Adventurers and Planters

Unfortunately, we don't know much about the next century. By 1850, poker and futures markets had developed most of their modern features and were spread widely throughout the Mississippi region. It's easy to pick out features that clearly link both to John Law's ideas and to West African and Mississippi Indian cultural elements. But we can only speculate about when and where they were mixed.

Historians are not much help. The leading historian of the American South in the early twentieth century was Ulrich Bonnell Phillips. He famously dismissed the history of the Mississippi region before it became part of the United States in 1803 as concerning only "redskins and Latins." In the later twentieth century, Harvard professor Bernard Bailyn was the most celebrated historian of the Colonial period. He referred to the people living in the Gulf of Mexico region as "exotic," "strange," and "bizarre." Daniel Usner has written the only useful economic history of eighteenth-century Louisiana and calls the attitude of mainstream historians "the geographical trivialization of the Gulf South in colonial American historiography." In shorter words, he added:

Its people have been largely ignored or casually dismissed as mere bitplayers in the drama of American development-colorful, no doubt, but peripheral and unimportant. Before falling under the sovereignty of the United States, lands along the Mississippi River appear to be an amorphous area sojourned by French woodsmen and Indian warriors while waiting to be occupied by Anglo-American settlers and their African-American slaves. Those Anglo-American settlers worked on the basis of an old economic system of Adventurers and Planters. The words are confusing. Planters had the adventure, while Adventurers stayed planted at home. Adventurers-from the same linguistic root that gives us the modern venture capitalist-put up the money for a new colony or town. Planters were the people who actually settled the new place. They were led by professional town founders, who had to be skilled at administration and dealing with natives.

This is a hierarchical system of settlement. The original colonies are funded by European investors. As colonies mature and have more capital than high-return investment opportunities, they give birth to new towns. These new towns are beholden to their parent colony and send their economic products through them. Every frontier town, however remote, was connected through such a hierarchy to a port, for shipping goods to Europe.

This system was impossibly slow and rigid for the spectacular economic opportunities of central North America, especially after steam travel made upriver shipment of bulk goods practical and offered reliable year-round transportation. A very limited pool of capital had to move quickly over unknown and dangerous terrain to service literal and figurative gold rushes. Opportunity raced far ahead of legal systems that would protect conventional investments (or the lives of conventional investors and their agents, if they traveled out west to inquire in person). Moreover, the Planters were not peaceable town folk, the surplus population of a settled town with social and blood ties to their investors. Some were renegades and outlaws; all were tough and independent, with few ties outside the region. In modern terms, the West needed a dynamic self-organizing network of economic relations.

Of all the ways this need was met, the soft money bank is the one most recognizable today as a financial institution. Consider a group of people who arrive together at some place in the West. It could be a mining camp or a place suitable for farming, ranching, lumber production, or some other activity. These people show up with a diverse collection of assets: tools, provisions, livestock, and other items. Somehow the people and assets have to be organized into efficient production teams.

With developed financial markets, this is easy. Some people organize companies, or the companies can be organized back in a city. The companies raise capital by borrowing money and issuing stock, then use it to buy whatever assets and hire whatever people are needed. The profit from the business activity is used to repay the borrowings plus interest and pay dividends to the equity investors.

But our hypothetical camp is far from cities, and there is little money available. No outsiders are offering to invest. A common solution was for one person with a small amount of gold or silver to set up a bank. It's called soft money because it issues banknotes far in excess of its hard capital. If anyone tries to redeem any significant amount of notes, the bank will fail.

The bank makes loans to people, who use the money to buy assets and hire labor. People take the banknotes because there is no alternative except to try to eke out a living with whatever assets they brought with them. The notes are accepted within the town, although not outside it. Of course, no one holds much in banknotes at any time; you get them only to spend them quickly. This liquidity allows people to organize pools of assets appropriate for various economic projects, an impractical exercise using barter.

If the projects are successful, goods of real value will be produced and shipped to outside markets. There they can be sold for hard money-gold, silver, or notes from sound banks. The soft money bank will gradually evolve into a hard money bank. If the projects are unsuccessful, the bank will fail. While everyone involved understands this risk, taking banknotes is much less risky than extending credit to individual entrepreneurs. A person running a logging camp, for example, might promise to pay his workers when he sells his logs. If his business fails, the workers do not get paid. But if he pays his workers in notes borrowed from the soft money bank, they will collect as long as the overall town is successful, even if this one business fails. Moreover, a business based on personal credit will liquidate if it fails. A business funded by a soft money bank loan will be taken over by the bank if it does not meet interest payments. Often it can be reorganized and succeed under new management; if not, the assets can be usefully dispersed to other bank borrowers. When everyone in town has a stake in the town's success, that success is much more likely.

POKERBANK

It's easy to see that a town poker game fulfills many of the same functions. If people convert their assets into poker chips and play, the winners can acquire enough assets to start businesses. Poker chips take the place of banknotes. Like the notes, no one holds significant wealth in them for long-you buy them only to play poker, and exchange them for real assets at the conclusion of the game. The losers can work for the winners to get enough chips to try to win the businesses.

