Great Houses

Gregory Treat: All right, everybody.

Thank you so much for joining me on The Great Houses Forum.

We're here to talk about what it takes to build a great house that can own a business and protect your property and continue your lineage and your family values, and have an impact on your community.

That's what a great house is.

A great house is a family that, that owns its own property, that, that knows how to keep its children, and that is able to be a blessing to its broader community.

So, uh, today we're actually, again, this is episode 12, we're gonna talk about, uh, Churchill's aristocracy.

So.

Oh, you thought I meant Winston Churchill.

I of course mean John Churchill, the first Duke of Marlboro, uh, one of the greatest generals ever produced by Britain.

He never lost a battle.

He founded a, a lineage that had massive prestige through World War II and continues to this day.

And the question that I want to ask for us is, how did he do that?

How did John Churchill do that?

Churchill was one of kind of a group of new aristocrats that that came up.

You know, we spent the last several weeks talking about the death of chivalry and how things had kind of transferred on, and the gentry was this new thing.

Um, it was not like the old, um, the old aristocracy that had dominated Medieval Europe and Medieval Britain.

Uh, but John Churchill was one of the best.

Now he did win his Spurs in battle.

He was a great general, um, but he was a different kind of aristocrat than, you know, we had seen before.

So.

And I've been, I've been talking, I don't know if I have actually formally defined, um, aristocratic technology on, uh, the Great Houses Forum yet I've talked about it quite a bit and it's one of the themes that I talk about on other podcasts.

I just recently did a, um, a podcast with the Great Will Tanner, who's an excellent poster on X, and then he's got, his substack is called the American Tribune and his.

Podcast is called The Old World Show because he, like me, does not have brand discipline and I appreciate him for this.

Um, but, but so, so I'm gonna give us some, some definitions of, of aristocratic technology.

So the first one is kind of a tautology and aristocratic technology is a technology that produces aristocratic families.

And, and that is a, a tautology, I, i, i, I grant you, but I, I, I, it's an important thing to think about because every enduring, multi-generational family that I'm aware of, everyone that I've ever studied
has some central functional technology, some domain mastery, something that it uses to, to influence the world, to defend its wealth and power, uh, that lends itself to generational continuity, right?

That means that there was some competitive advantage to having a relationship with a particular family for purposes of that technology, right?

So there were three classes in, in, um, the medieval period, and, and, and they kind of continued into the gentry that I wanna talk about.

The first is kind of the Marshall class, right, which was dominated in the medieval period by the knights.

And then you had the Levitical of the priestly classes, which were dominated by scribes.

And scribes were, you know, the people that could, you know, with, with pen and parchment or pen and paper.

They could duplicate.

A document very quickly.

Uh, they, they famously, you know, they, they, they copied the Bible.

Uh, that's, that's one of the main things that scribes did was old texts.

These, these papyrus or these early papers, they, they fell apart mostly after 20 years or so.

It was not a, they, they, they, they did not last a super long time.

So every 20 years or so, you had to have a person come along and hand copy, letter by letter, every text that you wanted to preserve.

And, you know, this leads to some interesting things.

So, for instance, one of the, one of the stories, we've talked a lot about how, over the past several weeks, about how the, uh, the knighthood, the, the Marshall class got corrupted by new technologies.

Well, the, the scribe class, which was mostly associated with the church, got one shotted by the printing press, right?

You went from, uh, monks having to gather in monasteries and spend enormous amounts of time and effort by a, a fairly significant chunk of the high IQ people in their society, just
to keep the texts alive to, Hey, we've got a, a printing press and we can punch out hundreds or thousands of books in, in thousands of copies of a book, at least in, in a week.

And that's, that's a very, very different, um, framework than they'd had before.

So they, they estimate that the Gutenberg revolution drops the, uh, the price of a book by 10,000 times.

So, so to give you some idea before the Gutenberg revolution, the, the cost in rare materials in man hours, skilled man hours, high level artisan man hours was about, for a Bible, was about the same cost in the modern day that you would pay for a Ferrari.

And you think about that the Catholic church put a Ferrari or something that the same price in terms of man hours and, and, and difficult to obtain materials.

It, you know, almost everywhere they had a priest, you know, every town in Hamlet that required this massive, you know, uh, transnational funding effort that they, you know, they, they developed for the, the bible, uh, the, of preserving the text.

And then they use that same, uh, transnational funding network to fund the crusades and very interesting things.

But then the printing press comes along and in about a 50 year period, the price of, of, of book drops, like I said, by 10,000 times.

And that left the Catholic church with all of this money that it didn't have to spend to, uh, to accomplish its purposes.

And it, there was a lot of corruption that, uh, that led to, uh, that, that glut of money led to.

Um, specifically the Catholic church had this period of time where they thought, oh, well we just have infinity money.

And then they appointed for Medicis as popes in a single century.

Shouldn't do that, shouldn't do that.

Um.

So the, uh, the, the printing, the, the shift from the scribe to the printing press was a very similar, uh, type of shift that as to the night, to the firearm, and then the weaver, right?

These, these very skilled weavers, people would do tapestries, tapestries were not just, you know, for cloth or they, they, they contained information.

They would contain historical records.

There was a lot in the weaver stuff.

And then that all gets replaced in, again, a very short period of time by the textile mill.

So you go from having, you know, these, these three groups, um, that, that, one of the things I wanna emphasize, it took a really long time to train all of these people.

Um.

You know, the, the, the genetic advantage, uh, of, of an, of the knighthood class, there might be more sort of genetics in, hey, your ability to ride a horse and wear played armor and, and lift a lance.

