Learn From the Past ... in a Cozy Scottish Reading Room

Why you should care

Because if you don’t read it, you might be doomed to repeat it. Cue the Library of Mistakes.

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Tucked away in a mews in central Edinburgh — if you power walk, you could be there less than 15 minutes after your train pulls in to Waverley station — is a two-room, book-lined haven, complete with a fireplace and (fake) tulips on the mantelpiece. Also on the mantel: a portrait of Charles Ponzi, who gave his name to the most famous of schemes and bilked thousands of people out of their money in the 1920s.

It’s people like Ponzi (and former currencies like the tulips, which caused a massive financial bubble in Holland in 1637) whose stories animate the Library of Mistakes, a friendly warrior on the side of good governance that seeks to serve as a resource for anyone interested in learning from history’s great financial errors. For Russell Napier, the professor and investment professional who founded and keeps the library of about 4,500 books, it’s a way of fighting back against not just specific idiocies but also against a financial profession that’s turned largely to teaching by the numbers rather than focusing on what history has taught us works … and what doesn’t.

The three main groups of people using the library are retirees, students and investment professionals.

What doesn’t was illustrated in the 2008 British financial crisis, which Napier says was the inspiration for the library. When it comes to financial education, he explains, it’s “easier to sell the surety of numbers” — getting people to trust you with their money, whether at a personal or systemic level, is easier with algorithms, equations, things that seem unchangeable. But finance doesn’t just run on numbers. Napier, who’s taught financial history for years, argues that it’s through stories — and specifically through cautionary tales — that we’ll find a way to navigate both micro- and macro-economic disasters, avoid getting scammed and maintain sane policies and practices that govern finance.

To be sure, this reading room may not change the course of history anytime soon. Napier says the three main groups of people using it are retirees, students and investment professionals, and that the library, which is unmanned and invites registered readers to drop in anytime they want, only gets three to four visitors a week — though it can hold 30 at its periodic lectures.

But the Library of Mistakes is catching on. A sister library opened in Pune, India, in 2016, and another is planned to debut in Lausanne, Switzerland, before the end of the year — the first that’s expected to include non-Anglophone texts.

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In fact, libraries of mistakes could be useful for any profession. “Financiers make more mistakes than engineers,” Napier says, “but engineers also make mistakes.” Reading about the bicycle boom and bust of the 1880s could have helped those involved in the rubber boom and bust of the early 20th century see where they were heading. And anyone who had read about the history of banks, Napier explains, would have known that Britain’s banks in 2008 were dangerously unstable. “All mistakes come from the human brain,” he says, “so maybe by studying the history of mistakes, we can improve our decision-making.”

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