Finance
The unexpected origins of a modern finance tool
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.
But in 1626, Durham officials found a formula for fees that tenants would accept. If tenant farmers paid a fee equal to one year’s net value of the land, it earned them a seven-year lease. A fee equal to 7.75 years of net value earned a 21-year lease.
This was a form of discounting, the now-common technique for evaluating the present and future value of money by assuming a certain rate of return on that money. The Durham officials likely got their numbers from new books of discounting tables. Volumes like this had never existed before, but suddenly local church officials were applying the technique up and down England.
As financial innovation stories go, this one is unusual. Normally, avant-garde financial tools might come from, well, the financial avant-garde — bankers, merchants, and investors hunting for short-term profits, not clergymen.
“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.”
Deringer has published a new research article about this episode, “Mr. Aecroid’s Tables: Economic Calculations and Social Customs in the Early Modern Countryside,” appearing in the current issue of the Journal of Modern History. In it, he uses archival research to explore how the English clergy started using discounting, and where. And one other question: Why?
Enter inflation
Today, discounting is a pervasive tool. A dollar in the present is worth more than a dollar a decade from now, since one can earn money investing it in the meantime. This concept heavily informs investment markets, corporate finance, and even the NFL draft (where trading this year’s picks yields a greater haul of future picks). As the historian William N. Goetzmann has written, the related idea of net present value “is the most important tool in modern finance.” But while discounting was known as far back as the mathematician Leonardo of Pisa (often called Fibonacci) in the 1200s, why were English clergy some of its most enthusiastic early adopters?
The answer involves a global change in the 1500s: the “price revolution,” in which things began costing more, after a long period when prices had been constant. That is, inflation hit the world.
“People up to that point lived with the expectation that prices would stay the same,” Deringer says. “The idea that prices changed in a systematic way was shocking.”
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.
Meanwhile, tenants had additional leverage against the Church of England: religious competition following the Reformation. England’s political and religious schisms would lead it to a midcentury civil war. Maybe some private landholders could drastically increase fees, but the church did not want to lose followers that way.
“Some individual landowners could be ruthlessly economic, but the church couldn’t, because it’s in the midst of incredible political and religious turmoil after the Reformation,” Deringer says. “The Church of England is in this precarious position. They’re walking a line between Catholics who don’t think there should have been a Reformation, and Puritans who don’t think there should be bishops. If they’re perceived to be hurting their flock, it would have real consequences. The church is trying to make the finances work but in a way that’s just barely tolerable to the tenants.”
Enter the books of discounting tables, which allowed local church leaders to finesse the finances. Essentially, discounting more carefully calibrated the upfront fees tenants would periodically pay. Church leaders could simply plug in the numbers as compromise solutions.
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 (and church-affiliated institution) 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.
Performing fairness
The discounting tables from books did not only work because the price was right. Once circulating clergy had popularized the notion throughout England, local leaders could justify using the books because others were doing it. The clergy were “performing fairness,” as Deringer puts it.
“Strict calculative rules assured tenants and courts that fines were reasonable, limiting landlords’ ability to maximize revenues,” Deringer writes in the new article.
To be sure, local church leaders in England were using discounting for their own economic self-interest. It just wasn’t the largest short-term economic self-interest possible. And it was a sound strategy.
“In Durham they would fight with tenants every 20 years [in the 1500s] and come to a new deal, but eventually that evolves into these sophisticated mechanisms, the discounting tables,” Deringer adds. “And you get standardization. By about 1700, it seems like these procedures are used everywhere.”
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.”
Once discounting was widely introduced, it never went away. Deringer’s Journal of Modern History article is part of a larger book project he is currently pursuing, about discounting in many facets of modern life.
Deringer was able to piece together the history of discounting in 17th-century England thanks in part to archival clues. For instance, Durham University owns a 1686 discounting book self-described as an update to Acroyd’s work; that copy was owned by a Durham Cathedral administrator in the 1700s. Of the 11 existing copies of Acroyd’s work, two are at Canterbury Cathedral and Lincoln Cathedral.
Hints like that helped Deringer recognize that church leaders were very interested in discounting; his further research helped him see that this chapter in the history of discounting is not merely about finance; it also opens a new window into the turbulent 1600s.
“I never expected to be researching church finances, I didn’t expect it to have anything to do with the countryside, landlord-tenant relationships, and tenant law,” Deringer says. “I was seeing this as an interesting example of a story about bottom-line economic calculation, and it wound up being more about this effort to use calculation to resolve social tensions.”