But even in the other two, in the scribes and the, the, the, the artisan class more broadly, there is a huge economic difference between a master, somebody who had totally mastered the skill and a junior right.

So to, to put it be be very direct, a squire, a junior scribe and a weaver's apprentice were not economically viable.

The, their work product, their output was not enough to pay for them to eat.

Right.

That's why, uh, you had, uh, indentures.

Okay.

So, and I kinda gonna give a side, we we're hearing a lot right now about the, the permanent underclass.

The permanent underclass, and, and, and God knows there's gonna be some significant disruptions that we're gonna go through.

Um.

There's gonna some sign significant disruptions that we're gonna go through, but we're, we're going to have a, a, a lot of of changes because we're, we're really returning to the meat, is what I would say.

So when you're using industrial machines, the, um, there's this big jump that you get from being competent.

When you become competent, then the machine kind of takes over and you get standardized output.

That's true of a firearm, right?

You, you have a super smart person pulling a trigger.

You have a super dumb person pulling a trigger.

The same number of bullets come out, right?

If you have just a marginally competent person using a printing press or a textile mill, or you have a super smart person using a printing press or a textile mill, you get the same product.

The book looks the same, the text looks the same because there's standardized industrial output.

So there are not normally big benefits that come from mastery.

Beyond that competence, certainly not the, the same kind as the benefits from I can, I can use the machine and I cannot use the machine that that's the distinction.

So this is what justified in the industrial age, you know, what was relatively high wages for single men, especially in the 19th and 20th centuries.

And as single men's wages went up, you see the number of uh, uh, uh.

Corporate families or household based families go down.

And that's because, you know, there's a certain amount of money in any business that kind of gets allocated to labor and an industrial system, it gets divvied out among the competent, right?

So if you're competent, you're using the machine in an industrial system, especially these early industrial systems, you just get, uh, you get paid for
your competence, but there's no, there's no benefit, uh, for, for, or not a huge benefit related to the amount of effort, uh, to really mastering something.

Okay?

And what I'll say is this has not been the case, right?

Throughout times in history when dealing with aristocratic technologies, there is a huge advantage to being a peak user, right?

And, and junior users are essentially non-viable.

You see this in YouTube, which follows the general mass media template, right?

The top 10, the top a hundred, top 10 make a lot of money.

The top a hundred make it, you know, good money.

The top 500 and a thousand make decent money.

And then maybe the top 10,000 makes something and everybody else makes effectively nothing.

Um.

So this is why in the medieval period, a lot of apprenticeships were, were, were indentures, right?

You got paid room and board, you didn't get paid any wages, you were indentured because the trainee didn't generate enough money to be worth paying.

In fact, for most of the medieval period, high status roles, like the ones I mentioned, the knights, the scribes, the weavers required a fee to take on an indenture.

If you were a master, someone wanted to sell you their child for seven years, which is how indentured apprenticeships are, are tend to be framed in our modern age.

That's not really what was going on there.

But, um, they, they would say, you have to pay them.

You have to pay them to take their child.

And, and all of the work, all of the output, whatever that apprentice produces for the next five, seven, sometimes 10 years, but usually seven was kinda the max that was owned by the master and he demanded a fee on top of that.

And, you know.

I wanna suggest to you that that's not oppression, that's not, you know, some, some, you know, big bad.

It wasn't that they, the people back then were inherently more evil than they are now.

And we've just now seen the light.

It was just economics.

The, the output of those people, what they produced in terms of its worth in the marketplace, was not sufficient to allow, you know, them, them to be, to be viable as a position.

Okay?

So, uh, you know, I'm, I'm gonna say I, I suspect that X, you know, and the other social media platforms are aristocratic technologies.

And, and I guarantee you one of the big questions that they're dealing with internally is how to subsidize the right people.

Because it's true on the one hand that if you know the, the, there's a bunch of these people that are not economically viable.

But if you only pay out the people who are economically viable, right now, you kill the pipeline, right?

Because it takes a long time to train People have to get in the reps, they, they call, right?

So what happened in the modern world was society as a whole became much less aristocratic in terms of the major technologies.

Most nobility became corrupt because the status games that they were playing were were based on the old horsemanship culture, and to some extent on the Preprinting press scholarship culture.

But Britain was able to preserve a vibrant, high quality, high competence aristocracy for much longer.

And the question is, why?

And I'm gonna put to you a provocative thesis.

You know, one of the things that you said, I made a statement that, that some people, you know, uh, pushed back on for me, uh, that I, I said that, uh, the, the gentry were valued for their financial acumen.

And, uh, and I got some comments and people said, Hey, I mean, what are you talking about?

The, the British nobility and especially the, the, the gentry grown broadly, but especially the aristocracy.

Were horrendously in debt.

You know, if you go into grok and you say, you know, tell me about the, the, you know, any family, but we'll say, we'll say the Churchills 'cause that's what I did with this is, uh, tell me about their financial acumen.

The grok, the ai, and all the, the Google searches respond.

They had terrible financial acumen.

They were always in debt, right?

And I said, oh, they're always in debt.

Always horribly in debt.

They were always on the verge of, of going bankrupt, always on the, did they ever actually go out of business for 400 years?

So for 400 years, you're telling me they were leveraged up to their eyeballs and yet somehow they were never taken out of play.

That's different.

That, that's very interesting.

Right.

Let's, let's, let's note that because in general, you know, people that are on the brink of doing something, do it in less than a century, I'm gonna suggest to you.

Right.

Especially when it relates to things like money and, and, uh, and insolvency.

At some point, somebody puts them outta the game.

