The Pigeons of Rothschild

Telegraph, Internet, and Paris Hilton

Image generated by artificial intelligence on Craiyon.com. Search term: “carrier pigeon drawn by John Tenniel.”

Four decades ago, an economics seminar at Columbia University was disrupted for an hour or more by a flock of nettlesome carrier pigeons, flitting about the room and repeatedly swatted away by the beleaguered speaker as Tippi Hedren had once swatted away crows in Alfred Hitchcock’s The Birds. The pigeons were brought into the room by a scholar who would one day win the Nobel Prize and recite quotations by Paris Hilton and Jeff Foxworthy on national television.

I should probably mention that the birds in this instance were imaginary, though perhaps less so to the speaker-in-question. In the early 1980s, the lecture I describe addressed the world-changing impact of the telegraph on financial markets in early 19th century Europe. Looking back from 2022, the memory of that lecture speaks today of the world-changing impact of the internet in our own time.

The dramatis personae of this tragicomedy included two great economists—one still living in 2022 and one who has sailed on to whatever Valhalla awaits deceased economists. The remaining characters were a mostly silent Greek chorus of seminar attendees. These events occurred in the dim past, four decades ago, so please forgive me if I misremember a detail or two.

The speaker, then a relatively young man, was already a scholar of the highest order. Four decades later, he has climbed to the pinnacles of one arena after another in the financial world. I’ll leave his name out, as it is the other figure in the story who is the real subject of this essay—and I have no idea what the speaker thinks today of that long-ago seminar.

That central figure in this saga was Robert Mundell, professor of economics at Columbia University from 1974 until his death in 2021. Though his résumé is far too long to catalog here, suffice it to say that Mundell’s intellect provided the superstructure for the supply-side revolution in economic policy and for the establishment of the Euro as a multinational currency. In 1999, the Bank of Sweden awarded Mundell the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel—a.k.a., Nobel Prize in Economics.

But it is Mundell’s endearing eccentricities that motivate this essay. A key to what made Mundell so interesting is that his intellect raced like a Learjet while his delivery plodded forward like a mule cart. Mundell was clearly self-aware and more comfortable with his image than most of us can ever hope to be. In the early 2000s, he took his quirky image on the road in a series of appearances on the David Letterman Show. Mundell, elegantly attired in suit and tie, would stand sentinel before the camera, reciting quotes from Paris Hilton’s memoirs, from “You Might Be a Redneck” and “Yo’ Mama” jokes, and from puerile Grammy-nominated song lyrics—all delivered in his slow, choppy, ill-timed, lilting Canadian cadence.  

Though I liked Mundell a lot and deeply admired his writing, I lasted exactly one day in his class, back when he sported shoulder-length gray hair and (if I remember correctly) ashen-colored turtlenecks. His plodding hour-long lecture reminded me of a comedy skit by comedians Bob and Ray, in which a frustrated TV host attempts to interview the … president … of … an … organization … called … the … Slow … Talkers … of … … … America. Reluctantly, I dropped the class for the sake of my sanity.

In graduate seminars, Mundell’s participation seemed always to follow a pattern: somnolence, blurt, silence, query, more silence, non sequitur, long silence, second query, final silence, revelation, and dénouement. This was the pattern on the Day of the Pigeons.

The speaker presented his recent work on the impact of the telegraph in the movement of securities prices across Europe. He had detailed data from the major stock and/or commodities exchanges of Europe. His hypothesis was that prices on, say, the London and Vienna exchanges were relatively unsynchronized when news traveled by horse and then suddenly began moving in lockstep the day the two exchanges were first linked by telegraph. The speaker explained this much in the first five minutes of so of the 90-minute lecture. Then came the familiar sequence:

SOMNOLENCE: Mundell, at least to my eyes, appeared to be dozing off from the start.

BLURT: Then, without warning, his head tilted upward and he said, “I don’t see how your hypothesis can possibly be correct.

SILENCE: The speaker looked a bit startled, and the audience started looking around nervously.

QUERY: The speaker finally asked. “Why is that, Bob?”

MORE SILENCE: Mundell sat motionless for some awkward seconds, as if his mouth were waiting for instructions from his brain.

NON SEQUITUR: Mundell asked, “Because aren’t you forgetting about the pigeons?”

LONG SILENCE: Attendees looked at one another, perhaps wondering whether Mundell had suffered some sort of neurological incident.

SECOND QUERY: The speaker asked, “What pigeons are you talking about, Bob?”

FINAL SILENCE: Clocks ticked away as Mundell sat quietly once again.

REVELATION: Then, fully engaged, Mundell said, “For many years prior to the introduction of the telegraph, the Rothschilds had used carrier pigeons to move price information between the major European exchanges much faster than ground-based messengers could manage. So, given the periodicity of your data, I don’t see why the telegraph would have the big effect you’re suggesting.”

DENOUEMENT: So far as I could tell, no one knew whether Mundell was correct or whether he was just imagining something. For the remaining hour-plus of the lecture, the speaker said over and over, “Now the next section suggests … assuming we ignore what Bob has said about the pigeons … that price movements …” yadda yadda.

It was painful to watch, though wickedly fun. As some of us graduate students exited the seminar room, we asked one another, “Do you think Mundell knew what he was talking about, or do you think he was just hallucinating?” We shrugged and headed off to the local taverns.

Decades later, I thought about that seminar and Googled <Rothschild pigeons>, and BANG—endless hits. A legend has it that the Rothschild family earned their great wealth by transmitting news of Napoleon’s defeat at Waterloo via carrier pigeon, enabling them to beat all the other market participants to the resulting price movements. That story, though widespread, is likely a myth. But pigeons carrying encoded price information really was a key to the Rothschilds’ success. Mundell, as was generally the case, was perfectly correct, though his odd pattern of impromptu presentation often left his listeners puzzled.

These extemporaneous Mundell critiques were a joy to watch, because they were generally devastating, but unprovable in real-time. Today, under the same circumstances, every attendee would simply hit the cellphone and see within seconds that the peculiar assertion was correct. (Or that it was not.) And then, they would likely cease paying attention and watch cat videos or some such for the remainder of the session. But back then, we were left to wonder, and the speaker was left to deal over and over and over and over and over with an assertion whose veracity was unknowable during his time on stage. And the audience had no option other than to watch the unfolding drama.

To reiterate, this seminar was more than half a lifetime ago, and I’m hoping I haven’t slipped on any details. Someday, I’ll investigate whether the speaker that day ever published his findings on the telegraph’s impact on European exchanges and whether he adjusted his findings to incorporate the pigeons that invaded the seminar room that day. It was a time when disputation involved only the knowledge that resided with those in attendance, and not the near-infinity of information available through a cellphone. And at times, I mourn the loss of that circumscribed reality.