One apparent disadvantage of a poker game versus a soft money bank is the randomness of the allocations. The businesses are run by the best, or luckiest, poker players. In contrast, a banker will decide who gets loans based on honesty, ability, and experience. However, in the context of the American frontier, this may actually be an advantage. There weren't experienced bankers to make these decisions, and the documentation or references needed to base them on didn't exist. Skill at poker was arguably as good a qualification as any. More important, it was accepted. Poker losers generally delivered their assets, whereas people rejected for bank loans might refuse to accept banknotes, causing the whole system to fail.

A clear advantage of the poker game is that it does not require anyone to be accepted as banker. In modern poker games, one player or the house generally acts as banker. The bank sells chips to players and redeems them at the end of the game. On the early frontier, poker was played with a check system instead. Each player had his own chips, which were identifiable. At the end of the game, players bought back their own chips. Winners would have some of the losers' chips left over. It was the winners' responsibility to collect from the losers. Something similar is sometimes done in private games today. Each player is given a fixed number of chips, which they return at the end of play. Those players with fewer chips than they started with write checks to the players with excess. That means no one has to act as bank, and no one has to bring large amounts of cash to the game. If a loser cannot or will not pay, it's a winner's problem, not the whole table's.

This last point is critical. Unless you gamble or work in finance, it's easy to forget that financial rights and obligations represent relations among people, not numbers in a theory. It's not enough to know who owes you money and how much; the nature of their obligation can make all the difference in the world. Poker writer David Spanier tells the story of Doyle Brunson and Pug Pearson's trip to London. Two tough-looking gentlemen called on the two World Series of Poker champions in their hotel room with the message that 25 percent of their poker winnings should be contributed to a local crime boss. Pug preferred not to play under those conditions and went back to the United States. But Brunson asked whether the 25 percent cut paid for collection services as well. When informed that it did, he decided it was a good buy. In finance, wise people always negotiate in advance precisely who has what responsibilities if some parties to an agreement fail to adhere to it.

Another difference between a soft money bank and a poker game concerns the distribution of profit if the town succeeds. With the soft money bank, the bulk of the money will go to the people who were selected for bank loans and who then made successes of their businesses. The biggest cut of all goes to the banker and her investors. The people who were not given loans will do well, earning their wages plus interest, but not as well. With poker as the financial institution, the game will continue until the town is successful enough to attract outside capital. Business owners will have to keep playing to meet their ongoing expenses and capital needs. That means everyone who plays has a chance of coming out on top in the end. In that sense, it's fairer than selecting some people at the beginning to get rich. On the other hand, in the poker game, a lot of people are going to end up with nothing. With the soft money bank, only people who default on their bank loans lose everything. In that sense, poker is less fair.

Which system you prefer depends on your available economic opportunities. If there is a gold rush or land opening or new railhead popping up all the time, it makes sense for the losers to move on and try their luck again. This is an environment for risk takers who will either get rich or bet again. When economic opportunities start to narrow, towns have to cultivate a middle class, people who value security over the chance to get rich. In those circumstances, a bank looks more sensible than a poker game.

A variant of this system was documented in Yukon gold rush camps later in the century. It probably happened elsewhere, but we have no record. Miners would work all season, then play poker all winter. The winners could leave, having accumulated as much gold as they could carry, and as much as they needed to be wealthy for life. The losers would mine for another season and try their luck again. This is much more efficient than everyone working until he gets a required stake. By concentrating assets, some people got to leave early, which opened places for newcomers.

The poker game is a more dynamic institution than a bank. If the opportunity expands, the game can easily accommodate newcomers; if the opportunity turns out to be less than expected, losers can find themselves frozen out. The bank is more of a cooperative effort in which everyone will succeed or fail together. That is attractive to many more hardworking people than the poker deal, so the bank will attract more useful settlers. However, it can lead to disaster if the town is successful, but not successful enough to support everyone who came. If the opportunity is larger than expected, the successful soft money bank can attract capital in the form of money from outside investors, while the poker game attracts nearby adventurers with skills and physical assets on location. Depending on the circumstances, one of those things may be needed and the other useless.

The biggest advantage of the bank is that it leads to a stable evolution to a permanent settlement. As it becomes more successful, its notes will be accepted farther away. It will facilitate transactions at transshipment points and processing centers. Outsiders who want to invest capital will find businesses run with money accounting and a history of loan repayments. Lenders like that more than a business founded in a poker game and recently taken over in another poker game by an inexperienced manager, with no written records except some IOUs and a framed full house. Stability is important for activities like farming and ranching, where there is a large immovable investment. It is less important in mining, hunting, and lumbering, where people stay only until the local resources are exhausted.

It did happen, however, that poker games evolved into permanent settlements. The next step was an outside gambler who arrived with significant capital. Professional gamblers were typically excluded from poker games: You had to participate in local economic activity to play. But at a certain point of development, a professional offering faro, chuck-a-luck, and roulette was welcome. This person would provide safe-deposit services and import luxury goods and necessities. He also provided a degree of rough law enforcement, since he had to defend his own property. As the town grew, it could attract a professional gunman in exchange for the faro concession. Wild Bill Hickok, holder of the famous dead man's hand of aces and eights, did this for a living. Finally, the town could get to the point of collecting taxes and hiring a sheriff, who might even be directed to shut down the gambling halls and public poker games.

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Дата добавления: 2015-10-26