Another way to say this is why did all of these otherwise sane people continue lending them money for hundreds of years if they were always on the brink of going out of business?

Right.

And one of the reasons was that, that Britain had gone through a financial revolution.

This is just kind of to set the scene, the big picture.

So post the, the 1688 Glorious revolution, they created a bunch of new tools.

They public credit, they had the Bank of England, they had stocks, they had ex checker bills.

And we'll get into those a little bit more.

Um, and I'm gonna suggest to you that the gentry shifted the key thing that they did, and this, and this is not just true of the gentry, it was true of the entire British aristocracy.

They shifted from battlefield shiverly, you know, being the key skill that they did to a, a kind of illegible merchant bank model.

They would issue notes on their prestige without entering vulgar trade.

And, and the finance allowed their families to project power to fund their lifestyles.

And critically, and this is what makes it an aristocratic technology, bind their descendants to their ancestral lands and duties, even after those
ancestral lands didn't make money in the same way, they didn't create wealth in the same way though we'll see that, that they were still integral.

Okay.

So now I wanna, I wanna frame the, the, when I say a, a, an illegible merchant bank, they were not engaged in retail banking.

They weren't even engaged in open commerce.

Right?

They had a, a, a access to a social network where people would lend them money based on prestige.

So they would, they would borrow money.

They would be expected to lend money, they would invest in various things.

And this is, this is how they kind of squared their, their, the fact that they weren't allowed to engage in, in commerce in dirty trade, right?

But they were always worried about money.

They were always thinking about money.

They were always transacting in money.

Okay?

And this goes back to John Churchill.

All right, so John Churchill.

Was in many ways the, the pioneer of military finance, he's born 30 years, he kinda lives through the, the creation of the Bank of England and all of these things.

Um, and he was importantly, he was the captain General during the war of Spanish succession.

Uh, and, and John Churchill, you know, one of the things people say, but he never lost a battle, right?

He was this incredible general, and you sort of study like why, what, what did he do?

Was he, and he was a brilliant tactician, right?

He was no slouch.

I'm not saying that he wasn't a very, very good general.

There were lots of good generals in Europe at the time.

What, what mostly people talk about when they talk about John Churchill was that his people loved him, his men loved him, and that, that he, he never showed up unprepared to a battle, right?

He had a logistical train that he had financialized the logistical train.

So they, they had figured out there was other people that had developed all of the, uh, kind of the key financial metrics issuing these
bills and certain types of war bonds and all of the things that, that, that, that they call it the financial revolution in Britain.

Um.

But John Churchill was the guy that took kind of these, okay, we can issue currency like this, we can issue currency like that.

We can, you know, give people these types of contractual rights and was actually able to turn that into a reliable logistics system
that, that you could make sure that everybody got fed, the soldiers got paid, and that, uh, you know, people kinda showed up on time.

Uh, so before Marlboro, uh, military logistics were, you know, as, as they used to say, positively medieval, right?

So it relied on fixed magazines and slow wagon convoys tied to secure bases.

So basically, whatever you needed for the fight, you brought it with you.

Now again.

When what you were bringing with you was your sword.

A couple of lances, maybe, maybe maybe five, 10 lances, right?

If you really thought it was gonna be a long, dangerous battle.

Um, and maybe some arrows, right?

Uh, those, that's not that much of a baggage train.

That's not that much.

And, and all of that is stuff that you're intimately familiar with.

These tend to be custom weapons just for you.

Um, but as we move away from that old medieval where you're using the same weapon repeatedly to a consumable base where you have to carry cannonballs, you have to carry lots of gunpowder, lots of bullets, all of the consumables that go along with this.

And frequently, in the early days, you know, guns weren't all that stable either, so you needed to carry it, you know, extra guns for your men.

So.

This spawned massive, cumbersome baggage trains with thousands of camp followers.

Um, and, and, you know, frequently the armies, uh, lived off the land, which is a euphemism for, you know, they would, they would go in and take what they wanted and, and, um, you know, in terms of food, they would take stuff.

Sometimes they would take people, especially women, um, and critically they never, never ever paid the troops on time.

Right.

Uh, I mean, they, they, a lot of military commanders kind of had the mindset, if you pay the troops before the battle, they might just take their money and leave, which was, you know, for many of those troops.

Not an unreasonable thing to, to, to wonder about.

Um.

And so the, the British, the British logistics chain under, under Marlboro was very different.

So the, the ex checker issued debentures is what they were called.

These were specific promises to pay regiments and contractors, and they were often addressed to Marlboro.

And then Marlboro would sign the warrants that come, came along with those debentures, and that activated the payments.

So this is what allowed them to have that, that punctual troop prey.

It allowed them to have pre-positioned supplies.

There was a particular, there's a 1704, uh, March to the Danube.

That's, that is, it's a, it's a very different experience.

The, the, the way that his army interacts with the peasantry in the area is totally different from, from traditional armies.

Okay.

And he was able to discipline his troops.

Now, you know, what I'll say is all Christian armies have been able to discipline their troops anytime they wanted to.

But, uh, but it, it posed a lot of challenge.

I mean, they'd been able to do that.

Going back to, there's a gentleman, uh, from the Byzantine era called Bella, who famously his troops did not pillage.

Okay.

But Marlboro was one of those guys.

He was, he was a deeply Christian man who, who saw a problem in the way that the armies of Christendom operated and decided to solve it.

And God, just as far as I can tell, gave him incredible insight into the world of high finance.

And again, there were other bankers that were people that, that were very involved in issuing these things as banking notices and, and using them for credit in peace time.

