Money without Illusions

In 1610 the Court of Common Pleas in London decided a lawsuit brought by a physician named Thomas Bonham against the College of Physicians.

Bonham had been educated at Cambridge, took his medical doctorate at Oxford, and practiced in London. The College, which licensed physicians in the city, had refused to admit him in December 1605 and again in April 1606. It fined him and warned him to stop practicing. When he said he would continue, it had him arrested, and on November 7, 1606, he was imprisoned for contempt. His lawyer obtained a writ of habeas corpus, and he was free six days later. Years afterward he sued the College for false imprisonment, and the case came before Sir Edward Coke, