Thomas Gresham

Summary

Sir Thomas Gresham (ca. 1519 – November 21, 1579) was an English merchant and above all a financier who worked for King Edward VI, then his half-sister, Queen Elizabeth I.

His expertise in the field of currency management and financial balances made him one of the first practitioners of monetary issues. In this respect, he is known for having formulated, by also taking up Nicolas Copernicus” earlier observations, the so-called “Gresham”s law” according to which “bad money drives out good money”.

Born in London and descended from an old Norfolk family, Gresham was the only son of Sir Richard Gresham, a well-known London merchant, who was for some time Lord Mayor of London, and who, for negotiating loans from foreign merchants for Henry VIII of England, was knighted. Although his father intended to make him his successor, he was sent for some time to Caius College in Cambridge.

He then apprenticed for eight years to his uncle Sir John Gresham, also a merchant, who established Gresham”s School in Holt, Norfolk in 1555. In 1543, the Mercers Company admitted Gresham to its ranks at the age of 24. That same year, he went to the Netherlands, where, in his own name, that of his father or uncle, he conducted his business while pursuing multiple activities as an agent of Henry VIII. In 1544 he married the widow of William Read, a London merchant, but continued to reside mainly in the Netherlands, with his main center of activity in Antwerp, where he was very successful in his business.

Gresham died suddenly in November 1579.

When in 1551 the mismanagement of Sir William Dansell, the king”s merchant in the Netherlands, had placed the English government in a great financial embarrassment, the authorities sought Gresham”s advice and then chose him to implement his proposals. He used various methods – very ingenious, though rather arbitrary and unfair – to increase the value of the pound sterling on the Antwerp Stock Exchange. They were so successful that within a few years King Edward VI had practically paid off all his debts. The government then sought Gresham”s advice in all its financial difficulties, and also employed him in numerous diplomatic missions. If he did not receive a salary from the State, he received from King Edward, as a reward for his services, many lands; their annual value reaching nearly 400 pounds.

With the accession to the throne of Queen Mary in 1553, Gresham was disgraced for a short time, and Alderman William Dauntsey replaced him in his post. But Dauntsey”s financial dealings did not prove to be very successful and Gresham was soon recalled. As he showed a strong desire to serve the queen, and showed great skill in negotiating loans and smuggling money, weapons and foreign goods, not only were his services retained throughout her reign (1553 – 1558), but in addition to a daily salary of twenty shillings, he received church lands worth 200 pounds annually. Under Queen Elizabeth I (1558 – 1603), in addition to his duties as financial agent to the Crown, Gresham became for a time ambassador to the court of the Duchess of Parma, becoming a knight in 1559. The troubled times preceding the Dutch revolt forced him to leave Antwerp on March 10, 1567; but, although now living in London, he continued his business as before. He became one of the richest men in England.

Queen Elizabeth found him very useful for many tasks, as jailer of Lady Mary Grey (sister of Lady Jane Grey), who, to punish her for marrying Thomas Keys the master jailer, was imprisoned in her house from 1569 to 1572.

In 1565, Gresham made a proposal to the City Council of London to build a Stock Exchange on his own money – which became the Royal Exchange, on the model of the one in Antwerp – on the condition that they buy a piece of land for it. With this proposal, he did not forget his own interests by obtaining for an annual rent of 700 pounds the shops in the upper part of the building.

With the exception of a few sums donated to charities, Gresham left the bulk of his property (properties in various parts of England worth nearly 2300 pounds) to his widow and descendants, with the proviso that upon his death his residence at Bishopsgate, as well as the rents of the Exchange, were to pass to the Corporation of London and the Mercers Company, for the purpose of establishing a college where seven professors were to teach – one per day – astronomy, geometry, physics, law, theology, rhetoric and music. Gresham College, the first institution of higher learning in London (apart from the pseudo-university of the Inns of Court), opened in 1597.

Gresham”s law, “bad money drives out good money,” was named after him (although others, including the astronomer Nicolaus Copernicus, had recognized the concept for years) because he urged Queen Elizabeth to restore England”s depreciated currency.

According to this “law,” when two currencies circulate concurrently, one in gold and the other in silver, the one that inspires the least confidence is used to make payments while the better one is hoarded. The good currency thus ends up disappearing from circulation (economic actors keep it because they think it will not be devalued) and is replaced in current exchanges by the bad currency (economic actors who possess it seek to divest themselves of it as quickly as possible because its value is deemed to be less reliable or to be destined to diminish in the near future).

External links

Sources

  1. Thomas Gresham
  2. Thomas Gresham
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