But nobody actually was able to turn this into, was able to take paper that somebody signed and say, okay, now I'm gonna give you this piece of paper that I just signed, and in exchange
you're gonna give me actual gun power and actual bullets and actual food, and you're gonna take my piece of paper and kind of trade it to somebody else who will trade it to somebody else.

Who will take it back to London.

Right.

Um, and, and, and what I wanna emphasize to you, this is, this is, it was Marlboro's signature.

So he's the one issuing the notes.

Like he, he, the notes were printed informally issued by the ex checker back in London, but they didn't become legal tender.

They didn't become something that you could pass around like a dollar bill until Marlboro signed them, which meant that it was his skill, his ability to kind
of sense, okay, I should issue this note right now, or I shouldn't issue this note right now that was keeping this kind of local currency, if you will, stable.

Okay.

Because he was, he was effectively issuing a new currency that didn't just trade in London, it traded all over Europe.

Um, sometimes it even traded in the, the, the markets of the people that Marlboro was fighting with, which is hilarious.

Um.

So Marlboro wins.

He, he wins all of, he wins every battle that he has.

He gets treated somewhat badly by the, uh, the internal political process in Britain.

You know, there's, there's only been a couple times where the British didn't sabotage themselves in terms of global politics, and they basically conquered the world, uh, each time.

Um, one of those was the Richard Lionheart and Lich, figure out who the other one was.

Um, so at the end of his service, um, there's a parliamentary grant to, to, uh, John Churchill.

Lord Marlborough of wood.

What was before Woodstock Manor is the huge, you know, 240,000 to 300,000 pound, uh, construction cost paid for.

It was supposed to be paid for by the state.

He has to, he has to eventually enforce that, uh, legally, but it creates a statutorily entailed inalienable estate, and this becomes the family's permanent tier one capital.

This becomes the core asset, the core inalienable asset that, uh, his family will leverage for the next several hundred years.

Okay.

So I'm gonna read you some, uh, some quotes.

Uh, this is from, uh, Winston Churchill's, uh, biography of, of John Churchill.

This is about Blenheim house, which is the house that they built.

Marlboro had set his heart upon this mighty house In a strange manner, Sarah considered it as his greatest weakness.

It certainly gives us an insight into the recesses of his being.

There is no doubt that the desire for posthumous fame to leave a good name to history, to be remembered long generations after he had passed away was in these years his strongest passion.

At his age, he could not hope to enjoy Blenheim much himself.

Several years must pass before it could even offer the co comforts of Holywell, which is where he lived.

It was as a monument, not as a dwelling that he so earnestly desired.

It, hence the enormous thickness of the walls and masses of Masonry and Van Bros Plan had appealed to him and had probably been suggested by him.

As the Pharaohs built their pyramid, so he sought a physical monument, which would certainly stand if only as a ruin for thousands of years about his achievements, he preserved a complete silence offering neither explanations nor excuses for any of his deeds.

His answer was to be this great house, which given the name of the podcast, I couldn't help but read that, that quote for you guys.

So, so that was John, John Churchill, the founder of the line.

He was kind of the, the emblematic figure in, in the lineage, and he had this core skill that, uh, that the British Empire found very, very useful.

Okay, so then his wife continues.

Um, she, she was, you know, a a, an incredible figure.

Uh, Sarah Churchill, she, uh, was an active investor.

She, this was kind of the thing that people didn't really like much.

This kind of violated a bunch of aristocratic norms.

But she went and actively invested.

She invested in the Bank of England.

She invested in the East India company.

Uh, she invested in a number of, of government shares.

She acquired a bunch of estates, um, which she then kind of divvied out among her, among her various descendants and friends.

Uh, when she, when she passed, not all of them passed to the, the specific, the, the, the, the Churchill Spencer line.

Uh, but, but she, she was, uh, you know, at one point they called her, she was the richest woman in England, right?

Um, there was a particular thing where it was called the, the South Sea Bubble.

Um, there was a, there was a South Sea company, uh, and she bought stock in it, and she converted it strategically.

Like she figured out that these people were not being honest.

And so she pulled out all of her money netting a, you know, a hundred thousand pound profit, which would be tens of millions in today's money.

Um, and she simultaneously lent it was a bubble, right?

So it was going up.

So she, and she pulled her money out and then she lent money to other people to buy more South China Soea stock, um, that she thought was gonna go out of business soon.

And she was right.

And this caught us a, a fair bit of, uh, of, of, uh, people were upset about that, let's say, but she amassed an enormous amount of wealth.

And she was able, you know, this, these were kind of the early time periods in the British financial system.

There was a lot of ups, there was a lot of downs.

Um, and, and she, she really, I mean, she 10 x the wealth that her, her husband left her by the time she died easily, maybe more.

It's, it's hard.

There's certain things that are hard to quantify in today's terms.

Okay.

So she was also a financial genius then her daughter and Churchill, she marries Charles Spencer and, um.

And the Spencers were rich gentry.

So Sir John Spencer, back a, a century and a half earlier, uh, was a yeoman sheep farmer.

And he, he was very successful in sheep, right?

Very successful in the wool business, which wool was, was again this bridge technology.

It was very important in the medieval period.

It was also very important in the, um, in the, um, in the early modern period.

So the Spencers amassed thousands of sheep.

They had a lot of wool prophets, and they built gentry status.

And then this was how they, how they became, you know, a part of the true aristocracy.

Right?

So there, but there was a marriage here, right?

It was, she was bringing prestige and they married into money, okay?

And that became a thing that the, uh, that the, that the family did this, I'm, I'm laying that, that theme is people will tend to look at the later descendants.

