Latest / Economy & Finance / How New York paid for the canal that brought America together _ The Story of Money

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How New York paid for the canal that brought America together _ The Story of Money · Economy & Finance

• 0:00
  Speaker 1: This is a massive, massive construction and engineering project, unlike
• 0:05
  Speaker 1: anything we've ever seen. It's like an Apollo program for
• 0:08
  Speaker 1: the era. The canal is, what, 350 miles long, which
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  Speaker 1: is an order of magnitude bigger than any canal ever
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  Speaker 1: built in America before. And it can cut time travel
• 0:19
  Speaker 1: from Albany to Buffalo from two weeks to just five days.
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  Speaker 1: It's essentially like a teleporter in Star Trek or something
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  Speaker 1: for the era.
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  Speaker 2: Well, that's the important point, I think.
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  Speaker 3: The.
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  Speaker 4: The cost of shipping, let's say, a ton of wheat
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  Speaker 4: from where it was produced to the market in New
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  Speaker 4: York City was like one-tenth of what it had been previously.
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  Speaker 2: It's a dramatic reduction. And this is where the U.S.
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  Speaker 4: Begins to grow rapidly because transport costs fell so dramatically.
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  Speaker 5: Today on The Story of Money... the 19th century construction
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  Speaker 5: project that helped make New York the country's premier financial center.
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  Speaker 5: We're talking about the 363 mile long Erie Canal, which
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  Speaker 5: links the Atlantic Ocean to America's interior and how its
• 1:16
  Speaker 5: construction almost never happened.
• 1:19
  Speaker 1: But it did. And Gillian, I'm particularly excited about this
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  Speaker 1: story because, well, our hero is kind of this weird,
• 1:27
  Speaker 1: underappreciated corner of the bond market that really kind of
• 1:30
  Speaker 1: only exists in America. And I'm talking about the municipal
• 1:34
  Speaker 1: bond market, which are bonds sold by US states, local authorities, schools,
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  Speaker 1: even prisons. And as you know, I feel the US
• 1:44
  Speaker 1: municipal bond market is a pretty magical thing that doesn't
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  Speaker 1: really get the attention it deserves.
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  Speaker 2: Yeah, yeah, yeah.
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  Speaker 5: I mean, we used to work together and you were
• 1:53
  Speaker 5: constantly ranting about muni bonds and why they're so important.
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  Speaker 2: Well, they are.
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  Speaker 1: They are, Gillian. Okay, so I had to cover crypto
• 2:02
  Speaker 1: all the time. Crypto, the entire industry is around $ 2 trillion, right?
• 2:06
  Speaker 1: But the US muni market is more than twice as big.
• 2:09
  Speaker 1: It's kind of the antithesis to crypto, which is incredibly sexy,
• 2:14
  Speaker 1: fundamentally useless and pointless. Well, muni bonds are super important,
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  Speaker 1: hugely valuable. but nobody really cares about it. But it
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  Speaker 1: all started with the Erie Canal, which is why I'm
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  Speaker 1: so excited today.
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  Speaker 5: Yeah, I mean, I'm glad this is what gets you excited.
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  Speaker 5: Most ordinary mortals don't actually feel so passionate about the
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  Speaker 5: Erie Canal.
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  Speaker 1: Yeah, my case are peculiar, Jill, I have to admit.
• 2:35
  Speaker 5: Okay, so muni bonds are not sexy, but they're critical
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  Speaker 5: to how finance works today, not just for the issuers,
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  Speaker 5: the governments, but also for the investors. And today we're
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  Speaker 5: going to start off by talking about the Erie Canal.
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  Speaker 5: And the founding fathers and the future presidents, who were
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  Speaker 5: part of the story, who loved it, and some hated
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  Speaker 5: it too, and a New York City mayor who, just
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  Speaker 5: like today, made a lot of headlines and actually made
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  Speaker 5: sure it got built.
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  Speaker 1: Plus, why? Even though the Erie Canal isn't used in
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  Speaker 1: the same way it was today, 200 years ago, its
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  Speaker 1: financial legacy is huge.
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  Speaker 5: So, welcome to the story of money from the Financial
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  Speaker 5: Times with me, Gillian Tett.
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  Speaker 1: And me, resident Bob nerd, special immunity finance, Robin Wigglesworth.
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• 3:30
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• 3:35
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• 3:38
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• 3:42
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• 3:45
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• 3:48
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• 3:52
  Speaker 6: to learn more. Investing involves risk. Principal loss is possible.
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  Speaker 5: To help us tell the story of the Erie Canal
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  Speaker 5: and why it matters so much, we have got a
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  Speaker 5: financial history superstar with us today. He is the historian
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  Speaker 5: Richard Siller, or Dick Siller, Professor Emeritus of Economics at
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  Speaker 5: the New York University's Stern School of Business.
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  Speaker 2: Welcome, Dick. Glad to be here. I'm sort of excited
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  Speaker 2: about this opportunity.
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  Speaker 5: So technically you're Professor Siller. I'm going to call you
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  Speaker 5: Dick if that's okay. But we're going to be talking
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  Speaker 5: a lot in this episode about a book that's one
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  Speaker 5: of Robin's favourite. Take it away, Robin. Why do you
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  Speaker 5: care so much about this book and why is Dick
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  Speaker 5: so relevant to it?
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  Speaker 1: This book is called The Wedding of the Waters. It's
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  Speaker 1: written by another one of my favourite financial historians, Peter Bernstein,
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  Speaker 1: who sadly passed away in 2009. But this book in
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  Speaker 1: particular is so fantastic because it really gets into the
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  Speaker 1: nitty gritty detail of how the canal was built And importantly,
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  Speaker 1: for a finance geek like us, Gillian, it explained how
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  Speaker 1: it was paid for. And Dick, you knew Peter Bernstein
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  Speaker 1: and worked with him as well, didn't you?
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  Speaker 4: Yes, he was a good friend and I actually admired
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  Speaker 4: him a lot. He was not an academic, but his
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  Speaker 4: publication record would have entitled him to be probably a
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  Speaker 4: university professor at some good university.
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  Speaker 5: So what we're actually talking about today, though, is his
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  Speaker 5: book about the Erie Canal. And it begins in the
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  Speaker 5: years after the American Revolution. Now, the country has just
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  Speaker 5: won the war. The founding fathers are working on getting
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  Speaker 5: the Constitution written and unifying the states. And it's all very,
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  Speaker 5: very exciting. But as so often, there are some really
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  Speaker 5: big glitches. The country is also crying out to be united,
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  Speaker 5: not just in political theory, but also through trade and economics.
