Michael Lewis’s latest book, Flash Boys, is the 21st Century version of the story of those British financiers who lost out to Nathan Rothschild in 1814, and of their attempts to figure out how Rothschild did it, writes Jim McNiven in Thoughtlines. Today, semaphores and carrier pigeons have been replaced with fibre optic cables and microwave towers. There is nothing illegal in getting to the market microseconds ahead of the other guy by using up-to-date technology. And yet, in the aftermath of the trauma of the crash of 2008, the unethical and the illegal easily flow together, especially when the risk is of another crash. An excerpt of McNiven’s new column:
“I Stole It Fair and Square.” I have sometimes used that quote to describe what went on in much of the United States’ land policy with respect to Native Americans. An awful lot of land was acquired from various ‘chiefs’ who were deemed by the American authorities to have the legal right to sell property presumably owned by their tribes. Often the ‘purchase’ was made for a pittance, especially from chiefs who were largely unaware of the import of what was being discussed, since in their world view no one could own the land. Treaty in hand, the ‘buyers’ would then move in and evict the tribe from the land, survey it, and sell it off in parcels to eager settlers, all legal and proper-like.
Cross this with another story: that of Nathan Rothschild in London in 1814. Two hundred miles away, across the English Channel, British and Allied forces were meeting the French army at Waterloo, near Brussels. The outcome would affect the British financial market. Rothschild had operatives in Brussels who reported the outcome to him, not with the standard technology of the time, of fast horses and Channel sailing ships, but through semaphores and carrier pigeons. He got advance information, and did well out of it.
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