Ricardo’s finances and Waterloo: legends by Samuelson and others lack historical evidence

Abstract

Paul Samuelson and others suggested that Ricardo (‘the richest economist in history’) made a life-changing coup on the Stock Exchange after the Battle of Waterloo (1815), but archives reveal that Ricardo amassed his fortune more gradually, often by small profit rates upon large investments, as a jobber on the Stock Exchange and a contractor for seven British Loans. The 1815 Loan generated exceptional profits for Ricardo, but not the million sterling mentioned in unreliable legends about Ricardo or Rothschild. Such legends neglected the stock price statistics, the suboptimal timing of Ricardo’s transactions in 1815 and the dominant role of the Baring-Angerstein consortium, which took a much larger part of the Loans than Ricardo’s consortium. Insufficient attention was also paid to the special year 1813, when Britain exceptionally launched not one, but two very profitable Loans. After his large 1813 profits, Ricardo started contemplating his retirement and bought Gatcombe Park in 1814. Samuelson neglected this and overestimated the influence of 1815 events. Moreover, Samuelson claimed that today Ricardo might be prosecuted for using unscrupulous market manipulation and inside information. Archives and statistics show that Samuelson’s allegations lack historical evidence.