Oh my gosh.

They, they married wealth and this is, so that's what their ancestors did.

They were, they were following the family train.

Okay?

Um.

So the third Duke of, uh, of, of Marlboro, uh, was a, was a heavy spender.

Um, but he was able, you know, to, to borrow money from his peers.

There was a gentleman named Lord Penbrook, who lent him a large amount of money.

Um, and they had the, the, the core basis for that was the annual income of his estate, which was about 20,000 pounds.

It was from rents and timber and tenant pastures.

And the key thing was, is that Blenheim, that original act that Queen Anne had passed, granting it to, uh, to John Churchill, had an entail that said, this estate can never be taken from this family.

Right?

So it's the only thing that you can encumber when you encumber the family or the family estate is the income for a certain number of years, right?

But the core asset could never be lost.

And so he was able to, to leverage that.

Um, now.

His son, the fourth Duke was, was uh, kind of ver a very canny person.

Instead of just taking the income from his estate and kind of approaching close friends and saying, Hey, can I borrow money?

He, um, he bought what's called the Marlboro Gems Collection.

He also had Capability Brown, which who was a very famous, um, garden designer, designed the gardens at Blenheim.

So he had this, this kind of display of precious gems.

And he had this, uh, this garden that was very famous and that meant that people came to, to his property for parties.

It was a, it was a very attractive thing.

There was, there was prestige to going to Blenheim.

And so wealthy, powerful people went to Blenheim.

And that meant that he could borrow more from them to invest in various businesses.

Now, it, it's, it's not clear that, that it was understood that that's what he was doing was, was using this.

He, instead of borrowing directly based on the, the, the income of land he was taking, the income of the land, buying prestige projects and then using the prestige that he created to have funds to operate.

His son did not, did not get that.

Um, his son was, was, uh, bought a bunch of books, had a mar magnificent library.

I mean, I'm, I'm, I'm a Biblio fire myself.

But they, they said he had Biblio mania, right?

He was, he had a mania about buying books and he, he got 600,000 pounds in debt, which is, which is a staggering sum in, in, in the early 18 hundreds.

It's a ton of money.

And yet even after all of these bad decisions, somehow he was able, um, to borrow 50,000 pounds to, to kind of.

Put off the creditors and keep things going.

Now, he did have to liquidate the, the, the books, uh, that he had bought were he, he'd basically been cheated a lot by the, by the people that that had sold in the books.

He was only able to sell the books for 20,000 pounds and it was a big scandal.

Um, now one of the interesting things that the fifth Duke did, and again, this, this goes back to prestige, was he petitioned the queen, uh, that he should be allowed to add the Churchill name to Dis Spencer.

So before then, they'd been the Spencers for several generations, since Ann Churchill married into dispenser lineage, and now they would be the Spencer Churchills.

And that's how they were known for the next several generations.

Um, and, and I think he did this to enhance his borrowing power by signaling contin continuity with the first Duke of Marlboro.

That's why he wanted the name.

He wanted to be able to sign things.

You know, Spencer Churchill, right?

Like, like John Churchill.

So why, why was this able to happen?

Um, the answer again, I I mentioned earlier, was the statutory entail that protected blenheim.

Uh, and so Blenheim couldn't be taken from that many, it couldn't be sold.

And so all we were talking about was, was income similar.

You know, for those of you who've read the Old Testament, they talk about that they're, they, they had the, the, the land jubilees and these things.

Then they talk about when you're close to a Jubilee, you're not actually selling the land, you're selling a certain number of harvests from the land.

And that's the kind of scenario that you find yourself in here.

Now, interestingly, you know, when, when God set up a system, he gave every family, every citizen of, of his nation.

And entailed a state like that.

Very interesting.

Very interesting.

And then there were some other things.

You know, the, the, the way that prime generator worked, right?

The way that the rental income worked meant that, uh, things would thing, these things would stay together.

Um, and there was pretty good returns.

The, the, the, the market, the agricultural stuff that was happening.

Britain was doing well, and there was a, there was a high yield on aristocratic paper, um, combined with the fact that government paper was not, not doing well at all.

Okay.

And so again, what, what I wanna suggest to you, I have this diagram that, uh, that AI built for me.

And, uh, I, uh, it's there, there's a lot in this diagram that, that I, I'm not gonna take the time to go through today, but, but what I wanna emphasize to you is you think, you start kind of over on the left hand side with, with government es and.

And your income producing real estate.

And again, what people would think to do is, well, I'm gonna take that money and I'm gonna invest in, I'm gonna make investments, I'm gonna make loans to other aristocrats.

That's how we're gonna do this.

And then I'll get returns from my investments and then I'll be able, like in the modern world, the modern way it works is you get actual returns from your investments and that gives you prestige, right?

That that's what gives you prestige to get investors to do the next thing.

But in, in the general, the period of the gentry, you didn't get actual prestige from.

Your returns.

I mean, Sarah Churchill, right?

One of the most successful investors of the aristocratic class in history.

And she got positively reviled for having, you know, gotten a lot of money out, right?

So there's this broken link between actual returns and getting an enhanced reputation that allows you to, you know, get access to more investments and borrow more.

So what they would do instead is they would, they would take money and they would do prestige buys, right?

So gyms and jewelry, art and rare books, gardens and estates, these were prestige buys.

It brought them in that interesting people would come to your estate.

You have cool parties, right?

And out of those events, then you could put together financing opportunities to get access to, to better quality deals.

'cause you'd have insider knowledge.

This was before, you know, insider trading was even like, they, they wouldn't have known how to, how to even think about the, the idea of insider trading being illegal.

