Summer Reading: The Long View

Finding the search for alpha fruitless, hedge-fund managers have been closing shop and complaining about the short-sightedness of investors. Originally, hedge-fund investors were supposed to think long-term. Then they wanted quarterly numbers. Then, weekly numbers! Whatever happened to the long view?

Without historical perspective, Naill Ferguson argues, animal spirits run amok. He assigns part of the blame for the current economic mess to "the failure of most educational institutions to teach financial history."

You'll find history galore, including financial insights, in two books I finally got around to. Each deals with one of the first English settlements in this county. They're both good reads.

Savage Kingdom: The True Story of Jamestown, 1607, and the Settlement of America, by Benjamin Woolley, tells the story in newly researched detail. The Jamestown project was financed by the sort of "gentlemen adventurers" who seldom sailed to the New World. They were (ad)venture capitalists. When The Virginia Company could find no more adventurers with deep pockets, it created a joint stock company. This IPO occurred a century before shares in the South Sea Company began to boil and bubble.

Think pay-to play is a modern practice? The Virginia Company showered astronomical sums upon court influentials as "Christmas gifts."

Woolley includes an account of the Sea Venture's voyage. Bound for Jamestown, the supply ship was blown to Bermuda instead. Compared to Jamestown, the ship's passengers discovered, Bermuda was a lot like heaven.

Mayflower: A Story of Courage, Community, and War, by Nathaniel Philbrick, gains from the author's nautical knowledge and interest in the Indians of New England. Lack of learning isn't Americans' only fault; most of what generations of schoolchildren learned about the Pilgrims isn't true. They were aiming to settle in what is now the New York metropolitan area, not New England. Their first anchorage in the New World was at what is now Provincetown on Cape Cod. Though they eventually decided to settle at Plymouth, they never set foot on that silly rock. Half the passengers on the Mayflower weren't even Pilgrims; to finance the Mayflower's voyage, the Pilgrims had to team up with a commercial (ad)venture.

Perhaps the principal economic lesson from these English settlements emerged in both Jamestown and Plymouth Colony. Land was at first held in common. Working on this publicly-controlled acreage, settlers couldn't get the hang of planting and harvesting enough to live on. When allowed to acquire their own plots of land –a miracle! Farming skills improved dramatically.

Makes you feel a bit queasy about the fate of GM under public ownership, doesn't it?

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Extra credit: Englishman Henry Hudson discovered the river that bears his name for the Dutch 400 years ago. Read Island at the Center of the World, by Russell Shorto, for the often-ignored story of New Amsterdam.

Below, a detail from a 1651 map. Not long thereafter, in 1653, the rapidly-expanding New Amsterdam felt threatened by invasion from New England. For defense a new road was laid out from shore to shore across the north end of town. This rough pathway was fortified by a palisade of twelve-foot oak logs and a four-foot-high breastwork.

Today, we still call it Wall Street.