Thomas E. Finser
LESSONS, GLEANINGS AND HYPOTHESIS EVOLUTION
Personal Evolution of Research Hypothesis
My intention when I initiated this research project, was to make historical inquiry into the world’s first actuarial-based life insurance fund, the Sottish Ministers’ Widows’ Fund of 1744. The questions posed were as follows: What, if any, relationship exists between 18th century Scottish Enlightenment cultural values and contemporary permanent capital funds? Could I trace the origin of 21st century permanent capital investment vehicles to the values and movements within the Scottish Enlightenment of the 18th century? When I found evidence of renascent epistemological humility in a new one-of-a-kind library in Edinburgh, dedicated to finance history, The Library of Mistakes, I became inspired by this resource. The Library of Mistakes served as a connective link between the spirit of humility found in the Widows' Fund of 1744 and the financial culture of the 21st century. My project had started with a personal interest in the history of the Widows' Fund. Through research, it transitioned into an exploration of the unfolding impulse of the 18th century Scottish Enlightenment values of humility and accountability in current finance culture.
Conclusion
The Scottish Ministers' Widows' Fund of 1744 played a unique and important role in the development of modern finance. It was at the vanguard of mathematics, demography and investment management. In creating the evergreen self-funding capital base, Webster, Wallace and Maclaurin forged the first permanent capital investment vehicle. This proof of concept was a seminal pattern in the formation of modern finance. It paved the way for the establishment of similar insurance funds in England and the United States. Today, permanent capital investment vehicles have become a prevalent source of funding for institutional funds.
The marriage of financial and moral accountability, with zeal for "doing good" in the world, was nested in the Moderate Literati Scottish Enlightenment culture of the 1740s. The origination of the Widows' Fund was an embodiment of the 18th century Scottish Enlightenment value of humility and accountability.
The marriage of financial and moral accountability, with zeal for "doing good" in the world, was nested in the Moderate Literati Scottish Enlightenment culture of the 1740s. The origination of the Widows' Fund was an embodiment of the 18th century Scottish Enlightenment value of humility and accountability.
"The Fund is peculiarly Scottish, created by men of character and foresight, who were not afraid to venture into unknown areas of finance as their brothers did into unknown parts of the world. These men were, too, in the forefront of the Enlightenment in every area of human thought. Their work ought to be acknowledged and praised" (Ian Dunlap xii). |
It is my hypothesis that collaboration and a quest for humble service to a greater cause played a powerful role in the creation of the Widows' Fund. As observed in the pattern of the Scots Pine tree cone, from seed to sapling, to mighty tree, this 18th century Scottish Enlightenment endeavor, marked a critical turning point in financial cultural development. Just as one can observe the seminal pattern of the Scots Pine cone, one may also observe, in the evolutionary process of financial history, the impact of the Widows' Fund on modern day financial practices. It is my contention that through observation and experience, it is possible to learn from the deeds and the seeds of the past and move into a future of moral accountability and humility.
Suggestions for Additional Research
Would the Widows' Fund of 1744 have succeeded without Webster and Wallace's willingness to solicit for the detection of mistakes in their actuarial assumptions? These courageous Presbyterian ministers submitted their work to the uncompromising scrutiny of Colin Maclaurin. It is my contention that learning and innovation is accelerated through observation, documentation and analysis of errors. Further research could involve the process of investigation into how individual investment managers review errors in capital allocation. Is there a process of dialogue and a willingness to submit errors to scrutiny? Do they have processes of collaborating with a central repository of knowledge such as the Library of Mistakes? Do they know about this valuable resource? And how could the global institutional investment management community build upon and access The Library of Mistakes? One may learn through the reflection and review of our mistakes in the spirit of Epistemological humility, as found in the 18th century Edinburgh Enlightenment, and the establishment of the Widows' Fund. As Alastair Darling aptly stated during the 2022 Library of Mistakes reopening :
We all make mistakes whether it is individuals, or it is institutions, governments for that matter, we make mistakes, and the thing is, to learn from them. If you make a mistake, why did you make a mistake, what went wrong, what could you have done better? |
I propose the creation of a Library of Mistakes be founded in the United States. How about starting with my home state of Texas?