Darwin Among the Machines (31 page)

In 1655 and 1656, Petty organized the first complete survey of Ireland after it was decided to confiscate the estates of all landowners who could not prove “constant good affection” to the English government. Redistribution of the property, to settle the government's debts, required accurate maps. Although Petty's cartography was impeccable, real and perceived inequities aroused lingering animosities, and in 1660 Petty was challenged by Sir Alan Brodrick to a duel. “Sir William is extremely short sighted,” said Aubrey, “and being the challengee it belonged to him to nominate place and weapon. He nominates, for the place, a darke Cellar, and the weapon to be a great Carpenter's Axe. This turned the knight's challenge into Ridicule, and so it came to nought.”
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Petty had a lifelong interest in naval architecture; he acted as an advisor to Charles II and even predicted the use of auxiliary propulsion in “An attempt to demonstrate that an Engine may be fix'd in a good Ship of 5 or 600 Tonn to give her fresh way at Sea in a calm.”
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He was obsessed with the potential of twin-hulled sailing vessels, of which the prototype was launched in 1662. Petty's third catamaran, christened the
Experiment
by Charles II, was lost with all hands during a severe storm in 1665, a misfortune that failed to sink the idea in Petty's mind. He wrote to Robert Southwell in 1680 that “I have a Treatise ready to Vindicate the designe and the necessity of attempting it, which will make it rise againe when I am dead.”
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In 1671, Petty produced the first of a series of essays on
Political Arithmetick
, circulated widely in manuscript but published in full only after his death. “It was by him stiled Political Arithmetick,” wrote Petty's son Charles in the dedication to the 1690 edition, “in as much as things of Government, and of no less concern and extent, than the Glory of the Prince, and the happiness and greatness of the People, are by the ordinary Rules of Arithmetick, brought into a sort of Demonstration . . . where the perplexed and intricate ways of the World, are explained by a very mean piece of Science.”
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Exercising “the art of reasoning by figures upon things relating to government,” Petty laid the foundations for a growing association between the powers of numbers and the powers of the state. He thereby helped to establish the statistical basis of
cybernétique
, as the theory of government would be positioned adjacent to the theory of power in the
systematic classification of human knowledge formulated a century and a half later by Ampère. In his essay
On the Growth and Encrease and Multiplication of Mankind
, published in extract in 1686, Petty anticipated and countered the arguments made a century later by Malthus. As a founder of the science of political economy, Petty was among the first to methodically examine the origins of wealth.

In 1682, in the brief but precise
Quantulumcunque Concerning Money
, Petty posed the question, “What remedy is there if we have too little Money?” His answer, amplified by the founding of the Bank of England in 1694, would resonate throughout the world: “We must erect a Bank, which well computed; doth almost double the Effect of our coined Money: And we have in England Materials for a Bank which shall furnish Stock enough to drive the Trade of the whole Commercial World.”
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Petty showed that wealth is a function not only of how much money is accumulated, but of the velocity with which the money is moved around. This led to the realization that money, like information but unlike material objects, can, by assuming different forms, be made to exist in more than one place at a single time.

An early embodiment of this principle, preceding the Bank of England by more than five hundred years, was the ancient institution known as tallies—notched wooden sticks issued as receipts for money deposited with the Exchequer for the use of the king. “As a financial instrument and evidence it was at once adaptable, light in weight and small in size, easy to understand and practically incapable of fraud,” wrote Hilary Jenkinson in 1911. “By the middle of the twelfth century, there was a well-organized and well-understood system of tally cutting at the Exchequer . . . and the conventions remained unaltered and in continuous use from that time down to the nineteenth century.”
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A precise description was given in 1850 by Alfred Smee (whose speculations on artificial intelligence and neural networks were cited in
Chapter 3
). To discourage fraud and counterfeiting, Smee developed tamperproof banknotes and the formula for what became known as bank ink—a “magnificent, solid ink . . . used for the Court Minute Books until comparatively recent years.”
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As resident surgeon to the Bank of England and the son of the accountant general, Smee was able to state with authority concerning some tallies preserved as relics that “curiously enough, I have ascertained that no gentleman in the Bank of England recollects the mode of reading them.” Tallies are the direct ancestor of digital financial instruments being introduced today.

“The tally-sticks were made of hazel, willow, or alder wood, differing in length according to the sum required to be expressed
upon them,” explained Smee. “They were roughly squared, and one end was pointed; and on two sides of that extremity, the proper notches, showing the sum for which the tally was a receipt, were cut across the wood. All these operations were performed by the officer called ‘the maker of the tallies.' On the other two sides of the instrument were written, also in duplicate, the name of the party paying the money, the account for which it was paid, the part of the United Kingdom to which it referred, and the date of payment; recorded with ink upon the wood, by an officer called ‘the writer of the tallies.' When the tally was complete, the stick was cleft lengthwise by the maker of the tallies, nearly throughout the whole extent, in such a manner that both pieces retained a copy of the inscription, and one half of every notch cut at the pointed end. One piece was then given to the party who had paid the money, for which it was a sufficient discharge; and the other was preserved in the Exchequer. Rude and simple as was this very ancient method of keeping accounts, it appears to have been completely effectual in preventing both fraud and forgery for a space of seven hundred years. No two sticks could be found so exactly similar, as to admit of being identically matched with each other, when split in the coarse manner of cutting tallies; and certainly no alteration of the particulars expressed by the notches and inscription could remain undiscovered when the two parts were again brought together. And, as if it had been further to prove the superiority of these instruments over writing, two attempts at forgery were reported to have been made on the Exchequer, soon after the disuse of the ancient wooden tallies in 1834.”
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Exchequer tallies were ordered replaced in 1782 by an “indented cheque receipt,” but the Act of Parliament (23 Geo. 3, c. 82) thereby abolishing “several useless, expensive and unnecessary offices” was to take effect only on the death of the incumbent who, being “vigorous,” continued to cut tallies until 1826. “After the further statute of 4 and 5 William IV the destruction of the official collection of old tallies was ordered,” noted Hilary Jenkinson. “The imprudent zeal with which this order was carried out caused the fire which destroyed the Houses of Parliament in 1834.”
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The notches were of various sizes and shapes corresponding to the tallied amount: a 1.5-inch notch for £1000, a 1-inch notch for £100, a 0.5-inch notch for £20, with smaller notches indicating pounds, shillings, and pence, down to a halfpenny, indicated by a pierced dot. The code was similar to the notches still used to identify the emulsion speed of sheets of photographic film in the dark.