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  Speaker 5: And they didn't really have that, did they? Why was
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  Speaker 5: it so hard?
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  Speaker 2: Well, the United States was.
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  Speaker 4: not as large then as it is now, but it
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  Speaker 4: was still a very large country. The Brits in the
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  Speaker 4: Peace Treaty of Paris in 1783 basically give the United
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  Speaker 4: States all the territory east of the Mississippi River. Now,
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  Speaker 4: that territory is broken up by a chain of mountains
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  Speaker 4: called the Appalachian Mountains, and that was a barrier to trade.
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  Speaker 4: Americans were rushing across the Appalachians to settle places like
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  Speaker 4: Ohio and Kentucky, so they could produce a lot of
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  Speaker 4: agricultural products, but it was hard to get those products
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  Speaker 4: to the market. There were some rivers, but basically you
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  Speaker 4: had to carry things by wagons, which is very expensive.
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  Speaker 4: The Westerners sometimes thought, well, that Eastern government, the new
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  Speaker 4: federal government of the United States, isn't doing very much
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  Speaker 4: for us, and so maybe we should, you know, go
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  Speaker 4: off on our own and break up the country.
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  Speaker 1: Even George Washington worried that the country might sunder into
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  Speaker 1: two different parts, right?
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  Speaker 4: Right. It just showed that at the very top of
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  Speaker 4: American society, leaders were thinking that it was important to
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  Speaker 4: develop trade connections between the trans-Appalachian West and the Atlantic Tidewater.
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  Speaker 1: And this is all going to be super expensive and difficult, right?
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  Speaker 1: And this is where our main character of this story,
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  Speaker 1: DeWitt Clinton, enters the picture. because he's the politician, Gillian,
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  Speaker 1: who really got the Erie Canal built. And in the process,
• 7:22
  Speaker 1: unwittingly sparks the creation of the mighty US municipal bond market.
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  Speaker 1: But Dick, can you tell us a little bit about
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  Speaker 1: DeWitt Clinton? He's not like a name that people know,
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  Speaker 1: at least us Europeans know that much today, but he
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  Speaker 1: was a huge figure at the time.
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  Speaker 5: Yeah, hands up. I've never even heard of him properly before.
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  Speaker 4: Well, he's forever associated with the great success of the
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  Speaker 4: Erie Canal. But DeWitt Clinton was a an early American
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  Speaker 4: from a political family.
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  Speaker 2: He got into politics.
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  Speaker 4: He was a mayor of New York for a number
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  Speaker 4: of terms, and he was also governor of New York
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  Speaker 4: State for a number of terms. He was well-educated and
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  Speaker 4: apparently a very effective, eloquent speaker and had a way
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  Speaker 4: of getting people to follow him.
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  Speaker 5: Why did they suck him in to lead the charge
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  Speaker 5: around something which is not usually the stuff of high politics,
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  Speaker 5: which is how to finance a canal.
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  Speaker 4: When Clinton was mayor of New York City, some other
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  Speaker 4: leaders of the time, Gouverneur Morris, who was a member
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  Speaker 4: of the Constitutional Convention and an important American founding father,
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  Speaker 4: sometimes called the penman of the Constitution, and along with
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  Speaker 4: other New Yorkers like Stephen Van Rensselaer from upstate, These
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  Speaker 4: were very prominent New Yorkers, and they had this idea
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  Speaker 4: that it would be good to connect the Atlantic Tidewater
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  Speaker 4: with the Trans-Appalachian West. And it's their dream, really, to
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  Speaker 4: have this canal. Clinton gets involved with the project around
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  Speaker 4: 1810 when he joins the canal commissioners. Other people had
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  Speaker 4: the idea. Clinton realized it was a great idea, and
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  Speaker 4: his political skills made it happen.
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  Speaker 1: So obviously canals, you know, it sounds weird to us today,
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  Speaker 1: but canals were kind of the railways and the airlines
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  Speaker 1: of the era, right? They were an easy way of
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  Speaker 1: transporting people and goods from one place to the next.
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  Speaker 1: But the Erie Canal project is just vastly larger in
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  Speaker 1: physical challenges. And I was wondering whether the private money
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  Speaker 1: was there to do this kind of thing. So why
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  Speaker 1: did the Erie Canal Commission come up with this this
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  Speaker 1: project specifically?
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  Speaker 4: Well, I think the failures inspired DeWitt Clinton to find
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  Speaker 4: another way. There was even an attempt to form a
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  Speaker 4: company to make the Mohawk River, which runs along the
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  Speaker 4: route of the Erie Canal in upstate New York. There
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  Speaker 4: was an attempt to improve it a lot for navigation.
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  Speaker 4: They formed a corporation. It was called the Western Inland
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  Speaker 4: Navigation Corporation.
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  Speaker 2: Company.
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  Speaker 4: And they tried to improve the Mohawk River, but they
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  Speaker 4: didn't really have enough money to do it.
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  Speaker 5: So they went bankrupt in the end, wasn't it? It
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  Speaker 5: was basically a disaster.
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  Speaker 4: Yeah, I think there was a company that failed. And
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  Speaker 4: of course, a lot of companies fail. But So the
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  Speaker 4: Potomac venture with George Washington involved, it didn't really accomplish
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  Speaker 4: its objective, and neither did the Western Inland Navigation Company.
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  Speaker 4: So some other way had to be found. And that's
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  Speaker 4: where DeWitt Clinton and the Canal Commission come in, starting
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  Speaker 4: around 1810.
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  Speaker 5: So basically, they decided the private money wasn't there or
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  Speaker 5: not there to a great enough extent to actually finance
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  Speaker 5: this project. And, you know, I gather, looking back at
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  Speaker 5: the Bernstein book, he points out that the Karnal basically
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  Speaker 5: needed public financing, ownership, and control by New York State.
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  Speaker 5: But if they start looking to the state for help,
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  Speaker 5: it begs the question of why on earth wouldn't they
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  Speaker 5: just go to the federal government?
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  Speaker 2: Well, in fact, they did.
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  Speaker 4: The back story there is that Albert Gallatin, who was
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  Speaker 4: Thomas Jefferson's Secretary of the Treasury, Jefferson's term was 1801
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  Speaker 4: to 1809. In 1808, Albert Gallatin writes a famous report
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  Speaker 4: on roads and canals. He outlined a comprehensive internal improvement program,
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  Speaker 4: roads and canals, to knit the country together economically. And
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  Speaker 4: he said only the general government, meaning the federal government,
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  Speaker 4: really had the power to raise the money to do this.
