"There is no maxim in my opinion which is more liable to be misapplied, and which therefore needs elucidation than the current one that the interest of the majority is the political standard of right and wrong...." ~ James Madison
Money to Burn
Column by Jim Davies.
Exclusive to STR
In December, the death occurred of one of Britain's most colorful characters: Ronnie Biggs. He was 84 and had suffered several debilitating strokes.
He came to fame in 1963 as a member of a group of 17 professional crooks who held up the transport of used government money, being trained from Glasgow to London for incineration. I've not been able to discover why a match could not be applied to the bank notes in Scotland rather than England, but instead they were bagged up and placed in a special railroad car.
The gang prepared well, and chose August 8th of that year because the car was not, on that day, one of several recently upgraded with additional security. As the train approached the village of Ledburn about 50 miles NW of London, one of the raiders cut all local phone wires and the one that powered a green signal light. In its place he connected a 6-volt battery to the red signal, and sure enough, the train came to a stop.
The group detached the cars behind the one containing the equivalent of 46 million 2013 dollars, and forced the driver to move it half a mile further on, to a bridge over a roadway where they had trucks waiting. Forming a human chain, the gang moved the sacks of loot into the trucks in half an hour in the dead of night. Warning the tied-up staff to raise no alarm for at least 30 minutes, they then made off to a disused farmhouse they had rented, and portioned out the money. Each got around $2.7 million, in 1963 pounds. They played Monopoly with it.
Police were quickly on the job, and picked up on that 30-minute warning, guessing correctly that it meant that they were hiding within a 30-mile radius. The robbers used a scanner to monitor progress, and when the cops were getting close brought forward their dispersal plan and vacated the farmhouse. Then came their second mistake: the man commissioned to burn it to the ground found the police too close for comfort and skipped without doing so.
So a few fingerprints were found, some members were arrested and “sang” loudly enough for 14 of the 17 to be identified and captured – including Ronnie Biggs. Each got 30 years.
Ronnie, however, felt that 30 years was too long, so after 15 months in a London pokey, he and three other inmates arranged for friends to park a covered truck close to the outside of its wall and to let down a ladder inside the wall at the very moment when guards were being distracted by a disturbance. They all escaped, and Biggs made his way to Paris for a face job, and thence in due course to Brazil, where the arm of British law could not reach. For extra security, he married a Brazilian and fathered a son, knowing Brazilian law does not expel anyone with a native-born child. He then spent the next three decades enjoying the sun and sea and sand, granting interviews to any reporter who would pay a reasonable fee.
Biggs was therefore a person who cocked a snoot [in American: gave a five fingered salute] at the law and appropriated the best part of three million bucks to his own use, knowing that it was all about to be destroyed anyway. So he was stealing paper that was never real money, and which was already out of circulation. All he really did was to place it back in circulation for a while. Who lost what, exactly?
The UK government lost prestige, for having exposed its funny-money to the other criminals in society, and it lost the funds used for detection, prosecution and imprisonment. Those costs were of course passed on to taxpayers. Policemen, lawyers and jailers were employed, but nobody productive.
Did UK society lose the $46M? That's a bit hard to tell. It was quickly calculated that that much had been stolen in notes condemned to the furnace, so the order to print up an equivalent sum in new notes could have been cancelled. If it was, the total money supply was unchanged.
Even then there was a loss, though, because $46M had been transferred to 17 men who had not earned it by providing goods or services in exchange, on an agreed and voluntary basis. They had labored to prepare the heist and lug the sacks to the trucks, etc., but nobody had volunteered to pay for that work. As in all compelled transactions, there was no trade; one party got what it wanted but the other party got nothing. Such is government, also. Such is the huge flaw in “Gross Domestic Product,” defined to include unwanted government “services.”
If the replacement notes were printed after the heist, as previously planned, then the effect of the robbery was to increase the UK money supply. As we know, when such an increase has trickled down, prices rise in proportion and so value is transferred from real people to those who take the first use of the money: government. In this case, who got to use new money first? It depends which of the two loads of money we count as “new.” If it was the freshly printed kind, government did as usual; if it was the soiled stuff, this time the Great Train Robbers beat government to the punch. A distinction with little difference.
Biggs had one further claim to fame. The strokes that ended his carefree life in the late 1990s also exhausted his funds and he got poor and homesick. Americans tend to belittle warm British beer, and I concede that it's an acquired taste, but our Ronnie hankered for the chance to re-enter a pub and order a pint of bitter. So in 2001 he had himself taken back home, only to be placed back in prison – and so was furnished with free (albeit sparse) accommodation and food (but no beer, at any temperature) and free health care, which in his condition meant a lot. In 2009 he caught pneumonia and was granted parole, and survived another four years. So he is the only person I can think of who went to prison voluntarily.
In other news, Ben Bernanke, who in recent years has done roughly what Biggs did one-time, but forty three times every hour, 24/7, has not yet followed his example; nor has La Yellen (as Murray Rothbard might have called her) announced any such intention.