Until the Restoration tallies did not bear interest, but in 1660, on the accession of Charles II, interest-bearing tallies were introduced.
They were accompanied by written orders of loan, which, being made assignable by endorsement, became the first negotiable interest-bearing securities in the English-speaking world. Under pressure of spiraling government expenditures the order of loan was soon joined by an instrument called an order of the Exchequer, drawn not against actual holdings but against future revenue and sold at a discount to the private goldsmith bankers whose hard currency was needed to prop things up. In January 1672, unable to meet its obligations, Charles II declared a stop on'the Exchequer. At the expense of the goldsmith bankers, this first experiment with artificial money came to an end.

Money is a medium for communicating value across distances and over time. Tallies represented proof of the value that had been communicated in the form of gold and silver to the king—and a promise that the value would eventually be returned. As the government began to spend increasing amounts of money, more and more tallies remained outstanding among the community of merchants and bullion dealers who had loaned money to the king. Under these circumstances, a market for derivative financial instruments evolved—paper notes issued against the indirect security of tallies rather than the direct security of bullion or coin. Gold and silver that was in the hands of the king or had passed through his hands in being spent was now represented, at the same time, by circulating paper. As long as the paper was sufficiently trusted, and the king didn't issue a stop, it was possible to have one's cake and eat it too—increasing the amount of money in circulation without increasing the amount of gold.

These arrangements evolved, fitfully, into the system of banking and paper currency with which we are familiar today. “A Banke is a certain number of sufficient men of Credit and Estates joyned together in a stock, as it were for keeping several mens Cash in one Treasury, and letting out imaginary money at interest . . . to Trades-men or others, that agree with them for the same, and making payment thereof by Assignation, passing each mans Accompte from one to another, yet paying little money,” wrote Francis Cradocke in 1660 in his
Expedient For taking away all Impositions, and raising a Revenue without Taxes, By Erecting Bankes for the Encouragement of Trade
.
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This “imaginary” money sounded too good to be true, and often was. Moving at ever-increasing speed in increasingly abstract, fluid, and intangible forms, it soon came to govern the affairs of human society as a whole. “Above all other Engines or Instruments, the greatest preheminence is due unto a Banck,” exclaimed Henry Robinson in 1652. “It is the Elixir or Philosophers Stone, to which all Nations, and
every thing within those Nations must be subservient, either by faire meanes or by foule.”
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An economy is a system that assigns numerical values to tangible and intangible things. These numbers, having a peculiar tendency, common to all numbers, of lending themselves to intelligent processing, start moving the things around. The history of money has been a step-by-step progression from things to numbers: numbers stamped on coins, numbers printed on banknotes, machine-readable codes on checks, coded electronic transfers between numbered accounts, credit-card numbers transferred over the phone, and now a host of competing forms of digital currency, represented by numbers alone. The relations between money and information go both ways: the flow of information conveys and represents money, and the flow of money conveys and represents information. Prices represent the state of relations among different things, and the markets and other mechanisms whereby money, securities, or other abstractions sell at a discount against the future represent predictions of future events.

The cross-fertilization between banking, digital computing, and telecommunications continues a transformation precipitated nine centuries ago when the chamberlains of the Tower of London discovered that by splitting some sticks of wood in two they could double the spending power of their hoard of gold. The same principle that allowed the Exchequer to split a notched piece of wood, assign a value, and rest assured that only one person could turn up with the matching piece of wood demanding to be repaid, is now being implemented in digital form. Nearly all such digital financial instruments—from conventional electronic funds transfers to anonymous digital cash—are based on constructing a very large number with two prime factors that are all but impossible to extract from the product by brute-force attack. The product may be freely revealed, with its factors remaining mathematically concealed, using pairs of public and private cryptographic keys as uniquely mated as the two halves of a split piece of wood, guaranteeing that valuable numbers only have value to those to whom they are legitimately issued or assigned.

The most successful encryption system is known as RSA after its inventors, Ronald Rivest, Adi Shamir, and Leonard Adleman, who introduced it in 1978. “The era of ‘electronic mail' may soon be upon us; we must ensure that two important properties of the current ‘paper mail' system are preserved: (a) messages are private, and (b) messages can be signed,” they jointly announced. “An encryption method is presented with the novel property that publicly revealing an encryption key does not thereby reveal the corresponding
decryption key. . . . A message can be ‘signed' using a privately held decryption key. Anyone can verify this signature using the corresponding publicly revealed encryption key. Signatures cannot be forged. . . . A message is encrypted by representing it as a number
M
, raising
M
to a publicly specified power
e
, and then taking the remainder when the result is divided by the publicly specified product,
n
, of two large secret prime numbers
p
and
q
. . . . The security of the system rests in part on the difficulty of factoring the published divisor,
n
.”
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