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  Speaker 4: What happened was the New Yorkers went to seek help
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  Speaker 4: from the federal government. and they could point to Gallatin's
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  Speaker 4: reporters saying, you know, you ought to help us do this,
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  Speaker 4: and Thomas Jefferson, for various reasons, said no. I mean,
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  Speaker 4: he thought it was a bad time because in 1808,
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  Speaker 4: Jefferson had put an embargo on U.S. trade, which basically
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  Speaker 4: shut the country down from trading with the rest of
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  Speaker 4: the world, and that created budget problems for the federal government,
• 12:03
  Speaker 4: and we were moving toward a second war with Britain,
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  Speaker 4: which is called the War of 1812, and so that
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  Speaker 4: was a maybe Jefferson had the idea that the federal
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  Speaker 4: government should save its money for the war and not
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  Speaker 4: put it into canals. And I think also that Jefferson
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  Speaker 4: saw this as a New York project that wasn't really
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  Speaker 4: helpful to his political base in the South. And furthermore,
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  Speaker 4: his political base in the South, which often was large
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  Speaker 4: slave owners, they didn't want the federal government to do
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  Speaker 4: anything major because it might set a precedent for the
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  Speaker 4: federal government to interfere with the slave system of the South.
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  Speaker 1: Can you explain that link a little bit? What was
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  Speaker 1: the link to slavery?
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  Speaker 4: Thomas Jefferson was famously a states' rights advocate, which said
• 12:48
  Speaker 4: the federal government should be a minimal government. And if
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  Speaker 4: you look at the early decades of U.S. history, there
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  Speaker 4: were a number of Americans that were worried at the
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  Speaker 4: time the Constitution was written, And during the 1790s, when
• 13:02
  Speaker 4: Hamilton was making a lot of financial reforms, and going
• 13:06
  Speaker 4: into the early 19th century, in the country, there was
• 13:10
  Speaker 4: a growing opposition to slavery. But in fact, Jefferson's political base,
• 13:16
  Speaker 4: the strongest part of it was the slave owners of
• 13:21
  Speaker 4: the South. And they were worried that the new government had...
• 13:26
  Speaker 4: too many powers. If you can build a canal across
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  Speaker 4: New York State with federal money, then it's possible that
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  Speaker 4: these guys who are against slavery can get the federal
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  Speaker 4: government to end slavery. Remember, Jefferson was president 1801 to 1809.
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  Speaker 4: His protege, Madison, was president from 1809 to 1817. And
• 13:42
  Speaker 4: the protege of both of them, James Monroe, was president
• 13:44
  Speaker 4: from 1817 to 1825. And And so you had basically,
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  Speaker 4: they call it the Virginia dynasty running the country. All
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  Speaker 4: three of those presidents were slave owners and they represented
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  Speaker 4: the interests of slave owners. Those were among the reasons,
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  Speaker 4: I think, that Jefferson nixed the idea that New Yorkers
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  Speaker 4: had of getting federal aid to build the Erie Canal.
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  Speaker 4: And this led the canal commissioners in New York by
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  Speaker 4: the second decade of the 19th century to say, well,
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  Speaker 4: we're not going to get help from those guys in
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  Speaker 4: Washington because We're going to have to do this on
• 14:23
  Speaker 4: our own.
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  Speaker 2: How can we do it?
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  Speaker 5: Let's get back to 1812. And it seems that by
• 14:28
  Speaker 5: then there's a lot going against the whole idea of
• 14:31
  Speaker 5: whether the Erie Canal will ever fly. I mean, they've
• 14:34
  Speaker 5: already had a whole bunch of canal projects fail. You've
• 14:38
  Speaker 5: had essentially the federal government say no. But in the
• 14:42
  Speaker 5: true all-American spirit, they ain't giving up yet. And so
• 14:47
  Speaker 5: we're going to find out after the break what happens next.
• 14:58
  Speaker 3: Alternatives play a key role in investor portfolios. Traditional stocks
• 15:02
  Speaker 3: and bonds are becoming increasingly correlated in the most recent downturn.
• 15:06
  Speaker 3: Equities and fixed income were both significantly negative. Alternatives can
• 15:11
  Speaker 3: add diversification to your portfolios and lower correlations between the
• 15:15
  Speaker 3: asset classes. Both of those can help your portfolio behave
• 15:19
  Speaker 3: in a more resilient manner during the economic ups and downs.
• 15:35
  Speaker 1: And we are back. It's 1815 and it's already been
• 15:38
  Speaker 1: shown that these kind of waterway projects, whilst they're needed
• 15:43
  Speaker 1: to help unify the country economically, to foster trade, all
• 15:47
  Speaker 1: that good stuff, they're just too expensive for private companies
• 15:51
  Speaker 1: to do. Many have tried and they all basically failed.
• 15:54
  Speaker 1: And the federal government has said that it isn't eager
• 15:57
  Speaker 1: to jump in either, because while they're mostly concerned about,
• 16:00
  Speaker 1: at the time, this Virginia dynasty led by Thomas Jefferson, well,
• 16:04
  Speaker 1: they want to preserve the peculiar institution of slavery. And
• 16:09
  Speaker 1: of course, well, there's also a war going on with
• 16:12
  Speaker 1: Great Britain at the time, which I think actually at
• 16:15
  Speaker 1: one point, Gillian, led to Britain burning down the White House, right?
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  Speaker 5: Absolutely. I mean, this seems like the very worst moment
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  Speaker 5: to actually try and start a massive project. But, you know,
• 16:26
  Speaker 5: American history is littered with big risk-takers who say, well,
• 16:30
  Speaker 5: it looks like a terrible moment to do something. Let's try.
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  Speaker 5: And in this case, DeWitt Clinton was thoroughly undeterred because
• 16:38
  Speaker 5: after the War of 1812 was finally finished in 1815,
• 16:42
  Speaker 5: after all that burning and killing, the members of the
• 16:45
  Speaker 5: Erie Canal Commission decide they're going to try and get funding.
• 16:50
  Speaker 4: But.
• 16:51
  Speaker 5: they decide to be innovative and do this in a
• 16:52
  Speaker 5: whole new way. So what do they do?
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  Speaker 4: The idea of forming the Erie Canal, getting it done,
• 17:00
  Speaker 4: was on the minds of these political leaders and D.
• 17:06
  Speaker 4: Wade Clinton foremost. And he would give talks about how
• 17:12
  Speaker 4: history shows that the ancient Egyptians had canals and, of course,
• 17:15
  Speaker 4: Britain had its canal era And Americans had some short canals,
• 17:19
  Speaker 4: you know, nothing more than 30 or 40 miles that
• 17:22
  Speaker 4: worked out pretty well. And so Clinton said it was
• 17:26
  Speaker 4: history showed that canals could be very important, but it
• 17:29
  Speaker 4: was difficult to do. So you had to find another way.
