money even through these means, and they start debasing the currency, which means that they put more and more copper alloy rather than silver in the currency. Now initially, that may have had positive effects because I think one of the reasons that England for very long has this post-Black Death deflationary period is that they never debase. They do it once in the 1460s, and they occasionally have these smaller ones—defensive debasements that are required because other countries nearby are debasing as well.

You have a pretty much near collapse of the English state. Everyone’s pointing fingers at everyone else. Social cohesion completely collapses. You see these huge revolts by not just the poor, but we are talking people who are often even wealthy yeoman farmers, and so on, attacking landlords, tearing down their hedges, taking them prisoners, sometimes even murdering them. You see the mass protests across the country and then all the policies that you might expect when inflation is the problem. Where by proclamation or by acts of parliament you start seeing price caps. You start seeing restriction of wages. You start seeing export bans—anything you can think of to try and bring inflation down except for simply rebasing the currency. 

Economists disagree all the time on these sorts of things even when they’re experts. There’s a tiny, tiny, tiny proportion of the population at the time, especially when illiteracy is so high. Basically, a few people who work at the mint, and a few goldsmiths, and a few international merchants are the only people in the country who understand what the hell has happened. That they understand that debasement is the root problem of all of this inflationary effect.

To put it one way, the money supply pretty much triples over the space of just nine or so years. It’s really quite dramatic, but everyone else is pointing fingers at middlemen and greedflation and all this other stuff. This tiny group understands what’s happening. What’s astonishing is when I started to look into this, I realized that this tiny group of people are pretty much the only people who are also the initial shareholders in all of the joint stock corporations that are created in the 1550s. They’re the backers of all the voyages of exploration that England hadn’t been doing up until then but suddenly starts doing in the late 1540s.

RAJAGOPALAN: They’re a bunch of finance dudes of that time.

HOWES: It’s a bunch of finance dudes. Some of them are also civil servants and officials, and they have some friends amongst the politicians. What’s interesting is often their politician friends end up being sidelined for saying, “It’s actually debasement-like.” 

There’s this great piece which I think should stand in history as one of the most important economic treatises ever written, and it is cited a lot but not for this reason necessarily, which is called “A Discourse of the Common Weal.” It’s a discussion between a knight, a farmer, a merchant, a capmaker, and then a doctor of civil law. The doctor of civil law is the actual author, and he’s the one explaining that it’s actually debasement, whereas all the other people are saying, “The merchant’s putting up my price.” The merchant says, “Oh, but my suppliers are putting up their price.” The suppliers are saying, “Yes, but I have to pay higher wages and higher rents.” The landlord says, “Yes, I’m having to put up the rent because I have to pay more for these imports and all these other luxuries and all this other stuff.” It goes systematically case by case by case by case and draws it all the way back to debasement.

RAJAGOPALAN: This digression and debasement aside, how do they turn it around?

Solving the Problem of Debasement in Britain

HOWES: They turn it around because they realize—and I think this is important—debasement is the catalyst. There’s a reason I’ve got on the digression. It’s not my “Digression on Silver” exactly, but it’s close. The reason for the “Digression on Silver,” Smith-style, is that these people are unified around what they see as being wrong with the country, which is this financial problem. To solve the financial problem—it’s actually harder than it looks because you can’t just snap your fingers and change the currency back. The reason for this is a technical one, which is that it’s relatively easy to debase a currency because you just add more copper. If you’re going to rebase it, it means you need to reduce the copper content. 

Now, what you could do is you have lots and lots of silver and you just add more silver in and then you change the proportion. If it’s 50/50, you can add lots and lots of silver until it’s back to 90/10. The trouble is it’s very difficult to come by a lot of silver like that very easily, especially given you’ve been doing so much debasement so that by that stage, currency is often coming to the mint and then it’s immediately coming into the currency. People are effectively hoarding the stuff or they’re sending it abroad instead. The bad money is driving out the good because people have every incentive to hold on to silver because it’s becoming more and more valuable compared to the coin. For every gram of silver, you get more pounds or shillings and pence. 

Or you have to hire a bunch of Germans who know the only way of removing copper from a debased currency using a technique that they’ve kept secret, but even if it’s not secret, it’s very, very difficult to do at scale.This group teams up with a bunch of Germans who also happen to have all sorts of other inventions, [and] are extremely inventive Germans, mainly from Augsburg, some from Nuremberg. They bring over moneyers. They contract with them to come and do this. This is the influx that you see of skills in things like metallurgy and mining in particular but also in various other things in order to basically create that silver to solve the recoinage.

