Guernsey did not somehow conjure free money from thin air

Some of the words in your leader are taken verbatim from page 7 of a Marxist pamphlet published in 1960 by a local council activist in Scotland. Mr Jan K Grubiak had a thing about ‘usury’ and was trying to start a zero-interest rate voucher scheme in Glasgow in the late 1950s. Casting around for historical examples, he and his wife, Olive, wrote to the Guernsey Greffier asking how this island kick-started its building works in the 1810s.

Those were the days before Guernsey’s Island Archive. Greffier M. Guillemette sent them ‘a photostatic copy’ of pages from the bound and printed proceedings of the States for 1829, reporting at length on the matter to the Privy Council. He was probably unaware that the relevant original documents from 1814-19 were in the Public Record Office in London (now the National Archives).

The Grubiaks then published a pamphlet in 1960 called The Guernsey Experiment, cherry-picking from the 1829 report as they saw fit.

Their pamphlet records correctly that in 1816 the States issued £4,000 of interest-free Guernsey £1 notes. Sadly, it then enters cloud-cuckoo-land, ignoring most of the 1829 report which explains the mechanism, instead claiming that in some way we had self-levitated.

The Guernsey Experiment pamphlet never mentions that:

l the notes were secured against the revenues from a new tax of one shilling on each gallon of ‘spirituous liquors’ imported into the island, introduced in 1814 for five years. (During the Napoleonic Wars, St Peter Port had become an entrepot for onward smuggling of French brandy to England. At one shilling per gallon, £4,000 = 640,000 pints. Guernsey’s population was 20,000, man woman and child, so the spirits were not all being consumed locally);

l the notes were effectively post-dated cheques written against imminent revenues from this tax;

l subsequent notes for larger sums were also secured against the liquor tax (extended in 1819 for 10 years, and in 1829 for 15 years);

l further additional bank debts were borrowed at the going interest rate of 3%, secured against revenues from facilities which had already been built, paid for by this tax.

In particular, the pamphlet omits the previous submission to the Privy Council dated 18 March 1819 (PC1/4055 in the National Archives), before the States’ proceedings were bound and printed. This 1819 handwritten report says clearly that the 1816 notes ‘neither increased nor diminished the means of the States, they simply represented the [liquor] duty which was to be received six months after and which duty was to pay the notes…’.

Quoting the 1960 pamphlet perpetuates a falsehood. Guernsey did not somehow conjure free money from thin air in 1816 and later repay it from income generated by the projects on which it was spent.

The only thing conjured from thin air was a notion in the mind of a mid-20th Century Marxist amateur historian in faraway Glasgow, that Guernsey once invented a magical way to pick itself up by its own bootstraps.

FERGUS DUNLOP

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