• 17:32
  Speaker 1: At what point it was like they had this big drive.
• 17:35
  Speaker 1: You mentioned that they sort of they campaigned for this
• 17:37
  Speaker 1: quite persuasively. And 10% of New York's population, it was
• 17:42
  Speaker 1: only a million people at the time, but 10% basically
• 17:46
  Speaker 1: signed up in favor of this project, right?
• 17:47
  Speaker 4: 100,000 people signed the petition. Then he had to get
• 17:51
  Speaker 4: it through the legislature. And that was tricky because New
• 17:53
  Speaker 4: York politics was pretty divided. Opposing Clinton was another politician
• 17:58
  Speaker 4: named Martin Van Buren, who later on became president of
• 18:01
  Speaker 4: the United States. So Van Buren had a different political faction.
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  Speaker 4: So Clinton had to overcome their opposition.
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  Speaker 2: And he did.
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  Speaker 4: The canal commissioners decide that the way to do this
• 18:14
  Speaker 4: is to get the New York legislature to approve issuing
• 18:19
  Speaker 4: canal bonds to build the Erie Canal. When the legislature
• 18:23
  Speaker 4: approved it, of course, the initial financing was a lot
• 18:26
  Speaker 4: of small investors invested small sums to create the first funding.
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  Speaker 4: Then when it became clear that New York is going
• 18:33
  Speaker 4: to do this, then larger institutions and investors stepped in
• 18:37
  Speaker 4: to back it, and that put.
• 18:38
  Speaker 2: New York over the top. They were able to raise
• 18:40
  Speaker 2: the $ 7.
• 18:41
  Speaker 4: Million of municipal bond financing that allowed the completion of
• 18:46
  Speaker 4: the canal. It took eight years, started in 1817, finished
• 18:50
  Speaker 4: in 1825. But even before it was finished, upstate New
• 18:55
  Speaker 4: York was shipping goods through the canal to the Hudson
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  Speaker 4: River and down the Hudson River to New York City.
• 19:02
  Speaker 4: So the canal was successful even before it was completed. Wow.
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  Speaker 5: So it's a bit like doing a sort of 1930.
• 19:08
  Speaker 5: century version of GoFundMe campaign until they actually got the
• 19:11
  Speaker 5: ball rolling properly and more widely. But although 10% of
• 19:15
  Speaker 5: the population wrote and said they wanted to see the
• 19:17
  Speaker 5: canal happen, of course, there were quite a lot of
• 19:19
  Speaker 5: people who actually didn't like the idea at all, weren't there?
• 19:21
  Speaker 4: Yes. Clinton took a lot of political heat for backing
• 19:25
  Speaker 4: this project, which people called DeWitt's Ditch or Clinton's Folly.
• 19:31
  Speaker 4: And many people thought that they wouldn't be able to
• 19:33
  Speaker 4: pull it off, that it would fail just like the
• 19:35
  Speaker 4: Potomac Canal failed in the Western Pacific.
• 19:37
  Speaker 2: Navigation company failed.
• 19:39
  Speaker 1: I want to go back to the financing bit because
• 19:41
  Speaker 1: obviously that's one of my obsessions and to use that
• 19:45
  Speaker 1: terrible American CEO phrase, let's double click on that. and
• 19:49
  Speaker 1: find out where the money came from. Because like you say,
• 19:52
  Speaker 1: this is a massive, massive construction and engineering project, unlike
• 19:57
  Speaker 1: anything we've ever seen. I mean, it's not really even
• 19:59
  Speaker 1: a GoFundMe, it's like an Apollo program for the era.
• 20:03
  Speaker 1: The canal is what, 350 miles long, which is an
• 20:07
  Speaker 1: order of magnitude bigger than any canal ever built in
• 20:10
  Speaker 1: America before. How exactly did they pay for all this?
• 20:13
  Speaker 1: Was it just, Oh, we'll just sell some bonds. And
• 20:16
  Speaker 1: that was it.
• 20:16
  Speaker 4: Well, I think they had to make the bonds attractive
• 20:19
  Speaker 4: to investors. And, and, uh, one of the characteristics of, uh, uh,
• 20:24
  Speaker 4: the canal financing is that New York state engaged in
• 20:28
  Speaker 4: what I would call responsible or Hamiltonian finance. So they
• 20:32
  Speaker 4: had to get the investors, uh, to believe that the, uh,
• 20:36
  Speaker 4: the bonds would be a safe investment. And they did
• 20:39
  Speaker 4: this in an interesting way. They levied taxes that were
• 20:45
  Speaker 4: dedicated to paying the interest and eventually the principle of
• 20:49
  Speaker 4: the canal bonds before they started.
• 20:52
  Speaker 2: And there were two types of taxes.
• 20:54
  Speaker 4: New York has a sort of division between downstate, which
• 20:57
  Speaker 4: is basically New York City, and upstate, which is basically
• 21:00
  Speaker 4: an agricultural region.
• 21:02
  Speaker 2: And New York cleverly put out two taxes.
• 21:06
  Speaker 4: One was a tax on salt, which was produced upstate
• 21:10
  Speaker 4: around the city of Syracuse. And they put a tax
• 21:14
  Speaker 4: on auctions in New York City. New York was a
• 21:17
  Speaker 4: major trading center. Goods would come in from foreign countries.
• 21:21
  Speaker 4: And the way they were distributed initially was to auction
• 21:25
  Speaker 4: them to wholesalers and retailers in America. And so there
• 21:28
  Speaker 4: were a lot of auctions in New York City. So basically, politically,
• 21:32
  Speaker 4: this is where D-Link DeWitt Clinton was clever. He put
• 21:36
  Speaker 4: the burden of these taxes on both upstate and downstate.
• 21:40
  Speaker 4: And the idea was that the investors would be reassured
• 21:44
  Speaker 4: that their bonds would be, the interest would be paid
• 21:47
  Speaker 4: when it was due and the principal would be paid
• 21:50
  Speaker 4: when it was due by dedicating these taxes to paying
• 21:55
  Speaker 4: the costs of the canal.
• 21:57
  Speaker 5: I mean, it's fascinating, this idea of trying to make
• 21:59
  Speaker 5: sure a maximum number of people have skin in the
• 22:00
  Speaker 5: game to get them all at engaged in supporting. But
• 22:03
  Speaker 5: what kind of investors were they and how much do
• 22:04
  Speaker 5: they have to chuck in initially?
