London developed into a financial center in the 17th and 18th centuries. Sir Thomas Gresham, a 16th century merchant and royal financial agent, had some part in making this so. His leading role in establishing the Royal Exchange is well known and lends evidence to this view but that was just a part of his larger contribution to English finance. When he began his career there wasn’t much ‘English finance’ to speak of and his mercantile and financial ambitions thus took him abroad. It was in Antwerp where he made his riches and some of his greatest realizations, namely that finance can make and break sovereigns. This understanding made him an indispensable agent to the English crown, particularly in its financial affairs.
Sir Thomas Gresham was born in London in 1519. His father was the lender, speculator, and merchant Richard Gresham. Thomas was educated at Cambridge and briefly studied law, an education that although incomplete was nonetheless in excess of what most aspiring merchants received. After his education, Gresham worked for the Mercers Company, a textile merchants’ guild, under his uncle Sir John Gresham.
Following this apprenticeship, Gresham became a liveryman of the Mercers Company in 1543. Becoming a full member of the company allowed him to trade on his own account and shortly after gaining this right, he left for Antwerp. Gresham also became a member of the Merchant Adventurers, a London trading company. That same year, he came to the notice of King Henry VIII, mentioned in a dispatch to the King by his ambassadors to the Netherlands in which Gresham had recently arrived.
The city Gresham entered was arguably far more impressive, at least commercially, than the one he left. Indeed, Antwerp was northern Europe’s financial capital in the mid-16th century. The city possessed one of the first commodities exchanges in Europe, an institution that helped it secure its dominant position among mercantile centers. The Antwerp Bourse as it was known was a trading center for various commodities from all over Europe and, courtesy of new connections to India, the Spice Islands, and the Americas, much of the rest of the world as well.
Gresham had arrived in a very cosmopolitan city which was, in fact, one of the largest in Europe. Antwerp housed a population of perhaps 100,000, including many foreigners, making it a considerably larger city than London. Antwerp attracted merchants and bankers from all sorts of countries. English merchants came to Antwerp to sell cloth and to borrower money. In Antwerp, they also purchased luxuries like jewels, silks, tapestries, and spices to sell back in England.
Gresham’s trading was earning him an average income of over £750 a year between 1546 and 1551. This would have been a considerable income; a palatial London mansion could be had in this era for between £200 and £400. Besides conducting his own trading, Gresham managed the debts that the English crown had raised from Antwerp lenders, essentially acting as England’s royal agent there. Gresham returned home from Antwerp after the instability brought on by the Dutch Revolt against Spanish rule commenced in the 1560s. For years, he had already been using the riches he made there to purchase properties back in England but money wasn’t the only thing he brought back home with him. Gresham had helped import double entry bookkeeping to England, an innovation pioneered in Italy and from there introduced in Antwerp.
Despite his riches, Sir Thomas Gresham had his commercial failures too. One came in 1554 when he borrowed 300,000 ducats for up to one year in Antwerp and had this delivered to him in Spain where he attempted to exchange the sum into Spanish reals. At the time, Spanish real coins had a melt value in excess of their face value making it profitable to export the coins to England where they could be melted down. This is exactly what Gresham attempted but the size of the deal was so large that withdrawing so much coin out of the country triggered a bank run that saw the failure of two Seville-based bankers. This delayed Gresham in exporting the money out of Spain and forced him to incur a loss as he was forced to repay his Antwerp creditors before he could remint all the coins.
Antwerp and the Low Countries were the marketplace of Europe and as such were of deep interest to sovereign governments and not just merchants. In times of war especially, Antwerp was where money could be borrowed and arms and munitions bought, supplies which weren’t always produced in England in the required quantities. Gresham’s career in Antwerp was partially the result of his government’s interest in the city and he served as Henry VIII’s agent there. His work as royal agent involved smuggling gold for Henry VIII and playing the part of state banker under Edward VI.
Gresham used his financial expertise to refinance government debt in periods of falling interest rates under the reigns of Edward VI and Mary I. This involved negotiating loans for the sovereign in Antwerp, an experience which helped him realize just how powerful the city was. Gresham was worrisome of sovereign borrowing. He realized that indebted governments were also at the mercy of credit markets and not just the other way around as was more commonly recognized.