Um, that was not a thing back then.

So you just, you knew what you knew and you made the best decision you could.

Um.

So that's so, so, you know, again, when you study these people, the, the, the, the hot take is all these guys were just terrible at money because they were in debt up to their eyeballs.

And it's like, you know, it's, it's not that simple because if it were that simple, somebody would've put them out of business.

No, somebody would've said, we're not lending to you anymore.

Okay.

Then in the 19th century, things get even more interesting.

Um, they, they, they continue being in debt.

Uh, they, they continue having, uh, you know, a lot of, a lot of challenges.

They never really managed to be out of debt for more than, you know, a couple of decades.

But you have guys like, uh, Lord Randolph Churchill.

Uh, so he develops a strong relationship with a gentleman named Natty Rothchild, who was the first Bearen Rothchild.

He was the first, it, this is the first time that the Rothchilds, who had effectively been running the Bank of England for a hundred years at
this point, um, it was the first time that they were really granted, uh, prestige and, and, and allowed to kind of come out in polite society.

And there was a lot of pushback.

But the Churchill were one of the families that, that were early adopters.

They embraced the Rothchilds, and as a result of that, they received extensive personal loans and preferential investment access.

Um.

Uh, that's what was going on.

For instance, in, in there was something called the, the 19 18 91 South Africa syndicate.

So, uh, it was a Rothchild proposed gold prospecting venture in, in Rand, we'll call it.

And then there was a $10,000, or 10,000 pound, excuse me, letter of credit for expenses.

And $4,000 of that was given to Randolph.

It was purchased by Randolph, but the money to purchase it came from the Rothchild.

So the Rothchilds were putting together this fund, and they had all the money.

They had the $10,000, they took 4,000 of it.

They lent it to Randolph Churchill, and then Randolph Churchill used, used that money to invest in their, uh, in their project.

Okay?

And, and then they, they, you know, invested another, you know, uh, 11 or 12,000 pounds.

And, um, and, and that was what the syndicate was.

Now that syndicate.

Paid off, I mean, to the tune.

I think they, I think by the time it was all done, um,

Randolph Churchill's family received like 50,000 pounds back over the lifetime of that, uh, of that investment, which is a huge amount, right?

Um, and, and, and so, you know, again, what's going on there, right?

Is because people, again, they'll, they'll look at that and they'll say, well, this is just corruption.

Is it though, or, or is there a, a, a need in order to pull this, this thing off for government connections?

There's a lot that goes into that with the Bo war, and, and there's still lots of things to sort of be like, Hey, maybe, maybe this wasn't the most moral thing anyone's ever done, but it worked because of the high trust.

It worked because of the relationships.

It worked because finance was an aristocratic technology.

Uh, then in, in the 1870s, well, this is actually before the, the most recent example I gave, but you have, uh, Jenny Jerome, who marries, uh, Randolph Churchill.

Jenny Jerome was the son of Leonard Jerome, who was an American financier.

And he brought, you know, she brought a significant dowry.

She was the mother of Winston Churchill, right.

And, and then the next generation, they, uh, Consuelo Vanderbilt brought money into the main, so, so, uh, Winston Churchill was actually from a branch line of the Churchills.

He wasn't in the al succession, ironically enough, even though he writes the, the great biography.

But, uh, but Consuelo Vanderbilt brings a huge dowry with her, and they get a lot of criticism for that.

Again, from the way, from my perspective, when you're looking at this family over the course of two to 300 years, they're using the same strategies.

They're doing the same thing.

They're marrying people that come from trade.

They're, they're open to new financial relationships.

They're open to new financial technologies.

That's what they're doing.

Okay.

And then, uh, you know, one of the other methods that they would use is when, when Lord Randolph's father died, his trust provided an annual income for him.

And so he went to an insurance company, standard Life Insurance and said, Hey, I will assign you this long-term trust interest.

I, and I want to consolidate, uh, all of my debts into one kind of low interest package.

And that, that ability to restructure is very interesting because that's not how, that's not how normal private citizens are treated.

Okay.

I. Alright, so, and then, uh, you know, Winston Churchill, uh, though I, I won't go too deep into it, but he did the same kind of thing.

He had relationships with the Rothchilds, they lent him money to invest in projects that they were participating in, and he benefited as a result of that.

Basically all, all of the money that Winston Churchill ever made came from those sorts of arrangements.

Okay.

So, again, what I, what I wanna suggest to you is that this family is, is effectively.

Operating as an illegible merchant bank, right?

They, they have this tier one capital, they, which is the blenheim estate, which is protected by law.

It can't be sold, it can't be, um, permanently, they can't be permanently removed from it.

Now, there was a point in time, I think, with the fifth Duke, where, uh, it was in receivership, which meant that, that, uh, the, the, the treasury or the chancery had appointed someone to go and, and work there or to go and live there and manage the estate.

And, and the Duke had to live in one small wing and kind of keep to himself while they were making money off of the estate, which is hilarious.

But they did get it back eventually, and they always would get it back eventually.

Okay.

So then they would, they would buy movable stuff, you know, gems, books, art they would buy and that, that would be additional security that you
could say, Hey, if, if something happens, you can actually come and take this stuff away 'cause it's not, you know, part, part of the estate.

And then they would buy investment portfolios and then they would get political jobs.

Many of which didn't really, really require that much in the way of actual work on a, on the day-to-day basis.

Right?

So these non-liquid prestige works provided effectively a, a perpetual borrowing capacity.

'cause every 20, 30 years there'd be a new Churchill who would get new access to the networks and the, the, the credit networks would say, oh, we, we, we are effectively gonna rate you high because you're a Churchill.

