In the early 1600s, the officials running Durham Cathedral, in England, had serious financial problems. Soaring prices had raised expenses. Most cathedral income came from renting land to tenant farmers, who had long leases so officials could not easily raise the rent. Instead, church leaders started charging periodic fees, but these often made tenants furious. And the 1600s, a time of religious schism, was not the moment to alienate church members.
"Most people have assumed these very sophisticated calculations would have been implemented by hard-nosed capitalists, because really powerful calculations would allow you to get an economic edge and increase profits," says MIT historian William Deringer, an expert in the deployment of quantitative reasoning in public life."But that was not the primary or only driver in this situation.
For Durham Cathedral, inflation meant the organization had to pay more for goods while three-quarters of its revenues came from tenant rents, which were hard to alter. Many leases were complex, and some were locked in for a tenant's lifetime. The Durham leaders did levy intermittent fees on tenants, but that led to angry responses and court cases.
In this period, England's first prominent discounting book with tables was published in 1613; its most enduring, Ambrose Acroyd's"Table of Leasses and Interest," dated to 1628-29. Acroyd was the bursar at Trinity College at Cambridge University, which as a landholder faced the same issues concerning inflation and rent. Durham Cathedral began using off-the-shelf discounting formulas in 1626, resolving decades of localized disagreement as well.
Thus, as Deringer writes,"mathematical tables for setting fines were not so much instruments of a capitalist transformation as the linchpin holding together what remained of an older system of customary obligations stretched nearly to breaking by macroeconomic forces."article is part of a larger book project he is currently pursuing, about discounting in many facets of modern life.