• 22:05
  Speaker 4: There's kind of three steps along the way. Number one,
• 22:08
  Speaker 4: we mentioned that 10% of the population in New York
• 22:11
  Speaker 4: endorsed the idea of the canal. And a good number
• 22:14
  Speaker 4: of them initially bought the, you know, small amounts of $ 1, 000, $ 2, 000
• 22:19
  Speaker 4: worth of canal bonds. And that got the canal rolling.
• 22:22
  Speaker 4: And then some financial institutions, New York had actually created
• 22:26
  Speaker 4: savings banks starting around the same time that the Erie
• 22:29
  Speaker 4: Canal started.
• 22:30
  Speaker 2: And one was called the Bank for Savings in New
• 22:32
  Speaker 2: York City.
• 22:33
  Speaker 4: The savings bank would invest that money in things like
• 22:37
  Speaker 4: government bonds. Fairly early on, they took the savings of
• 22:41
  Speaker 4: small working class people and bought canal bonds. So you
• 22:46
  Speaker 4: had first these small individual investors, then you had institutions
• 22:50
  Speaker 4: like the savings bank putting money into the canal bonds.
• 22:54
  Speaker 4: And by 1822, this canal is moving along pretty well,
• 22:58
  Speaker 4: getting completed. foreign investors come in, especially British investors. The
• 23:02
  Speaker 4: Napoleonic Wars are over in 1815 and Britain isn't running
• 23:07
  Speaker 4: up so much debt anymore. There's a sort of economic
• 23:10
  Speaker 4: investment boom in Britain and British investors are looking for
• 23:15
  Speaker 4: places to invest. They do a lot in Latin America
• 23:18
  Speaker 4: and other places, but they also start buying these Erie
• 23:21
  Speaker 4: Canal bonds because basically American bond yields are higher than
• 23:25
  Speaker 4: you can get in Europe. And there's a lot of
• 23:27
  Speaker 4: money in Europe.
• 23:28
  Speaker 1: So a bit of a classic hunt for yield, but
• 23:30
  Speaker 1: in the 19th century then, beginning of it. But just
• 23:33
  Speaker 1: returning to the bonds, states or colonies in the U.S.
• 23:37
  Speaker 1: had issued bonds for decades before this. What was so
• 23:42
  Speaker 1: special about these New York state bonds to finance the
• 23:44
  Speaker 1: Erie Canal?
• 23:46
  Speaker 2: I'd make two points.
• 23:47
  Speaker 4: One is that the previous municipal financings were rather small,
• 23:51
  Speaker 4: like Philadelphia issued some bonds to build a waterworks. But
• 23:55
  Speaker 4: that was, you know, some probably could measure in the
• 23:58
  Speaker 4: hundreds of thousands or at most a million dollars. Now,
• 24:02
  Speaker 4: New York is talking about $ 7 million of bond financing.
• 24:06
  Speaker 4: To make people be reassured about that large amount of
• 24:10
  Speaker 4: bonds that are going to be issued, they did this,
• 24:12
  Speaker 4: what I call Hamiltonian financing. They raised some taxes and
• 24:15
  Speaker 4: dedicated those taxes to servicing these canal bonds. I think
• 24:19
  Speaker 4: the small investors did it for sort of patriotic reasons.
• 24:22
  Speaker 4: but the savings banks of the United States and the
• 24:25
  Speaker 4: foreign investors were interested in a safe investment that had
• 24:29
  Speaker 4: a certain yield that was better than they could find
• 24:32
  Speaker 4: in Europe. So that kind of the way they structured
• 24:36
  Speaker 4: the financing of the bonds was important in making the
• 24:41
  Speaker 4: financing successful.
• 24:42
  Speaker 1: Just to put in context, I've been looking up the
• 24:44
  Speaker 1: numbers on American GDP. Obviously, GDP data going back that
• 24:49
  Speaker 1: far is pretty dodgy. But People think that the US
• 24:52
  Speaker 1: economy was around $ 700, $ 800 million annual economic output. So
• 24:59
  Speaker 1: $ 7 million worth of bonds today is equivalent to almost
• 25:01
  Speaker 1: a trillion dollars. It was a massive project, right?
• 25:05
  Speaker 4: Yes.
• 25:06
  Speaker 1: And I think maybe that's why we consider it now
• 25:09
  Speaker 1: the genesis moment for the US municipal bond market.
• 25:12
  Speaker 5: One of the things that make this whole story more
• 25:15
  Speaker 5: extraordinary is that all this was occurring as you had
• 25:18
  Speaker 5: the panic of 1819. Tell us, Dick, briefly what that
• 25:23
  Speaker 5: panic was and whether it damaged or actually helped efforts
• 25:28
  Speaker 5: to get the financing together for the Erie Canal Project.
• 25:31
  Speaker 4: Well, the panic of 1819 is rooted in the War
• 25:33
  Speaker 4: of 1812, where government debt soared a lot.
• 25:35
  Speaker 2: I mean, at the end of the War of 1812,
• 25:36
  Speaker 2: the U.S.
• 25:37
  Speaker 4: National debt is like $ 130 million, which is well above
• 25:39
  Speaker 4: where it had been in any previous year. You might
• 25:50
  Speaker 4: think that a financial panic that was a major panic
• 25:53
  Speaker 4: affecting the whole country would be a bad thing for
• 25:56
  Speaker 4: the Erie Canal project.
• 25:58
  Speaker 5: I mean, no one tried to do massive muni bond
• 26:00
  Speaker 5: projects in the middle of the 2008 financial crisis. Seems
• 26:02
  Speaker 5: like the worst time possible.
• 26:04
  Speaker 4: That's what you would think in theory. But in fact,
• 26:06
  Speaker 4: New York's finances were fairly solid. And in terms of
• 26:10
  Speaker 4: the panic, the panic actually helped the canal by reducing
• 26:14
  Speaker 4: the prices. You know, prices came down from their inflated levels. So,
• 26:18
  Speaker 4: you know, paying the workers and buying the equipment to
• 26:21
  Speaker 4: build the Erie Canal was cheaper after the panic of 1819.
• 26:25
  Speaker 1: Well, so as time goes on, this Clinton's folly, DeWitt's ditch,
• 26:32
  Speaker 1: it actually looks more like Clinton's conquered the canal. It's
• 26:35
  Speaker 1: his triumphant moment. Let's go into sort of after the
• 26:39
  Speaker 1: canal was built. We've done a bit of foreshadowing already,
• 26:41
  Speaker 1: but it's October 1825 and it's opening. The canal has
• 26:46
  Speaker 1: been under construction for the past eight years. And it's
• 26:48
  Speaker 1: now all of 363 miles of it. That might not
• 26:53
  Speaker 1: sound like much today, but that was monumental at the time, right?