At the same time, just before this is happening, they finally do a recoinage in 1560 to 1561, and it’s seen for the whole of Elizabeth I’s reign as being her big achievement. Not just the war stuff, not just settling the religion and stopping the dissension between Protestants and Catholics, but the recoinage is always listed in those top three. 

At the same time, before they managed to get that through, what they’re trying to do is build up a stock of silver through trade. Hence, you see all these same people thinking, How do we try to create more trading opportunities for England? Let’s send off voyages of exploration. Let’s send people off across the Atlantic. Let’s send people off in search of a northeast passage because that would be closer to Britain. If we could somehow go all the way up around Scandinavia, all the way around Russia, directly to China, Japan, maybe there’s a way that we can start selling English broadcloth, basically whatever exports we’ve got, to other parts of the world, into the Mediterranean, down to the coast of Africa, wherever they can.

It all seems to be hinging on, “How do we get more silver? How do we get more bullion to put back into the coinage?” given they couldn’t yet work out the other way of doing it. I think the two things that are most important about England suddenly having this flourishing of all sorts of different industries are very related to that project, which is, “How do we undo the debasement?” Bringing in skills is part of it. Coming up with lots of innovative ways to try and get people with skills to come to the country, to attract that kind of—not just foreign investment, which is effectively a lot of what it is—but also foreign investment of talent into England.

A lot of the early patents are effectively indentures with the crown to say, “We will bring in such and such investment. We will bring in such and such many skilled persons, and we will, within the duration of the patent, train such and such many English people to do it as well.” They’re often industrial transfer contracts, is the way to think of the very early patents that have been used. 

The same with the joint stock corporations they start to innovate. What becomes the Muscovy Company is actually just the Company for Discovery of New Lands. The Company of Mines Royal, the Company of Mineral and Battery Works, all of these things are set up so that they can try and attract these foreign investments or so that they can—because they’re extremely risky, these are very high-risk things that the government is trying to do—try and do it through private means rather than through spending its own money because they’re broke. For the rest of the 16th century, even the 17th century, English kings are remarkably broke.

Again, weirdly I think that’s part of the secret to the success is that they create all these ways in which they can get market actors or a lot of other people, a broad swathe of people, to do invention for them rather than just being direct funders themselves, where you end up with a lack of robustness.

The Path to the Royal Society of Arts

RAJAGOPALAN: A big part of your project in your book—this is “Arts and Minds: How the Royal Society of Arts Changed a Nation”—one of the big arguments is just how to get people to care about making things better. This is not just one or two people or one or two people who have skin in the game. It’s actually quite weird in that sense, your project, which is how do we get people who don’t have very much skin in the game to come together and just want to improve things? 

When does that switch happen? That’s another weird thing I would not expect in England at that time. You would expect this in Florence. You would expect this in Antwerp, maybe even in some parts of France. If you go east, you would expect it in some parts of India or some parts of China, but England doesn’t look likely as a place one would pick for people just suddenly deciding, “We want to make everything better.” 

HOWES: In a way, success begets success. Once you start seeing these institutions being created early on, and they start finding successes—the Muscovy Company does find Muscovy, so it opens up a trade with the White Sea, Arkhangelsk, up in the north. It gets the name, the Muscovy Company, as a result of the discovery. It doesn’t find the northeast passage, sadly for it. They’re very disappointed by this.

Later on, they continue trying to innovate by getting involved with Arctic whaling and all sorts of other industries as well, again trying to bring in foreign expertise because that was often done by the Basques. They do try to stay ahead of things, but that group of shareholders also commissions various other voyages of exploration out to the northwest and other parts of the world as well.

RAJAGOPALAN: The Spanish and the Dutch have a head start in that, right?

HOWES: They absolutely do. Actually, one thing I hadn’t realized until very recently, which will go into the next book, is the extent to which the English had been banned from trading and exploring, not by the Spanish or the Portuguese, but by their own monarchs because they were afraid of diplomatic incidents. There are voyagers of exploration in the 1460s and ‘70s, or attempted ones where they’re asking permission, and they’re being told, “No, we don’t want to ruin relations with the Spanish or the Portuguese. They are our allies.”

[It is] often famously said that the Portugal and England have the oldest continuous alliance. That alliance was one of the key things that was keeping back the English from ever doing an exploration because no one wanted to piss them off. Same during the 1550s. There’s quite a lot of literature that’s suddenly published in the 1550s to try and convince the English to do more voyages of exploration. What’s really interesting about them is that they’re intended for the new rulers of England, which are Mary but also her husband, who is Philip, who’s the future Philip II of Spain, who doesn’t want any competition. In the 1580s, he also becomes king of Portugal, combining the two mega empires, Portugal and Spain, [which] end up under the same ruler from the 1580s onwards. 

