Nigeria was amalgamated into one country in 1914. We will be 100 years old in 2014; just about a year from now (the planning for this celebration ought to begin NOW).
But it wasn’t until 1959, one year to our Independence in 1960, that we had a functional Central Bank. So how did we cope?
You might argue that, that was in the “olden” days as we like to say. But even nowadays, there are countries without their own central bank. And the list may surprise you: Germany, France, Italy, Spain, Greece, etc. They are members of 17 European countries with one common central bank, called the ECB (the European Central Bank).
This is one of those "breakthrough thinking", the hallmark of creativity and innovation, that you are taught in strategy consulting. Learning to think of the unthinkable, to think out-of-the-box. To question settled wisdom.
Example: Why do we shake with the right hand? Why do we read a book from the first chapter to the last, unlike British Prime Minister, David Cameron who reads from the last chapter to the first.
But back to the Lords of Finance.
For 70-plus years, between 1836 and 1907, “the United States survived and even prospered without a central bank.”
But financial crisis is always lurking around the corner. So as bank after bank started to experience a run (more people taking money out than depositing), the country always turned to J. Pierpont Morgan, “the preeminent financier of his generation.”
Yes, he is the founder of the blue-chip banking powerhouse, J. P Morgan.
According to the book, “He had lived through more panics than had any other banker, in 1895 actually bailing out the United States government itself…”
So, Mr. Morgan, an individual, was the defacto central banker to the United States of America.
It wasn’t until the aging Mr. Morgan started having, shall we say, a bit more rewarding interest than financial crisis management that the U.S started to think of a more reliable, structured framework for central banking.
J. P. Morgan was “now seventy years old, semi-retired, and focused primarily on amassing an unsurpassed art collection and yachting to more congenial climes with a bevy of middle-aged mistresses.”
But the United States had actually experimented with central banking before J.P Morgan. In 1791 Alexander Hamilton, then the U.S Secretary of the Treasury had created the country’s first central bank, the First Bank of the United States.
This was 123 years before Nigeria existed. We are indeed a very young country. (Makes you wonder how we were functioning during these times….our forefathers were geniuses).
In 1811 the First Bank’s charter was allowed to expire. In 1816, the country tried again, setting up what came to be known as the Second Bank of the United States.
In 1836, the Second Bank’s charter was also not renewed. This was the void that a younger and more focused J.P Morgan filled. Until he was 70...
The book is essentially about how the world’s most powerful central banks of the era before now, held sway, for better and for worse.
Some books begin each chapter with a quote. This book is no exception. But it is in a class of itself in this regard.
Here’s one that is possibly my favourite of all time, so far (I’m still reading though):
“Anybody who goes to see a psychiatrist ought to have his head examined.”
Eeeh!
MERRY XMAS!
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Martin Udogie, founder of BOTTOMLINE Newsletter, can be contacted as follow:
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