• 26:57
  Speaker 1: And it's ready for business. It's four feet deep. It's
• 27:00
  Speaker 1: 40 feet wide. And it can cut time travel from
• 27:05
  Speaker 1: Albany to Buffalo from two weeks to just five days.
• 27:08
  Speaker 1: It's essentially like time travel. This is like a teleporter
• 27:11
  Speaker 1: in Star Trek or something for the era. How does
• 27:14
  Speaker 1: DeWitt Clinton celebrate this?
• 27:15
  Speaker 2: He goes to Buffalo, which is the.
• 27:19
  Speaker 4: Western end of the Erie Canal and gets a couple
• 27:23
  Speaker 4: of barrels of water from Lake Erie and puts them.
• 27:28
  Speaker 2: On a canal boat.
• 27:29
  Speaker 4: And then he himself accompanies these barrels of Erie Canal
• 27:35
  Speaker 4: water through the canal to the Hudson River in Albany.
• 27:39
  Speaker 4: That's like 363 miles away, as you mentioned. And then
• 27:42
  Speaker 4: it's about another 150 30 or 40 miles down the
• 27:47
  Speaker 4: Hudson River to New York City. So Clinton is one
• 27:51
  Speaker 4: of the first passengers to transit the Erie Canal with
• 27:55
  Speaker 4: these two barrels of Lake Erie water. And there's a
• 27:58
  Speaker 4: ceremony when he gets to New York. He goes out
• 28:01
  Speaker 4: into the harbor and dumps the Erie water into the
• 28:07
  Speaker 4: New York Harbor. And this is where Bernstein got his
• 28:11
  Speaker 4: title for his book.
• 28:12
  Speaker 1: Yeah, The Wedding of the Waters.
• 28:14
  Speaker 3: Yeah.
• 28:14
  Speaker 1: Good title.
• 28:15
  Speaker 4: And there were a lot of dignitaries present for this too.
• 28:18
  Speaker 4: So it was a major national event. It's sort of
• 28:20
  Speaker 4: like when we have a space, you know, sending a
• 28:23
  Speaker 4: rocket with the astronauts around the moon. This got the
• 28:28
  Speaker 4: same attention in the whole country, not just New York State.
• 28:32
  Speaker 1: And I understand there was even a song written for
• 28:34
  Speaker 1: the event. Fortunately for everybody here, I'm not going to
• 28:39
  Speaker 1: try and sing it. The producers keep trying to make
• 28:41
  Speaker 1: me sing these things. But Dick, Gillian, I'm not going
• 28:43
  Speaker 1: to do it, but we have queued it up. We
• 28:45
  Speaker 1: can actually listen to a little bit of it, because
• 28:47
  Speaker 1: actually it's on YouTube. It's called The Meeting of the
• 28:50
  Speaker 1: Waters of the Hudson and Erie.
• 28:51
  Speaker 3: Well, wow.
• 29:13
  Speaker 5: Well, I'm rather glad, Robin, you're not singing there.
• 29:15
  Speaker 1: I mean, Taylor Swift, Roll Over, you know. Exactly.
• 29:19
  Speaker 5: We can all sing about Muni Bonds one day. So
• 29:22
  Speaker 5: clearly this was a massive triumph for DeWitt and also
• 29:26
  Speaker 5: in many ways a massive triumph for the New York
• 29:29
  Speaker 5: City as well. But what did it actually do to trade?
• 29:33
  Speaker 2: Well, that's the important point, I think.
• 29:36
  Speaker 4: The cost of shipping, let's say, a tonne of wheat
• 29:40
  Speaker 4: from where it was produced to the market in New
• 29:43
  Speaker 4: York City was like one-tenth of what it had been previously.
• 29:46
  Speaker 4: It's a dramatic reduction, a 90% fall in transportation costs.
• 29:53
  Speaker 4: And the Erie Canal is an important part of what's
• 29:55
  Speaker 4: called sometimes in American economic history books the transportation revolution.
• 30:00
  Speaker 4: where improved roads and canals and eventually railroads reduce the
• 30:05
  Speaker 4: cost of moving goods from where they're produced to the market.
• 30:10
  Speaker 2: And this is where the U.S.
• 30:12
  Speaker 4: Begins to be knitted together and begins to grow rapidly
• 30:16
  Speaker 4: because transport costs fell so dramatically. And the Erie Canal
• 30:20
  Speaker 4: was a major part of that.
• 30:21
  Speaker 1: Yeah, and it also cements New York as the financial
• 30:26
  Speaker 1: hub of the United States of America, right?
• 30:29
  Speaker 4: Right.
• 30:29
  Speaker 2: There have been markets for government bonds and bank stocks
• 30:33
  Speaker 2: and insurance stocks in most of the American cities. I've
• 30:36
  Speaker 2: studied this. Boston had a good securities market. New York did.
• 30:40
  Speaker 4: Philadelphia actually probably had a larger securities market than New
• 30:44
  Speaker 4: York because the government was located there in the 1790s.
• 30:48
  Speaker 4: And so by the time the canal is finished, and
• 30:51
  Speaker 4: especially by the 1830s, New York as a capital market
• 30:55
  Speaker 4: has eclipsed Philadelphia.
• 30:57
  Speaker 5: I guess it also begs the question, though, about what
• 30:59
  Speaker 5: actually happened to the investors.
• 31:01
  Speaker 4: Basically, what they wanted to happen happened. The interest was paid.
• 31:06
  Speaker 4: In fact, we didn't mention this before, but it's worth
• 31:09
  Speaker 4: mentioning now. Even before the canal was finished, the tolls
• 31:13
  Speaker 4: on it were sufficient to pay the interest on the bonds.
• 31:17
  Speaker 4: And after the fact, New York didn't really need to
• 31:19
  Speaker 4: increase those taxes on auctions and the tax on salt
• 31:23
  Speaker 4: because the canal was so successful. its earnings were sufficient
• 31:27
  Speaker 4: to pay the interest on the bonds. When the canal
• 31:29
  Speaker 4: was finished, of course, toll revenues went up a lot,
• 31:32
  Speaker 4: and that was sufficient to pay off some of the
• 31:36
  Speaker 4: bonds when they became due. However, the success had a
• 31:39
  Speaker 4: little bit of a problem. It induced New York to
• 31:42
  Speaker 4: build a lot of feeder canals into the Erie Canal,
• 31:45
  Speaker 4: and those cost a lot, and they were not nearly
• 31:48
  Speaker 4: as successful in raising money. And by the late 1830s,
• 31:51
  Speaker 4: there's a bit of a financial crisis in the U.S.,
• 31:54
  Speaker 4: and New York comes through it fine because they stopped
• 32:00
  Speaker 4: spending money on losing feeder canals. But other states following
• 32:06
  Speaker 4: New York, I mean, this is the Erie Canal was
• 32:08
  Speaker 4: a great example. Its success induced other states to try
• 32:11
  Speaker 4: the same thing. And they did it, but their financing
• 32:14
  Speaker 4: wasn't as good as New York and their success in
• 32:19
  Speaker 4: terms of raising toll revenues wasn't as good as the
• 32:21
  Speaker 4: New York experience. So other states actually got to a
• 32:23
  Speaker 4: situation where where by the late 1830s, they're defaulting on
• 32:27
  Speaker 4: the debts they incurred to build canals.