So because you're a Churchill, we are gonna be very, very willing to lend to you.

Okay?

And, and I, you know, again, the, the,

the Blenheim estate and, and the way that the entail works, um, is, is, is very interesting because it's, it's, it shows the power of having.

Non-liquid assets, right.

Especially income producing non-liquid assets.

Uh, but people who can't get a, so, so the thing is if you have an asset, then there's going to that you can sell.

If you have an alienable asset, then there's gonna be enormous pressure on you to sell it 'cause there's more money.

Whereas if you have a, a non-liquid asset that still produces some money that you're not allowed to sell, people will still lend you money.

Okay.

And if you, you know, obligate enough years of, of income to them, they might even lend you almost as much as they would buy it for, but you get it back at the end.

Okay?

Now, in order to do that, you need some kind of political and social clout to lower borrowing costs.

Otherwise you're gonna get fleeced.

You can't, you can't do this without participating in the system.

You know, as, as people say this, these are, these are things that the minor gentry have to do.

You have to be a minor noble in order to get Yes, exactly.

You have to be a minor noble to do this.

Um, but it, it, it was a really effective way of, of developing this skill.

And again, it functions as an aristocratic technology.

So if you're an heir, right?

If you're a Spencer Churchill, you're attracted by the assets and the lifestyle, right?

You wanna live in this glorious manner, or at least have access to it.

I think, uh, you know, Winston Churchill never lived in Blenheim, but he did propose, if I recall correctly, to his wife, you know, so the family estate was, you know, serving a natal, a protist function.

Okay?

And then, but taking the estate with all of its assets also meant taking it with the debts.

And you couldn't get out without social and financial ruin, at least if you were the heir.

So one of the things this did was it compelled a, a lot of innovation.

So they, they had to constantly be saying, okay, we have a problem.

We can't rest on our laurels.

The money coming in isn't enough now.

We can't ever really lose, but we, we, we gotta keep innovating so that we can get out of debt and enjoy our lives and enjoy our aristocratic status.

Okay.

And that's what kept this going.

Um, now.

One of the things that, that, that, you know, to that point, this was not a stagnant type of a thing.

It wasn't like they, they mastered the skills of finance and then they were done in the 17 hundreds.

It was, you know, military public credit coordination, and then Sarah kind of has her own time period.

'cause she, you know, like I said, becomes the richest woman in England by doing all these investments.

And she, she had a lot of stark market alpha, as they say.

Then you have the 18th, 19th century prestige borrowing on the land.

And then by the late 19th century and the early 20th century, they're participating in these kind of imperial banking syndicates and, and, and to some extent bailouts.

Um, so there, there's, there's a difference in what they're doing in each century, but the, the financial skills, the core skills is, um, is, is what's driving the whole thing.

So, and just kind of, I've said this several times, but, but.

I don't think that, thinking about it as profligate spending and, and just saying, oh, these guys, they, they, they didn't know how to manage their money 'cause they were always in debt.

That's, that can't be, that can't be the whole story.

Okay.

Uh, because again, people continue to lend them money.

People continue to, they, they continue to have success.

They would invest in things that would pay off and they'd be flush.

And so they, they, they were able to keep working at it.

So what I, what I'd suggest to you is that this is a real skill and, and, and there is a sense in which it's kind of an artificial environment.

Right.

So why did this aristocratic technology, this, this setup persist?

And I think it's because the British Empire needed it.

They needed more Marlboros, they needed people that could manage this logistics train.

But teaching someone to manage a complex, you know, financial, your sort of issuing fiat currency, how do you teach someone to issue fiat currency?

Right?

That's really hard.

Um, long training times, long payoff times.

There's a high premium on high skill, high character, right?

How do you train for that?

Governments can't really train for stuff like that.

That's not what governments can do.

So you make a social construct that selects for that.

You make a social construct that does the training by making all of the people who live in something that is kind of a bubble, right?

That the government is maintaining around them.

They ha in order to thrive there, they have to get good at this skill.

And, and when they're good at that skill, then you can pull on them, uh, to, to do things, to entrust them with stuff for the government.

Okay?

So again, you know, in the broader context of what we've been talking about, if you want great houses, you will always need an aristocratic technology.

It's the aristocratic technology that holds the family together that allows them to have overlap from generation to generation.

That's what keeps the family together and allows it to be a pillar that you can build more things on.

Another way to put that is if you want to effectively manage an aristocratic technology, you will always need great houses, right?

You will always need the multi-generational structures because great houses is the optimal social form for managing long-term high payoff.

Uh, you know, some, many, many cases, high risk or maybe the, the better term would be personal risk, right?

If you, if you have a, a, a situation that doesn't depend on what the machine does with a competent user, if it depends greatly on the actual skill of the person using, you know, doing something, then that's a totally different skill, skillset.

That's an aristocratic technology, that sort of people evaluation.

And so you need a great house to manage that.

Now, one of the key things, right, so ob obviously we're studying this, hoping to learn something about our current moment and the current changes that we're going through, right?

So the modern period was characterized by democratic technology, short training times financial and physical capital being more important than character or skill.

And, and an easy, I'll call it an easy gratification for competence and, and no, or minimal rewards for long-term mastery.

Um, aristocratic technologies were relatively scarce, right?

That's why all the aristocratic families, that's why all the great houses kind of tended to fall off except for the ones that, that lived in these bubbles, most of which ended, um, around the time of the World Wars.

So that's very different from our, our, our moment, um, the dominant technologies of our day, fiat currency, nuclear power, mass media, chip foundries and above.