Yes, you’d think they’d have this major advantage, but what happens in the 1550s and ‘60s is England is so diplomatically isolated also as a result of these wars and as a result of the change in religion. It’s not necessarily that England is Protestant that matters, it’s the fact that England isn’t Catholic that matters. Which means that they end up basically being given a free pass to go and do voyages of exploration.

The Company for the Discovery of New Lands sends off its expedition literally weeks before Edward VI dies and Mary comes to the throne. Then a lot of the extra stuff that you see later on happens in the 1560s and ‘70s under Elizabeth, who is like, “Ah, I don’t care that much about relations with the Habsburgs. They’re basically our enemies anyway. It comes and goes.”

“And I need the money, I need the cash. I need some way of getting this stuff.” There is a big, big propagandistic effort during those periods to try and make the case that this is what needs to be done. They’re also making the case for establishing colonies in North America, none of which succeed until they finally get the go-ahead to do stuff in the early 17th century. It’s basically the next generation of the same group of people. 

The manner in which the group of inventors is born in England I think has a bearing on it. The context of a broke Crown is important. I think the context of having to create institutions, often with Crown support, that will make the Crown rich, but without the Crown funding it directly—getting private funding is important. 

Things like joint stock corporations are basically about being able to share the upside in an extremely risky venture and also broaden the downside from it as well. Any new industry has this, but mining and exploration are especially risky. Basically, it’s like a shot in the dark—you have no idea—but it’s a very expensive shot. You send off that bullet, and it turns out you broke the bank on just that one thing, and, hopefully, you’re going to hit the thing that you wanted, which is a new trade route or a new seam of copper or whatever. These are extremely risky things. Coming up with that institutional infrastructure to be able to do that risky venture also then means that less risky things can also benefit from that as well.

The Dutch almost ironically end up doing this better than the English because the Dutch East India Company is much more advanced and is able to do a lot more than the English one is, not just from the structure, but because before the English, they end up realizing the power of having a secondary market in shares. That it’s not just this ability to be an investor yourself, but your ability to sell your investment on and having a market for that turns out to be just as important, if not more important. They’re increasing the scale because they’re sending off ships left, right, and center, the English are. As I mentioned, there are reasons that the English end up on top, many of which I think are as a result of so much of the Dutch being reliant on this underlying mother trade that then gets disrupted.

RAJAGOPALAN: That story of Amsterdam’s Stock Exchange as arising spontaneously as a private institution is one of the more fun things. I think Ed Stringhamwrote about it, but I may be wrong with the reference. 

In this book, “Arts and Minds,” there are a couple of things going on. When we normally think of what leads to progress and economic growth, we talk about how institutions matter or how geography matters. You have Mokyr and a bunch of people talk about how culture matters. You have Deirdre McCloskey who’s talking about how liberty matters. All of that. It’s not like these are separate silos. They interact with each other, institutions interact with culture and liberty, and so on. 

Now, one of the things that comes out of how the Royal Society does things is it’s a particular culture, like the ‘culture of tinkerers and improvers’ that matters. That’s the main thing I get out of your book, which is, we don’t just need people to think big ideas. We like people who are constantly tinkering with things. Why doesn’t that take up in many other places and when does England lose it because it’s lost?

HOWES: Oh, okay. That’s a bold claim there.

RAJAGOPALAN: I would say a lot of things about England, but I would no longer call you a country of tinkerers and improvers.

A Culture of Tinkerers and Improvers 

HOWES: I’ll say this, I think there’s more improvement and innovation going on in the world today and in most countries today than ever before. I think that’s actually even the case for Britain. It may not result in unicorns and whatever measures that you might like to think of, but there is quite a significant degree of improvement going on. 

One thing I will say, you hit the nail on the head there with what you said that the key to invention isn’t the big, bold ideas. It’s actually the marginal improvement. It’s the constant optimization of things. I don’t think it’s unique to England. I think that is actually what defines inventors in general. I call it the improving mentality. People who have this mentality of constant optimization, constant improvement, 1% every day or 1% a month or year or whatever, those are the people who are actually driving progress. 

I think it becomes especially common in England very early on, I think during the 16th-century phase, late 16th century, early 17th century, to the extent that by 1700, when most people are even starting their studies of why the Industrial Revolution happens, it’s already a done deal. It’s not in the air. It’s not like everyone has it in the same way that not everyone who lives in San Francisco has a startup. There is a big subculture already in England at the time and quite a dominant one that everyone else is now jealous of. The Spanish, the Russians, the French, they’re all sending people to England to figure out what the hell is going on in the same way that we send trade delegations to Silicon Valley being like, “What the hell is going on? What is in the air here that we can try to bottle up and bring back.” That’s exactly what’s happening in England at the time. 

