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July/August 2019 177

SEBASTIAN MALLABY is Paul A. Volcker

Senior Fellow for International Economics at

the Council on Foreign Relations.

How Should a

Liberal Be?

Walter Bagehot and the

Politics o• Progress

Sebastian Mallaby

Bagehot: The Life and Times of the

Greatest Victorian

BY JAMES GRANT. Norton, 2019, 368 pp.

I

n James Grant, it sometimes seems,

the nineteenth century has been

resuscitated. Towering, gaunt,

bow-tied, and pinstriped, he writes with

a sly wit that recalls the novels o”

William Thackeray. His signal achieve-

ment is a fortnightly cult publication

bearing the antique title Grant’s Interest

Rate Observer. He is a nostalgic believer

in the nineteenth-century gold stan-

dard. He eyes modern banking innova-

tions with stern, starch-collared suspi-

cion, as though peering at them through

a monocle. Even traditional Ãnancial

instruments elicit a wry scorn. “To

suppose that the value o” a common

stock is determined purely by a corpo-

ration’s earnings,” Grant once wrote, “is

to forget that people have burned

witches, gone to war on a whim, risen

to the defense o” Joseph Stalin and

believed Orson Welles when he told

them over the radio that the Martians

had landed.”

Now, Grant has written a delightful

biography oÊ Walter Bagehot, the great

nineteenth-century Englishman in

whom Grant perhaps recognizes a

grander version oÊ himself: the would-be

Victorian sage is paying tribute to the

authentic one. From 1861 until his death

in 1877, Bagehot served as the third

and most famous editor o” The Economist.

He was a conÃdant oÊ William Glad-

stone, the dominant liberal politician o”

the era, and his words exercised such

sway over successive governments that

he was regarded as an honorary cabinet

minister. After Bagehot’s death, a

contemporary remarked that he might

have been the most fascinating conver-

sationalist in London.

Like Grant, Bagehot was a vivid

wordsmith and a cult Ãgure. Unlike

Grant, Bagehot was generally a modern-

izer, a believer in progress, and there-

fore an opponent o” the gold standard.

(Bagehot’s views on certain matters,

such as gender and race, were far from

enlightened.) In his slim 1873 volume,

Lombard Street, Bagehot explained how

central banks should quell Ãnancial panics

by printing currency and lending it

liberally—“to merchants, to minor bank-

ers, to ‘this man and that man,’ whenever

the security is good.” To Grant’s evident

dismay, this formulation has proved wildly

inÁuential ever since. In his memoir o”

the 2008 Ãnancial crash and the bank

bailouts that followed, Ben Bernanke,

the former chair o” the U.S. Federal

Reserve, cited Bagehot more than any

living economist.

I” the tension between the hard-

money biographer and the soft-money

subject permeates Grant’s book, it is not

the only theme that captures one’s

attention. For just as Bagehot was the

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