Being the father of a three-year-old, I get to watch the old classic children’s movies again as an adult. You know, a lot of them have a bit to offer us. Here’s an excerpt from my favorite song from “Mary Poppins.”
If you invest your tuppence
Wisely in the bank
Safe and sound
Soon that tuppence,
Safely invested in the bank,
Will compound
And you’ll achieve that sense of conquest
As your affluence expands
In the hands of the directors
Who invest as propriety demands
You see, Michael, you’ll be part of
Railways through Africa
Dams across the Nile
Fleets of ocean greyhounds
Majestic, self-amortizing canals
Plantations of ripening tea
All from tuppence, prudently
Fruitfully, frugally invested
In the, to be specific,
In the Dawes, Tomes
Mousely, Grubbs
Fidelity Fiduciary Bank!
There, in a throwaway number shared by the stern father and his ridiculous boss, is the essence of capitalism. The bank provides a primitive mutual fund; rather than stocks the bank selects projects and businesses to finance. The borrowers use the money to complete their goal and hopefully make a profit. Most of the loans get repaid with interest. The bank keeps a portion of the interest to pay its costs and maintain profit of its own. The remainder of the interest is returned to the depositor.
Doesn’t sound very sexy, I know. But look at the possible outcomes there – it’s not a zero-sum proposition. Everyone has a chance to win simultaneously. True, your bank could make many poor loan decisions and lose all your money. As a borrower, your idea may not be as good as you thought or you may be a poor manager. Those are aberrations, though. The system is designed so that when everything works as planned, everyone comes out ahead of where he was before. Look at the results, too. A man with a great idea has a chance to make it happen because of capitalism. All he has to do is convince a financier of the merits of the idea and be willing to share some of the profits with him. The outcome is technological advancement, construction, and a general elevation of the standard of living.
Now the movie is drawn mostly from the childrens’ perspective so it obscures some of the magnificence of the institution. On the depositor’s level it’s easy to forget that we assume the role of investor when we put money in the bank. We think of them as vaults for our money, nothing more than secure piggy banks or mattresses. It’s really hard to tell someone who just lost his shirt he should have looked more closely at the bank he chose, but that’s reality. It’s also really easy to forget the role our deposits play in advancing society; it takes a broad dispassionate view and the ability to look beyond the immediate. You probably knew saving money was a good thing for you, it turns out it’s good for civilization too. The children think with their emotions and want to use their money to buy birdseed, but their father sees the big picture and tries to teach them a life lesson. Perhaps it’s a bit too soon.
Mr. Banks eventually lightens up some, but maybe the movie’s not totally committed to ridiculing the system. After all, we do have this as one of Mary’s last lines:
Practically perfect people never permit sentiment to muddle their thinking.
Think without your emotions. Then if you can afford to indulge them for a little while after you’re done, go wild.