That improving mentality, I think, has still continued to spread, but I think England lost its advantages in terms of its first-mover advantage just because it’s spread to other places. 

RAJAGOPALAN: They lost the first-mover advantage. Fair enough. Having said that they lost the first-mover advantage, to some extent it spread to the US. Even at the Great Exhibition though, these people talking about how they thought the United States was like the backwaters, and the US comes with some fantastic exhibits. 

Today, even though China might be what I call the leader of the tinkerers and the improving mentality, it doesn’t seem like the US has lost it. It does feel like England may have lost it.

HOWES: Yes, maybe. Certainly, the US hasn’t lost it, I don’t think. I think I’d always bet on the US nowadays in the same way that I’ve always bet on London. I think London hasn’t lost a lot of this. There’s a lot of ruin in the nation. There’s certainly a lot of ruin in the city. Of all the investments you could have made in the past 500 years, if you’ve bet on London, you would’ve come out on top just because it’s grown so much. There’s maybe a period in the mid-20th century when things aren’t so great because it shrinks quite a bit. For the most part, London has really been going gangbusters and seems to be able to reinvent itself continually.  

I think maybe to an extent you’re right. I do think there’s certain fundamentals that maybe England should just get better [at], or the UK should get better at, in terms of energy, in terms of planning in particular, in terms of all the kind of things that can allow us to have agglomeration effects could be unlocked.

Certainly, I’m not being Panglossian and saying there’s no problems, but I think a lot of that stuff is latent, and it’s waiting to be unleashed again. I don’t think any of the cultural stuff is especially gone. Maybe it’s dormant, is one way of putting it. If you don’t have outlets for these things, they go dormant, and maybe they start to stagnate and decay away. 

Also, considering how much ideas now travel through the internet, the capacity, especially in the English-speaking world, for America to re-influence Britain is very, very high. 

The Society of Arts’ Aims and Legacy

RAJAGOPALAN: I also mean minor stuff. One of the most charming examples you have in the book is how the Society of Arts had a prize out, or premiums as you call them, for improving chimney sweeps because this is a time when little boys, very similar to this Dickensian description, were chimney sweeps, and they died cleaning. They literally fell to their death or got asphyxiated because of the soot and so on. They wanted a way to basically make it very costly to have child labor and relatively simple to clean.

HOWES: Well, to take their jobs basically.

RAJAGOPALAN: Exactly. Basically to take children’s jobs. Also, because kids were being kidnapped to become chimney sweeps and stuff like that, right?

HOWES: Yes.

RAJAGOPALAN: It’s a pretty terrible story. You go to England today, and English homes are famously uncomfortable. When was the last time you got a slightly less draughty window or a better heating and radiator system? When I read your book, it seems like that’s the sort of stuff they were going for like, “How do we actually improve people’s everyday lives? How do we improve the lives of people on a ship and seafaring sailors and naval officers?”

HOWES: I think that’s true. Certainly, when I think of toilets, this is one that makes me almost angry. I visited Japan last year, and the toilets are amazing, right?

RAJAGOPALAN: Oh my God, yes.

HOWES: The TOTO Washlet is like—it is peak.

RAJAGOPALAN: We get them at Costco. I have one.

HOWES: Do you actually? I’m very jealous. It’s so expensive to get here.

RAJAGOPALAN: I don’t have the fancy Japanese version. I have some American abomination version of it, but it is the TOTO brand.

HOWES: I think I want the one that’s automatic and self-cleaning and does all the shebang. That is absolutely crucial because they just have them everywhere. It’s like literally everywhere. They have peak toilets in Japan and that should be Britain. The same with the bullet trains, that should be Britain.

When I say that should be Britain, I don’t just mean, oh, it’s a shame, we don’t have that. I mean literally it should be because we invented both of those things. Thomas Crapper, very appropriately named, invents, I think it’s the U-bend. Then Alexander Cumming, a Scottish watchmaker, invents the S-bend. Maybe I’ve got those mixed up. Basically, these British inventors come up with the basic infrastructure for how toilets work. They do this a long time ago, and you’d think that nearly all the innovations would’ve continued coming from Britain because of that improvement.

RAJAGOPALAN: Yes, but they don’t.