• 32:30
  Speaker 1: Yeah, this is a bit of a classic one, right?
• 32:31
  Speaker 1: Somebody does something so successful that everybody emulates it quite naturally,
• 32:36
  Speaker 1: and then we overdo it, and we overdo it, and
• 32:38
  Speaker 1: it then actually ends in a debacle. I mean, those
• 32:41
  Speaker 1: state defaults come across this amazing scene in the original
• 32:45
  Speaker 1: version of A Christmas Carol by Charles Dickens, where Ebenezer
• 32:49
  Speaker 1: Scrooge has a nightmare about where he dreams that all
• 32:53
  Speaker 1: his securities are as worthless as American securities. So by
• 32:57
  Speaker 1: the 40s, the US was essentially, its name was mud
• 33:02
  Speaker 1: in financial circles in Britain, as Charles Dickens nailed.
• 33:05
  Speaker 2: There was a great boom in canal building in the 1830s.
• 33:08
  Speaker 4: They borrowed too much money, and then the bottom fell
• 33:11
  Speaker 4: out of the economy in the late 1830s, and they
• 33:14
  Speaker 4: defaulted on their debts. And by that time, Europeans owned
• 33:18
  Speaker 4: a lot of these debts. And as you say- Dickens
• 33:21
  Speaker 4: made fun of them. I think there's a famous quote
• 33:23
  Speaker 4: from Reverend Sidney Smith, an English leader, who said, you
• 33:28
  Speaker 4: shouldn't have dinner with someone from Pennsylvania because Pennsylvania defaulted
• 33:32
  Speaker 4: on these debts. And the British are suffering from these
• 33:35
  Speaker 4: wild Americans not paying their interest on their debts.
• 33:39
  Speaker 1: Dick, as I discussed earlier at the top, I often
• 33:41
  Speaker 1: call the US municipal bond market the anti-crypto because it's
• 33:47
  Speaker 1: fundamentally unsexy and not very glamorous. and people don't really
• 33:51
  Speaker 1: care about it, but it's actually valuable. It actually contributes
• 33:55
  Speaker 1: to economic growth in a very real sense. Can you
• 33:58
  Speaker 1: tell us a little bit about the importance of the
• 34:00
  Speaker 1: municipal bond market to America today?
• 34:02
  Speaker 4: I think of it in terms of things we encounter
• 34:06
  Speaker 4: every day, like the money is borrowed, say, for airports.
• 34:10
  Speaker 2: We all go through airports. The airports are.
• 34:13
  Speaker 4: Usually financed by municipal bonds. Building schools are financed by
• 34:18
  Speaker 4: municipal bonds. Water and sewer works. I mean, you know,
• 34:23
  Speaker 4: all this stuff is very important to us, but it's
• 34:26
  Speaker 4: not sexy, as you say. We just sort of take
• 34:28
  Speaker 4: it for granted. But the infrastructure of the country, the
• 34:32
  Speaker 4: municipal bond market finances a great deal of it.
• 34:35
  Speaker 3: Yeah.
• 34:36
  Speaker 1: Well, Dick, I have to admit, I think sewage treatment
• 34:39
  Speaker 1: plant bonds is fascinating and very sexy.
• 34:41
  Speaker 2: Of course.
• 34:43
  Speaker 5: The other point you missed is that masses of Americans
• 34:45
  Speaker 5: stick their savings into this. partly because it's tax-exempt and
• 34:49
  Speaker 5: also because it's seen as being boring and stodgy. But
• 34:52
  Speaker 5: in doing that, they're doing a really fantastic civic thing
• 34:56
  Speaker 5: in helping to create all the infrastructure that America relies on.
• 35:01
  Speaker 4: Right. And I think many people think large amounts of
• 35:06
  Speaker 4: our infrastructure are crumbling now or not in such good shape.
• 35:10
  Speaker 4: And so we need to repair a lot of things
• 35:13
  Speaker 4: that were built maybe 50 or 100 years ago and
• 35:16
  Speaker 4: In New York, we remodeled LaGuardia Airport, which used to
• 35:20
  Speaker 4: be one of the worst airports, but now it's considered
• 35:22
  Speaker 4: to be a very fine airport because they use municipal
• 35:26
  Speaker 4: finance to redo the airport.
• 35:28
  Speaker 2: Conclusion I draw is that.
• 35:29
  Speaker 4: The municipal bond market is very large now, but it's
• 35:32
  Speaker 4: going to become even larger as we fix up the
• 35:37
  Speaker 4: crumbling infrastructure of the United States.
• 35:39
  Speaker 1: Sadly, the one thing that the magical municipal bond market
• 35:42
  Speaker 1: cannot fix is New York's MTA. But that seems to
• 35:45
  Speaker 1: be beyond the ability of human to ever do anything about.
• 35:49
  Speaker 2: Oh, that's too pessimistic, I think.
• 35:52
  Speaker 5: And by the way, LaGuardia these days is fantastic.
• 35:55
  Speaker 1: True.
• 35:55
  Speaker 5: So this Erie Canal project was a win-win-win, it seems,
• 35:59
  Speaker 5: even though subsequent projects weren't quite as successful, in some
• 36:04
  Speaker 5: cases very unsuccessful financially. But I'm curious, to what degree
• 36:07
  Speaker 5: is it still part of the responsible finance principle or
• 36:12
  Speaker 5: reflecting those principles, as you mentioned earlier, Dick?
• 36:15
  Speaker 2: Well, there's an interesting story here.
• 36:17
  Speaker 4: New York practiced what I call responsible or Hamiltonian finance.
• 36:22
  Speaker 4: And just to go back a little bit, Alexander Hamilton
• 36:25
  Speaker 4: made it a big part of his financial reforms in
• 36:28
  Speaker 4: the 1790s to say that if the U.S. government wants
• 36:32
  Speaker 4: to make its public credit immortal, it should, when it
• 36:36
  Speaker 4: borrows money, it should levy a tax to pay not
• 36:40
  Speaker 4: only the interest on the bonds, but a little bit extra.