Last weekend, several thousand people took to the streets in Munich to demonstrate against abortion and assisted suicide. One speaker made an extremely dramatic plea against what he called the “culture of death” that has allegedly taken hold in Germany. One sign of this, the speaker argued, was that the government is planning to abolish a regulation known as “spousal tax splitting.”
Is tax law really relevant to deep philosophical debates on the sanctity of life? It is even a matter of life and death at all? Surely we needn’t go that far? In any case, the intense political uproar surrounding the new debate on whether to abolish spousal tax splitting is notable, even by today’s standards of populist outrage.
An advantage for couples with widely divergent incomes
The row was sparked by Germany’s vice chancellor and finance minister, Lars Klingbeil, of the center-left Social Democratic Party (SPD), who said he wanted to abolish and replace the joint taxation of spouses’ income, a system that has been in place since 1958.
How exactly does spousal tax splitting work? In Germany, married couples (and since 2013, couples in civil partnerships), can choose to have their income assessed jointly by the tax authorities.
It means that the taxable income for both spouses together is halved – as if both partners had each earned an equal half of the income. Their tax liability is then determined by simply doubling the income tax due on one half.
As people who earn more pay higher taxes in Germany, this system benefits couples where one partner (and often this is still the man) earns significantly more than the other (in practice often the woman).
Costs of up to €25 billion per year
If for example one partner earns €60,000 ($70,512) a year and the other partner earns nothing, the couple will be taxed as if they earned €30,000 each. In this example, the couple would save nearly €5,800 in taxes per year compared to the amount they would owe if both partners filed their taxes separately. According to the Finance Ministry, spousal tax splitting costs the government a total of up to €25 billion annually.
Some critics have long viewed splitting as a tool to keep women out of the labor market, because the more a woman earns, the larger her tax burden becomes. Klingbeil seems to agree, arguing on ARD television in late March that the system was “out of step with the times.” The spousal splitting system reflects “a view of women and families that is completely at odds with my own,” he said.
Chancellor Merz said to be in favor of splitting
On Monday of this week, Klingbeil got some surprising support on this from Johannes Winkel, head of the youth wing of the conservative Christian Democratic Union (CDU).
“Given the demographic reality, the government should create incentives to ensure that both partners in a relationship are employed,” Winkel told the Funke Media Group. “In the future, tax relief should primarily be granted to married couples when they are facing hardships related to raising children.”
But the chancellor is a vocal skeptic of the proposal. “I am not convinced by the claim that joint filing for married couples discourages women from working,” Friedrich Merz said at a conference organized by the Frankfurter Allgemeine Zeitung newspaper. “Marriage is a relationship based on shared income and mutual support. And in a marriage, income must be treated as a joint income for tax purposes, not separately.”
Klingbeil’s alternative plan
At around 74%, the labor force participation rate for women in Germany is one of the highest in Europe, but half of them work part-time.
Klingbeil’s idea is to replace the existing system with a more flexible approach: Both partners would be able to distribute tax-free income among themselves in such a way that it minimizes their tax liability. This would allow the couple to continue enjoying a tax advantage, albeit not to the same extent as before. And whether one partner earns more than the other would become less important.
However, it remains to be seen whether Klingbeil will be able to push through his proposal. Aside from Germany, similar regulations offering tax benefits to couples exist in Poland, Luxembourg, Portugal and France.
This article was originally written in German.
The $537,000-a-year office created in 2014 to advise the City Council on financial issues and avoid a repeat of the parking meter fiasco has failed to deliver on that mission, the city’s chief watchdog said Tuesday.
Days before concluding her four-year term, Inspector General Deborah Witzburg said a shortage of both adequate staff and financial information closely held by the mayor’s office prevents the Council’s Office of Financial Analysis from helping the Council be the the “co-equal branch of government” it aspires to be.
In a budget rebellion not seen since “Council Wars” in the 1980s, a majority of alderpersons led by conservative and moderate Democrats rejected Mayor Brandon Johnson’s corporate head tax and approved an alternative budget, including several revenue-generating items the mayor’s office adamantly opposed.
But Witzburg said the renegades would have been in an even better position to challenge Johnson if only their financial analysis office had been “equipped and positioned to do what it’s supposed to do” — provide the Council with “objective, independent financial analysis.”