HOWES: And they don’t, and the same with trains. Fascinatingly, at the Kyoto Railway Museum, their whole story literally starts in Britain and goes, “Here’s all the British inventions, and then we sent people over, and they copied this, and they brought it back.” Then from the ‘60s, ‘70s, ‘80s, they’re well ahead of what Britain’s doing. Yes, I agree we’re behind. We’ve got a lot of catching up to do in terms of redoing what we used to be very, very, very good at.

RAJAGOPALAN: I’m not just dissing England. I guess the broader question is minor things. I use sunscreen, and the difference between Korean or Japanese sunscreen versus whatever goop they are selling in the US and Europe, it’s staggering how different that is. I have recently seen the inside of one of the BYD electric vehicles, and it’s like a spaceship. We have nothing quite like it. If we had the Great Exhibition of 1851 today, all the marvels would come from Korea and China—

HOWES: That’s why we should do it. 

RAJAGOPALAN: And maybe from Texas because of Elon Musk, but largely, that’s where the stuff will come from. I guess that’s what I’m asking. Where did that spirit go away? Is it because of the decline of the Royal Society of Arts? Is it just some other cultural decline in England? Is it all these other places picking up? What’s going on? They don’t have an equivalent of the Royal Society of Arts, and yet they are countries of tinkerers.

HOWES: I think the Society of Arts in many ways is a late-generation institution. It emerges in 1754. It’s part of a project that you see for many years. Just to explain to listeners who wouldn’t be familiar, you have the Royal Society, which is the pre-eminent scientific institution found in the 1660s. The Royal Society is meant to both do science and invention originally but turns out science is much sexier than invention because if you discover a law, your name is on that for eternity, like Boyle and Hooke and so on, Newton. If you invent something, then you’re superseded within five, ten years, and everyone forgets it unless it was particularly crucial, and very few inventors get that. 

So they wanted to come up with a specific society that was just about invention. There’s a few different projects, but the 1754 one is what becomes what is now the Royal Society for the Encouragement for Arts, Manufactures, and Commerce. The role is only added in 1908, but for a long time, it was basically just called the Society of Arts. That’s what it does, is it gives prizes for inventions, and specifically non-patented inventions because the idea is that if something’s been patented, there’s already a market for it. There’s already investment going into it. You don’t want to duplicate that. You want to give prizes where it’s actually going to have the highest added value, which is where people aren’t already investing in things, hence, where you have a lot in improvements that are often quite marginal or to things like safety: to consumer safety, to worker safety, to rescuing people’s lives during a shipwreck, all that kind of stuff. There’s all the chimney sweeps, as you mentioned, which is my favorite one.

Then they shift in the 19th century, however, to the Great Exhibition or even exhibitions in general, where the whole idea is you expose people to all these different types of technologies that they may not already be aware of. Both producers who then see the TOTO Washlet and they’re like, “Oh my God.” Armitage Shanks goes, “We should be making this too. Why aren’t we doing this?”

You crucially also expose the consumers because then the consumers turn around to their producers, their local ones, and say, “What the hell are you doing? We either should be importing this stuff or we should be making this ourselves,” it elevates their expectations for how things ought to be in a way that you can get through foreign travel, which I guess has a Great Exhibition style effect, but it’s all the more concentrated when you do it all in one room over the course of [a] period of months where everyone can see all this stuff all at once as well. Then you can create a focal point to discuss these things, to talk about them, to have all the meetings, organizations, and discussions straight away about how to catch up. 

What’s fascinating about the Great Exhibition is often you see it portrayed as being, “This is Britain showing off to the world how great it is.” No, it’s born of paranoia that Britain is falling behind. Crucially, the project of its organizers is that they’re worried that the United States, the French, the Germans are catching up and they’re potentially going to supersede what Britain is doing. 

I think, in a way, maybe the problem is that Britain lost its paranoia. I think this maybe happens around the 1950s, 1960s where you have that paranoia in a “Britain stands alone against Hitler” kind of way. You have the self-sacrificial elements that occur through rationing and people digging up their gardens to grow vegetables and then creating that kind of wartime spirit, but it then doesn’t manifest itself later on, or it fizzles away with the new technology. 

That’s not to say that you don’t see these kinds of gambles on new technology—the jet engine. The UK until, I think, the 1970s has the most civil nuclear production of any country. They are taking a few of these gambles, but seemingly around the ‘70s and ‘80s, that has started to dissipate and they’re losing their lead. France ends up being the place that builds on the nuclear power stations and is still using all this nuclear power, electricity that we’re now importing because we just suddenly stopped. I think it’s maybe mid to late 20th century, but I’m not a historian of the 20th century, so don’t quote me on these just very general perceptions of when roughly things may have gone wrong.

