Request of the Week

The Potemkin Treasury

The SteynOnline Request of the Week was a regular midweek feature at this site for 11 years until the beginning of 2012, since when it's been on hiatus. However, we do still get requests. For example, longtime Texas reader Aaron Miller:

Mark,

Occasionally, and increasingly often amid the current EU controversies, I have wanted to cite an old article of yours discussing history of US currencies versus introduction of the euro. But I can't find it. The article explained that American states traded with a variety of foreign currencies long before the US dollar became standard, whereas the euro was an attempt to establish a union rather than facilitate an existing unity.

Would you please reprint it? Thank you.

Also, please keep us informed of your financial challenges so that we may contribute what we can to maintain some modicum of sanity in American journalism.

Aaron Miller
Spring, Texas

Thanks, Aaron - and here it is, written a couple of days before the first euros were issued, just over 15 years ago. Note the reference to "the insufficient labour mobility in Europe and the way the budgetary limits will complicate the already looming crunch over demographically unsustainable social programmes", and also the warning of "massive social pressures on member states whose democratic roots go no deeper than the mid-Seventies". That would be Greece, and Portugal.

As for "financial challenges", I'm not sure about bringing our Request of the Week back as a weekly feature, but, if you're one of the many readers around the world who've swung by the Steyn store to help prop up my end of the upcoming Mann vs Steyn trial of the century and you'd like a reprise of a favorite column, by all means drop us a line and we'll do our best to oblige.

Meanwhile, here's that dawn-of-the-euro piece as it appeared in The Sunday Telegraph on December 30th 2001:

The new euro notes are not unattractive, at least not when compared with Britain's current hideous Jeanette Charles bills. But they do give an interesting glimpse into Euro psychology. The notes are decorated by scenic views of grand buildings, just as many other currencies are: on the US and Canadian bills, for example, you'll find the White House and the Houses of Parliament and so forth. The only difference is that the scenes on the euro are entirely fictitious: the attractive gothic and classical edifices do not exist in (if Europhiles will forgive the expression) the real world.

Like the Lost City of Atlantis or the planet Krypton, these splendid buildings live only in the boundless Euroimagination, but for that very reason - the fact of their non-existence - they're felt to be more healthily pan-European than the prosaically nationalist bricks and mortar of the Hofburg or the Parthenon. In their very lack of physical manifestation, they meet the threshold of EU reality as defined by Louis Michel, the Belgian Foreign Minister, when he insisted the other day that the European Rapid Reaction Force "must declare itself operational without such a declaration being based on any true capability". "Apparently in Europe this works," The Washington Post commented.

So next Tuesday marks a genuine milestone in world history: the first time a new currency has been launched with toytown buildings on it. Perhaps one day these colonnaded masterpieces will actually be built, in Brussels or Strasbourg. Perhaps one is the celebrated European Food Safety Agency, the location of which has caused such disagreement between Italy and Finland and much mirth in the US papers. ("Parma is synonymous with good cuisine," argued Silvio Berlusconi. "The Finns don't even know what prosciutto is.") But, in their present purely fictitious state, the magnificent landmarks are a disarmingly straightforward acknowledgment of the EU's thought processes: 1. Great powers show symbols of national identity on their currency; 2. But we've acquired a currency before we've acquired a national identity; 3. So we'll pencil in the symbols and build them later - pas de probleme!

The EU long ago decided that it would create its superstate backwards, and Tuesday is only the latest stage. Great powers have not traditionally preoccupied themselves with inventing currencies, preferring to leave that to banana republics. In America, the dollar formed itself over many decades. For the first 80 years of the Republic's existence, state, Federal and European coins jostled side by side.

In my part of New Hampshire, the general storekeeper showed me the other day the "table of relative values" every business kept alongside the till back then. In 1815, £47 7s 10¾d - the store still priced its goods in sterling - was equal to $157.98 in New England money, $118.48 in New York money, $197.48 in Pennsylvania money and $157.59 in Federal money. The nearest thing to a standard coin, as it had been throughout the colonial era, was the Spanish dollar, the "piece of eight" whose influence lingers in the name Americans give their 25c coins - "two bits" (two eighths). Congress finally got around to ending the official status of foreign coins as legal tender in 1857, 65 years after the founding of the US mint and eight years after the California gold rush had bolstered reserves sufficiently to make dependence on foreign coin unnecessary. The greenback - now the symbol of American dominance - was not issued until the Civil War. In other words, the US expanded from a cluster of East Coast colonies to a continental power, went through a manufacturing boom, built the railroad and settled the West - and barely gave the currency a thought. The dollar just growed like Topsy and the state money and foreign coinage faded away.

Europe could have done the same - just got on with life and che sera sera - but that's not the EU's style. There is no need for a single currency, and several compelling reasons why it's a crummy idea, not least the insufficient labour mobility in Europe and the way the budgetary limits will complicate the already looming crunch over demographically unsustainable social programmes. Set against those considerations, the case for the euro was laughable in its feebleness. You don't need to scrap a dozen currencies to eliminate "transaction costs". That's like curing a cold by amputating your nose. At my bank in Quebec, I've never paid a dime to change US or Australian dollars, sterling or marks. Given that the EU is the kind of joint that regulates the curvature of bananas and the size of condoms and can punish a Swede for putting up an unauthorised poster in Brussels by banning him indefinitely not just from Belgium but 13 other countries, surely it would have been the work of moments to pass a directive prohibiting transaction costs on member-state currencies.

But that's not what this is about. In the normal course of events, monetary union follows political union, as it did in the US, Canada, Germany, the Netherlands, and so on. In this instance, uniquely, monetary union is in itself an act of political binding. What's important on Tuesday is not the introduction of the new currency but the abolition of the old ones - not the symbolic bridges on the back of the new notes, but the burning of the bridges represented by the discarded currencies. The new coins aren't yet jingling in his europants but already Hans Eichel, the German Finance Minister, is calling for a Brussels-levied Europe tax, even though EU members now have far less freedom in direct and indirect taxation than West Virginia or South Dakota.

It won't be long before the 10-euro note will have a real European Treasury to put on the front, just as the 20-euro note will be able to display the new European Holding Cell, in which Britons are detained before being extradited to Greece for plane-spotting offences. The new pan-European jurisdictional authority is also in marked contrast to the US, where New Hampshire won't extradite you to Vermont for actions that are illegal in the latter but not the former. Three years ago, Norman Lamont fretted that Britain would be reduced to the status of Delaware, to which I replied in these pages: you should be so lucky. That ship has sailed: on justice, taxation and much else, Britain is already reduced to well below Delaware.

For Americans, one of the eye-openers of this war has been just how huge the gulf is between the US and the EU, especially in the latter's indifference to liberty and accountability. Because Texans, Vermonters and Georgians all agree that they're Americans, they're happy to go their own way in matters of capital punishment, income tax, gay civil unions: that's a dynamic, creative federalism. Because Greeks, Scots and Austrians still regard each other as foreign, a European identity has to be imposed from the top down, as if by harmonising tax codes and passport design you can harmonise a bunch of foreigners into one nationality, regulate a European consciousness into being: that's not federalism, but a fetid, stagnant over-centralisation.

America, after all, is the exception to the rule: historically, small states - from Athens to the United Kingdom - have worked, and big sprawling entities - from ancient China to the Soviet Union - have failed. The euro is an exercise in vanity printing that will place massive social pressures on member states whose democratic roots go no deeper than the mid-Seventies. That may be the one advantage of those fantasy buildings and bridges on the banknotes. The fact that they don't exist makes them much harder to blow up.

~from The Sunday Telegraph, December 30th 2001

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