• 36:43
  Speaker 4: And that little bit extra will eventually allow you to
• 36:46
  Speaker 4: pay back the bonds. And New York basically followed that
• 36:49
  Speaker 4: procedure when it issued the canal bonds by dedicating the
• 36:54
  Speaker 4: salt and auction taxes to pay them. But the states
• 36:58
  Speaker 4: that later on borrowed a lot of money and, in fact, defaulted,
• 37:04
  Speaker 4: They didn't practice that sort of finance. So what happened
• 37:07
  Speaker 4: was after that bad experience, the states rewrote their constitutions
• 37:13
  Speaker 4: and kind of put responsible or Hamiltonian finance into their constitutions,
• 37:19
  Speaker 4: saying that if you want to borrow money, you may
• 37:22
  Speaker 4: have to get the permission of voters to do it
• 37:25
  Speaker 4: before you do it. And you also have to have
• 37:28
  Speaker 4: a plan for financing.
• 37:30
  Speaker 2: That municipal debt. This happened in the 1840s and 50s.
• 37:34
  Speaker 4: And basically, this return to responsible finance made the municipal
• 37:39
  Speaker 4: bond market continue to grow. Basically, municipal finance thrived from
• 37:45
  Speaker 4: then on. In the late 19th century, you were building
• 37:50
  Speaker 4: municipal water systems, sewer systems, schools, all the things that
• 37:54
  Speaker 4: local governments do. They could do it much more effectively
• 37:58
  Speaker 4: because they rewrote their constitutions to practice the responsible finance
• 38:03
  Speaker 4: that Hamilton had started, and New York State exemplified with
• 38:07
  Speaker 4: the Erie Canal. So the municipal bond market, what is
• 38:10
  Speaker 4: it now, Robin? Four to five trillion dollars?
• 38:13
  Speaker 2: Yeah, four and a half. You can go back and.
• 38:16
  Speaker 4: Study the history of the Erie Canal and the subsequent
• 38:18
  Speaker 4: history of what the states did and the reformed constitutional
• 38:22
  Speaker 4: reforms which made that market the large market it is today.
• 38:27
  Speaker 1: So you can almost say that the municipal bond market
• 38:30
  Speaker 1: flowed as if from a river from the Erie Canal.
• 38:32
  Speaker 2: You know, I am myself. I'm a voter.
• 38:35
  Speaker 4: Often you go on election day and you vote for
• 38:38
  Speaker 4: political candidates, but you also have vote on bond issues.
• 38:41
  Speaker 4: You know, the government thinks that you do a certain project.
• 38:45
  Speaker 4: It might be something for schools.
• 38:47
  Speaker 2: It might be roads. It might be waterworks.
• 38:50
  Speaker 4: Taxpayers vote on that whether they want to issue bonds
• 38:53
  Speaker 4: for that. So go back to the Erie Canal, the precedent,
• 38:56
  Speaker 4: it's set. eventually was embodied in the whole U.S. municipal
• 39:01
  Speaker 4: bond market. It's an important part of U.S.
• 39:04
  Speaker 2: Development.
• 39:05
  Speaker 5: It brings to mind, you know, a country like Switzerland
• 39:07
  Speaker 5: where so many of the finances or rather the fiscal
• 39:11
  Speaker 5: powers today remain local and very much driven by the
• 39:16
  Speaker 5: same principles of unresponsible finance. and a sense of taxpayer
• 39:21
  Speaker 5: responsibility and accountability of the local governments as well. And unsurprisingly,
• 39:26
  Speaker 5: Switzerland has a lot lower level of debt and much
• 39:29
  Speaker 5: more prudence and sense of voter engagement in so many ways.
• 39:33
  Speaker 2: I was in Switzerland in the year 2000 teaching at St. Gallen.
• 39:37
  Speaker 2: And while I was there, the Swiss had an election.
• 39:40
  Speaker 4: They went out on a Sunday and the election was
• 39:44
  Speaker 4: about getting permission from the electorate to buy a bunch
• 39:48
  Speaker 4: of fighter planes from the U.S.
• 39:50
  Speaker 5: Going back to this remarkable character, DeWitt Clinton, what actually
• 39:55
  Speaker 5: ends up happening to him in the end?
• 39:57
  Speaker 4: Not long after the canal is finished, and it's a
• 39:59
  Speaker 4: great success, in I think 1828, DeWitt Clinton dies at the,
• 40:04
  Speaker 4: maybe in his late 50s or something like that. He
• 40:07
  Speaker 4: disappears from the political picture of the U.S., but he
• 40:10
  Speaker 4: will be forever remembered because of the success of the
• 40:13
  Speaker 4: Erie Canal. The name Clinton is on, even the name
• 40:16
  Speaker 4: DeWitt is on towns in the U.S. and streets of
• 40:19
  Speaker 4: I live near Concord, New Hampshire, and there's a Clinton
• 40:22
  Speaker 4: Street in Concord, New Hampshire. So he is remembered in
• 40:27
  Speaker 4: that way. I mean, most people who see a Clinton
• 40:30
  Speaker 4: Street now don't realize that it's probably named for him.
• 40:32
  Speaker 2: But we know that.
• 40:36
  Speaker 5: Roll over, Bill and Hillary. They're not the only Clintons
• 40:38
  Speaker 5: that matter.
• 40:40
  Speaker 1: Well, Dick, it's been an absolute treat to have you on.
• 40:43
  Speaker 1: Thanks so much for coming on the show.
• 40:45
  Speaker 2: Oh, you're welcome. I really enjoyed our conversation.
• 40:48
  Speaker 5: And I've learned a lot, I really have, not least
• 40:51
  Speaker 5: about why canals matter so much and why the other
• 40:53
  Speaker 5: Clinton matters too. And I'm not yet as convinced as
• 40:57
  Speaker 5: Robin that the muni bond market is wildly sexy and exciting,
• 41:01
  Speaker 5: but it's certainly critical to the way our economies work today.
• 41:05
  Speaker 5: So thank you very much indeed as well from me.
• 41:08
  Speaker 1: Yeah, well, Gillian, I am going to convince you at
• 41:10
  Speaker 1: some point, but that's probably enough muni finance for this episode.
• 41:15
  Speaker 1: This is the Story of Money from the Financial Times.
• 41:17
  Speaker 1: I'm Robin Wigglesworth.
• 41:19
  Speaker 5: And I'm Gillian Tett. And we'll see you back here
• 41:22
  Speaker 5: next week.