I do think I know what the solutions are, and they are things like holding great exhibitions, creating more institutions like what the Society of Arts used to do. Now it shifted quite considerably in what it does. It’s more think-tanky. It does various campaigns, and as an institution, it does have to constantly reinvent itself because its whole mandate is just, “Improve things.” That’s a very, very broad thing. That can end up being social improvements as well as technological ones.

RAJAGOPALAN: Also, simple things like improving universities, investing in universities, bringing the best and brightest from other parts of the world. There are things that England did 500 years ago which are along those lines, and even those low-hanging fruit don’t seem to be on the table anymore.

HOWES: The university sector is still pretty strong, it seems, in the sense that everyone wants to go to British university. There’s some kind of X factor that they seem to have. Whether or not that will persist given the sheer scale in which they’re now taking students given debasement of the qualifications is potentially an issue, but even a qualification seems to be, in some ways, for general use something that emerges from the Society of Arts in the 1850s. Obviously, you used to have public examinations for civil services. The Chinese obviously had their civil service examinations going back hundreds and hundreds of years. The idea of having a qualification that you then take to any employer and say, “This is my proof to get a job,” seems to be something that emerges in the 1850s and in Britain.

RAJAGOPALAN: In part because of the East India Company Civil Service and Macaulay.

HOWES: Yes, partly civil service.

RAJAGOPALAN: This is a good place to ask you the question. The civil service examinations aside, you have James Booth, who wants to have this instruction-form mechanics, like a school-leaving examination which eventually becomes the GCSE and so on. 

Theories of Progress 

I have a broader question, and I’m probably going to phrase this in a clumsy way. If you think about the Royal Society of Arts, the way you start the story with William Shipley and then Henry Cole, is a very broad idea of progress. They don’t pick and choose, “We want only visual arts or fine arts or engineering or mechanical improvements.” It’s pretty broad. There’s a whole movement for conservation. There’s a movement for making seafaring more safe. There’s stuff going on for chimney sweeps and then there’s some abolitionists who join. It’s very, very broad.

If I think about a growth theory that fits that, it would be something like Paul Romer’s endogenous theory, which is, you have to invest in ideas, knowledge. When you have this increasing knowledge and people bumping into each other and these clusters, you’re going to have this growth effect. 

Now, the other kind of growth theory I can think of, which also works with some of the improvements of the Royal Society is what Kremer calls the O-ring idea of development. This is, basically for those who don’t know—he talks about how it’s part industrial organization and part development theory on how you can have production processes which consist of lots of different tasks which are highly interdependent. He calls it the O-ring theory of development because it’s the failure of the O-ring that led to the disaster with the Challenger space shuttle in the ‘80s. This is basically how a single component or a single production process that is subpar or not as highly skilled can take down the ship, in this case, literally a space shuttle.

Here if I think about the O-ring theory of development, that’s where I think of improvements like the civil service examination or James Booth wanting to have the mechanics instruction because there it’s talking about, “How do we improve the weakest link and how do we make sure that we can have quality separation such that the highest human capital can hang out with other high human capital or be matched with the best financial and physical capital?” That’s how the segregation works. 

What is your view of how the Royal Society overall through the centuries thinks about development? Are they more in the endogenous-growth theory camp or the O-ring theory camp?

HOWES: The distinction here is between, I guess, the weakest link and targeting the weakest link versus investments in the stronger links. Is that the dichotomy?

RAJAGOPALAN: Well, I don’t know how much of a dichotomy there is. I think it’s not just about the weakest link. It’s about generally improving skill levels across all the links, but also being able to understand which is a high human capital versus slightly lesser human capital that can be matched with appropriate levels. If you’re doing something like the Challenger, you want everyone including the lowest mechanic and the janitor to be extremely high skilled, which may not be the case if you’re, I don’t know, the janitor of a public school or something like that, right?

HOWES: Yes. There’s a potential shift in the 1850s. The earlier society’s whole thing is that you can effectively get improvement, but by using prizes you can, for very little investment, get quite large results. I guess there is something Romerian about that in that the investments could have increasing returns. 

I think the way they think about it is, William Shipley’s famous thing, not that famous but famous within the Society of Arts history, is that he sees all the attention and effort that goes into winning horse races even though they get just this tiny prize. He thinks they’re importing horses from left, right, and center, from North Africa, and so on. They’re breeding them, they’re spending all this money, and all they’re getting is this measly prize, and sometimes it’s not even that much money. He thinks, “What if we just did that but for everything else, and not just horse racing, but other things as well, more publicly useful things?”

That’s the Shipley way of doing things. I guess in a way that is about how you can get these quite significant returns from even small investments in invention. Small investments. That’s what the fund of subscribers that he puts together that become Society of Arts, that declare themselves Society of Arts, that’s what they’re doing. They’re creating a fund through their subscription fees that can be used to those ends.

