By Amy Froide, University of Maryland, Baltimore County
Enron. Bernie Madoff. FTX.
It seems that stories about fraud-prone managers and companies stealing from their investors are a part of modern capitalism.
In fact, these scandals can be traced back to the origins of publicly traded companies, when the first stockbrokers bought and sold company shares and government securities in the coffee houses of London’s Exchange Alley during the 1700s.
As a historian of 18th century finance, I am struck by the similarities between what’s known as the Charitable Corporation Scandal and the recent collapse of FTX.
A noble cause
The Charitable Corporation was established in London in 1707 with the noble mission of providing “relief of the industrious poor by assisting them with small sums at legal interest.”
It was essentially a loan program that offered low-interest loans to the poor to protect them from predatory lenders who could charge as high as 30% interest. In exchange for a pledged property, the corporation made loans available at a rate of 5%.
The Charitable Corporation was modeled on Monti di Pietà, a charitable institution of credit established in Catholic countries…