All right.

The thing that's kind of moving us, uh, in, in the direction that we're moving is ai.

And, and what I would ask you is are, are any of those technologies de democratic, any of them?

Those are the core technologies that make our world go.

And so what I think has happened is we have, we have a democratic management structure, right?

That is good at managing people that are competent with machines, right?

Where there's, there's relatively high payouts for people that get competent with some kind of industrial machine.

The, the, you know, we would see that where the factory worker was well compensated, right?

We would see that where, you know, later on the office worker was well compensated.

Um, that's not what we're seeing.

And I think it's because, I mean, fiat currency and nuclear technology, it's not, it's not just that they're, they're, um.

Not there, there, there are machines involved in that, but they are so potentially destructive that you, you want to be really careful about who gets access to those.

You, you want only ultimate, ultra high character people.

And you know, one of the things that we've found, you know, over the past, especially the last 20 years, I think, is we can't even seem to find, you know, 10 or 50 high caliber, high quality people to run those technologies.

Oh, actually we're doing pretty good on the nuclear side, but, but on the fiat currency side, we, we seem to have just a dearth of people that can, that can handle the character requirements of managing that, uh, those, those things.

'cause you know, you, you, you do something wrong and it kind of runs away with you.

There's a cascade effect there.

You mass media, you look at mass media, most of the people that go into media, I mean, it's the YouTube effect I talked about earlier.

You get nothing effectively.

Um, it's only people who develop, you know, they're, they're incredibly far on the, on the long tail of the normative distribution that you get any kind of economic payout.

Okay?

Chip foundries.

I mean, chip foundries are famously making chips is so hard and it's so ticky that, uh, that you don't, you, you, you need people that have developed incredible levels of skill.

And again, there's no, there's no economic benefit to, to, to training somebody to run a chip foundry, right?

Like if they screw up and you don't have a chip that works.

Well, you have nothing.

There's, there's no, there's zero economic value.

There might even be negative economic value there because reclaiming the materials that you use to make these chips is not always easy.

Is, is given, is, that's my understanding anyway.

Um, and then, you know, ai, uh, I think one of the, one of the great questions that we have about AI is will it stabilize into something where you get, you know, kind of regulated, uh, normal outputs for competent use?

Uh, uh, and, and, and, and I think that, that, that's still possible, right?

I'm not, I don't have a crystal ball, but everything that I'm seeing, everything that I'm, the way that I'm interacting with it is that it is not, it is not normative.

There aren't standard.

Things that you can do that reliably produce the same output.

You, it, it, it's a matter, it's more art than science.

You have to, you, you're, you're sort of building a relationship with a thing and sometimes it gives you what you want, sometimes it doesn't.

And sometimes you have to just try two or three times and then suddenly it breaks through.

It figures out what you want and hands it to you, you know, on a platter, that's not a standard industrial machine, right?

That's not the same thing as a, as a, as a gun.

Where when you pull it, the, this, a certain number of bullets come out every second.

Right?

Those are very different experiences.

At least so far it's been very different experiences for me.

And, and again, you know, if somebody figures that out, well then I think we'll all know about it because there will suddenly be clear, reliable outcomes
that you can get from Jet GPT, um, or for many of the ais F So as we're thinking about, um, you know, where we're going, I, I want to clarify that.

Nothing about this, nothing about the stuff that I'm saying.

Nothing about moving towards a, a more aristocratic.

Mindset or frame requires us to abandon our constitution, right, as, as originally granted to us by an act of divine grace.

Um, you know, we now, what I'll say is we, Mel, may well have to address the distortions introduced by corrupt judges and men like Woodrow Wilson and FDR, who thought they were smarter than God.

You know, there's, there's two great evils that Woodrow Wilson did.

One was, he ruined our constitution and the second, and almost as important was that he ruined Princeton, right?

Woodrow Wilson and all of the things that he did and the movement that he represented destroyed Princeton.

Um, and, and caused it to split into I think at least two, uh, different factions.

Um.

And, and Princeton University, people don't know this, but Princeton University produced a huge amount of people at one time.

Before that split, it was kind of the Presbyterian answer to, you know, Harvard and Yale and some of these other, you know, more Anglican institutions, more Episcopalian institutions.

And, um, and without that we lost a lot of the ability to, to manage the original structures of the Constitution.

But a, a Constitutional Republic representative government can function very, very well with a much more hierarchical, much more patriarchal, much more aristocratic structure than we have today.

And so, you know, as we walk through this stuff, as we think about, okay.

The world is, as we know, it is changing.

There's some things that, that I want, I want certain amounts of, of rights and privileges.

I want certain amounts of rights and privileges and, and to some extent, maybe even some, uh, egalitarian style or, or less hierarchical, uh, structures for my family and my children.

That's the, the, the life that I want to experience.

Um, and what I would say is, you know, learning from the gentry, learning from the Churchills, they were coming out of a, a very aristocratic world where everything in the medieval period was aristocratic.

Everything had long training times, everything had those kinds of things, and they were able to preserve their culture and the way that they operated, um, through a, a massive technological shift, right?

So just as the Churchills were able to preserve their aristocratic privilege in an increasingly democratic world, so too, if we want to create spaces where we have the innovative drive where we can.

If we have earned it in what is increasingly, you know, a, a, a functionally neo feudal system that's rising up all around us.

In other words, we can have, we can preserve that if we build great houses.

So thank you everybody for, uh, for coming along.

I know that was, uh, that was drinking from the fire hose.

Um, so I, I, I appreciate everybody that, that's listening to me on the, the public version of this.