There is a shift, however, in the 1840s and ‘50s because utilitarians come and get more and more influential. Henry Cole, who you mentioned, civil servant, who takes over the society effectively in the late 1840s, and his whole mantra, the reason he shifts and pivots towards exhibitions, is he’s much more interested in doing things for everybody. The utilitarian mantra is, “The greatest good for the greatest number.” It’s not necessarily about finding the weakest link, but it’s about raising general levels.

That’s the same thing you see post the Great Exhibition where they’ve revealed that, oh, Britain is maybe falling behind in some ways. There’s a bit of purposeful scaremongering done to make that case. One of their big solutions is, “How do we raise the skill levels of ordinary working men who already self-educate themselves through the mechanics’ institutions?”

One thing I mentioned in the book is, ironically, the French style of doing mechanics’ institutions was actually inspired by them looking at Britain where they were doing it bottom up, self-organized, and the French are like, “Well, let’s just pay for the state to just do this to catch up.” It’s just a state-funded catch-up. By the 1850s, the English are looking at this and going, “Oh, okay. They’ve got this great system that’s working really well.” When I say education, we’re talking scientific principles. We’re talking theory of mechanics for engineers to be using. We’re talking about design skills, artistic skills. “Mechanic” in the mid-19th century just means someone doing things manually. A mechanic profession isn’t necessarily like a car mechanic. It’s someone who uses their hands. 

RAJAGOPALAN: It’s everything from someone who’s a watchmaker, to someone who is improving steam engines, to the kinds of break or propeller systems you have. All of that is mechanical.

HOWES: They often call them the mechanic or the operative classes. I mean, “working class” is also one of the bywords at the time that’s used interchangeably with them. That kind of education that they’re seeing for better design, for better scientific knowledge, seems to be the core focus that you see in the 1850s. 

The government sets up a department for science and art, which Henry Cole leads up. He doesn’t actually care about the science. He only cares about the art personally, but there are many utilitarians around him who care about both. 

Then they set up this system to try and create qualifications for the existing bottom-up mechanics institutions to use, but also so they can start taking over the education system, which is all done privately, usually by religious schools. Their very clever idea is that if they create qualifications and then they pay teachers based on the results of their pupils, that they will basically get the schools to do what they want rather than what their owners want or the foundations that run them want. The state education system effectively evolves through them taking control of the education system through the qualifications and only later then actually taking control of the schools themselves. 

A really interesting lesson there in terms of how to take over private institutions is you can do it by just getting them all to follow the incentive structure that you want by giving them money to do those things. Literally, they paid them on results. Weirdly payment by results has a bad rap, but it’s what created the system that we have today that then ends up being copied elsewhere as well. The British system is an interesting one, but it’s inspired by the French and the Germans. 

I guess you could say there’s a Kremerian view there that they’re worried about weak links. They’re worried about weaknesses. They’re worried that, yes, they’ve got some great inventors, but we need to worry about everyone else who’s operating these things as well, and that that’s potentially going to be, going forward, one of the things that’ll emerge as, “If the French and the Germans and the Americans can catch up on the great inventor stuff, then they’re already beating us on the other stuff as well.” It’s putting advantages, lining them up and saying, “We’ve got these. They’re now catching up to these ones. How do we keep staying ahead, ahead?”

The Society of Arts and the Tool of Status

RAJAGOPALAN: Last question on the Society of Arts, how important was their status-raising contribution? To me, now when I look back, it seems like there’s some effective curation, there’s some effective networks, and all of that stuff. What seems to be the lasting contribution is, they’ve picked up people who would’ve otherwise been unknown and unsung and really raised their status by giving them prizes or putting their invention on the map or publicizing it using their own newsletters and so on.

HOWES: I think that’s a big, big part of it. I think one of the really genius things that they come up with very early on is realizing the extent to which status is a tool. Some of the early attempts to found stuff like the Society of Arts were profit-making ventures. Shipley, one of his big things that he realizes is that actually if you’re a non-profit, where it’s very much just for the public good, that’s what you want to do, but you still want to take advantage of people’s desire for status by listing all the donors right next to one another. If a Duke’s given £10, then if your name’s next to the Duke’s name, that’s a big deal so you can have this list of beneficiaries to the public. That’s a very powerful thing. 

In the same way that universities will name wings after such and such a donor, you can do that at scale to an extent. There are limits, but there is an extent to which you can do that somewhat at scale. That’s a very, very clever way of doing things. 