Gresham’s service as royal agent extended into the reign of Queen Elizabeth I. From his trading activities, Gresham had established a network of informants across Western Europe, making him a useful advisor to the crown. He passed on intelligence gathered, in particular to William Cecil, the Queen’s chief minister. Information was of crucial importance to the Gresham enterprise and gave him a competitive advantage. He was interested in and regularly supplied with the latest commodity prices, exchange rates, and political developments in Europe. Gresham prided himself on his extensive connections across European trading centers along with his contacts in the English government.
He served as agent to Queen Elizabeth I in unstable times and early in her reign received a knighthood for his temporary service as ambassador to the court of Margaret of Parma who governed the Netherlands on behalf of the Spanish King Philip II. Under Elizabeth, he encouraged local borrowing over foreign borrowing to reduce dependence on foreign creditors in the increasingly-unstable Spanish-controlled Low Countries.
To encourage local lending to the state, he advocated for the removal of anti-usury laws to stimulate further lending by local creditors. Gresham also called for the withdrawal from circulation of debased coins, introduced by the Queen’s predecessors, to make sterling a currency that creditors would be more comfortable lending in. It is from here that we get the rule known as ‘Gresham’s Law’, namely that ‘bad money drives out the good’ referring to the tendency of debased coins to cause people to hoard the higher value coins and use only the former in commerce. Though the rule is attributed to Gresham it was not at all first conjectured by him, having already been a widely known monetary fact.
Gresham’s work for the state extended to procuring armaments; he purchased and smuggled into England arms and munitions from abroad. These often had to be smuggled because of export restrictions imposed on England in this era of religious tension and religious wars between Protestant and Catholic Europe. On at least one occasion, he was able to bypass these controls by bribing Antwerp customs officials; he was willing to bend rules. Gresham also worked to locate other sources elsewhere all while warning the government of this dependence on foreign supplies.
After retiring from his role as the government’s agent in international transactions Gresham had his accounts audited as part of the conclusion of his service. This audit revealed that over £18,000 had been somehow lost. The missing sums, if charged to Gresham, could have bankrupted him but he somehow managed to convince the Queen, with whom he actually had quite frosty relations, to write off the sum. Nonetheless, even having been relieved of paying this large amount, Gresham still died very indebted in 1579, owing over £23,000 to 35 lenders.
Sir Thomas Gresham did leave more positive legacies in other ways though. These included the creation of two new London institutions. The first was the founding of London’s Royal Exchange which was modelled on Antwerp’s Bourse and was built between 1566 and 1568. The Flemish connection to this project extended to its design and a Flemish architect, Hendrik van Paesschen, was hired to work on the new exchange. A second legacy was Gresham College, which was established by Sir Thomas Gresham’s will and which still survives to this day.
This new college was made surprisingly accessible for a pre-modern institution. Though it did not formally matriculate students or confer degrees, non-students could attend its lectures, making the college a surprisingly open and public institution for higher learning and a model considered rather novel even today. In any case, it almost failed to launch as Gresham’s will was contested by his own wife as well as his many creditors. The college received ongoing funding with the revenues of his Royal Exchange.
As the center of European finance moved north from Italy to the Low Countries in the 16th century, England was increasingly drawn into the orbit of the burgeoning financial and commodities markets of Antwerp. Sir Thomas Gresham’s career is a testament to this fact. As perhaps the most powerful man in Tudor finance, he had as many connections to Antwerp as to his native London. In time, the capital of European, and indeed global, finance would jump across the channel to London and for this England owes something to Gresham. Sir Thomas Gresham understood the importance of financial markets, attempted to foster their development in England, and helped eventually make London a financial center, dwarfing even old Antwerp.
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1. Archer, Ian. “Sir Thomas Gresham, London and Europe.” 2019 Sir Thomas Gresham Annual Lecture, 9 Jan. 2019, Gresham College.
2. Burgon, John William. The Life and Times of Sir Thomas Gresham. R. Jennings, 1839.
3. Guy, John. “Sir Thomas Gresham, 1519-2019.” 2019 Sir Thomas Gresham Annual Lecture, 13 June 2019, Gresham College.
4. Guy, John. Greshams Law: The Life and World of Queen Elizabeth Is Banker. Profile Books, 2020.
5. Mainelli, Michael. “Sir Thomas Gresham: Tudor, Trader, Shipper.” Review of Financial Markets, Oct. 2019, pp. 67–69.