“We are entering new territory where the City Council is asserting new, independent authority over the budget process. It can’t do that in a meaningful way without its own access to financial analysis,” Witzburg told the Chicago Sun-Times.
Chicago Inspector General Deborah Witzburg’s latest report focuses on the Chicago City Council’s Office of Financial Analysis.
Jim Vondruska/Jim Vondruska/For the Sun-Times
But the Council’s financial analysis office, she added, “has never been equipped or positioned to do what it needs to do. It needs better and more independent access to data, and it needs enough staff to do its job. It has a small number of employees and comparatively limited access to data.”
The inspector general’s farewell audit examined the period from 2015 through 2023. During that time, the financial analysis office budget authorized “either three or four” full-time employees. It now has a staff of five .
Witzburg is recommending a staffing analysis to identify how many people the financial office really needs — and also recommending that the office “get data directly” from other city departments, “ rather than having it go through the mayor’s office.”
The audit further recommends that the office develop “better procedures to meet their reporting requirements” in a timely manner. As it stands now, reports are delivered “sometimes late, sometimes not at all,” the inspector general said.
“We find that those reports have been both not timely and not complete in terms of what they are required to report on and that those reports therefore have provided limited assistance to the City Council in its responsibility to make decisions about the city’s budget,” she said.
The Council Office of Financial Analysis responded to the audit by saying it hopes to add at least three full-time staffers in the short term and has made “some progress” over the last three years in improving their access to data, but not enough.
The office was created in 2014 to provide Council members with expert advice on fiscal issues.
For nearly two years the reform was stuck in the mud over whether former 46th Ward Ald. Helen Shiller had the independence and policy expertise to lead the office.
Shiller ultimately withdrew her name, but the office was a bust nevertheless. In an attempt to breathe new life into it, sponsors pushed through a series of changes.
Instead of allowing the Budget chair alone to request a financial analysis on a proposal impacting the city budget, any alderperson was allowed to make that request.
The office was further required to produce activity reports quarterly, not just annually.
Now former-Budget Chair Pat Dowell (3rd) then chose Kenneth Williams Sr., a former analyst for the office, as director and gave him the “autonomy” the ordinance demanded.
Two years ago, a bizarre standoff developed in the office.
Budget Committee Chair Jason Ervin (28th) was empowered to dump Williams after Williams refused to leave to make way for a director of Ervin’s own choosing.
The standoff began when Williams said he was summoned to Ervin’s office and told the newly appointed Budget chair was “going in a different direction, and I’m putting you on administrative leave” with pay.
“He took all my credentials and access away. I would love to come to work. I wasn’t allowed to come to work,” Williams said then.
Williams collected a paycheck for doing nothing while serving out the final days remainder of a four-year term.
Ervin’s resolution stated the director “may be removed at any time with or without cause by a two-thirds” vote or 34 alderpersons. He chose Janice Oda-Gray, who remains chief administrator.
Little League® International has announced that Reilly Barnes accepted a new role as Purchasing/Finance Assistant, effective April 6, 2026. Barnes transitions from a temporary Purchasing Assistant to this full-time position to assist in the year-round demands of purchasing for the organization, as well as the region and Little League Baseball and Softball World Series tournaments.
“We are thrilled to welcome back Reilly to our team as a full-time Purchasing/Finance Assistant. Reilly’s prior experience, time management, and attention to detail make him an invaluable asset to the purchasing team,” said Nancy Grove, Little League Materials Management Director. “We look forward to the positive contributions he will have on our organization.”
In this role, Barnes will be responsible for processing purchase requisitions, coordinating souvenir products, and tracking order fulfillment. He will also assist with evaluating suppliers, reviewing product quality, and negotiating contracts for effective operations.
After most recently working as a Logistician Analyst at Precision Air in Charleston, South Carolina, Barnes, a Williamsport native, returns after honing his skills in the fast-paced environment. Prior to his time at Precision Air, Barnes served as a Procurement Specialist at The Medical University of South Carolina, where his expertise and knowledge were instrumental in supporting both education and healthcare needs.
“I am thrilled to return to Little League in this full-time role,” said Barnes. “Coming back to my hometown and having the opportunity to work for an organization that has played such a special part of my upbringing means a lot. I can’t wait begin this new opportunity.”
Barnes graduated from the University of Pittsburgh in 2022 with a B.A. in Supply Chain Management, Finance, and Business Analytics.
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