Also from the price size, certain things shouldn’t have monetary prizes, they should have status prizes. It’s medals bestowed by high-up people that get you invited to the fancy dinner party or whatever and to a ceremony where people announce you. Turns out people really love that kind of stuff and value it very, very highly. 

Sometimes, even the monetary rewards will downgrade the status reward, so they were very careful often about who they were aiming these things at, especially people who are already very rich like gentlemen, aristocrats, noblemen. If they’re aiming stuff at them, then they purposefully don’t make those cash prices because these people are richer than Croesus already. An extra £50 is a lot of money to a mechanic back in those days and not a lot of money at all. It’s like spare change to an aristocrat. If you’re going to give them rewards, it has to be the kind of honor that you can bestow. 

Again, this is another way in which I think in Britain we have a really wasted [an] opportunity in that we have an extremely well-known brand in the royal family which we don’t use for encouraging invention. There are attempts in the past to do this. James I in the 1600s, 1610s, I think, creates an order of knighthood, which is the Knights of the Golden Mines, which is meant to be investors in gold mines in Scotland, which turn out to not pan out so well, but let’s ignore that. Two people do actually get these knighthoods, a bit of a failure, but there are later attempts also. 

There’s one of the orders of chivalry associated with Hanover. When George I becomes king of England, he’s also Electorate of Hanover. He’s also the ruler of Hanover. He has these Hanoverian titles, and some of those end up being used basically to reward men of arts and sciences and so on so forth with knighthoods, which aren’t in the British system but do mean that you get people like, I think it’s Herschel is one of the first.—so people doing things with astronomy and later doing things with photography. Lots of people who wouldn’t otherwise have gotten knighthoods the typical way are able to be given it that way. They’re also called the Royal Guelphic Order, I think. 

Then now, you do have a series of honors, a series of orders of chivalry, which a lot of people are using all the time. Some of them are given to entrepreneurs, but most of the time, they’re given to charity people, civil servants, politicians. When they are given to entrepreneurs, they’re given to them for their philanthropic work or for their political work, which is valuable stuff that ought to be often rewarded, but it’s almost never given for the stuff that actually increases living standards quite dramatically for pretty much everybody, which is through science and innovation. I’ve done this every year for the past few years. The proportion that’s given to those sorts of things, even using the most expansive of terms—

RAJAGOPALAN: Is shrinking.

HOWES: Is typically under 10%. It’s usually about 6% of all the honors that are given. That’s across all the different grades. My suggestion, I had a paper on this a couple of years ago, was there should be a new order of chivalry. We haven’t founded one in over 100 years for some reason. It should be a new order of chivalry, call it, I don’t know, the Elizabethan Order after Elizabeth II or something like that. You can make it after Elizabeth I and II if you want.

RAJAGOPALAN: Or Philip, who loved this stuff.

HOWES: Well, funny enough actually, when I suggested it, I had a few people suggesting Philip was actually very, very pro-invention, entrepreneurship, and he was president of the Royal Society of Arts for a very long time as a result of that interest. He would be a great. You could call it the Royal Philippian Order or something like that. I don’t know.

Whatever you call it, there should be a separate order because the current main one is the Order of the British Empire, which doesn’t sound great nowadays. There was a reason and context for it to be called that when they were trying to celebrate the empire versus the rest of the world and all those links with the empire. I guess had it been done 50 years later, it would’ve been called the Royal Commonwealth Order or something like that. It should be something that stands on its own and specifically, I think, should be for inventors, for entrepreneurs, for scientists. For those contributions rather than for their other contributions.

As I say, you’ve got this almost untapped, very powerful brand that isn’t currently being exploited in a way that’ll be extremely cheap. It’s just the cost of printing the medals, which is not very high at all then, and, I guess, organizing the occasional function, which they do day in day out at the palace anyway. 

RAJAGOPALAN: You should write a substack post that says, “Make Progress Great Again,” and after discuss this order.

HOWES: Exhibitions and honors, I think, are the lowest-hanging, cheapest fruit that most countries even, not just Britain, but most countries, could use to encourage—

RAJAGOPALAN: Prizes and things like that.

HOWES: Prizes along with that, but even those are more expensive. These are, I think, the cheapest ones you could do.

RAJAGOPALAN: This book is fantastic. It’s incredible how many fun examples there are. I was constantly marking things that we just use in everyday life that I had no idea in some sense came from the Royal Society. I love that Dadabhai Naoroji, who’s the first Indian to end up in British parliament, was invited by them to give a series of lectures. Probably the first association to invite him to give lectures. Just a very fun read. Thank you so much for doing this, Anton.

HOWES: Thank you. Thanks for having me on.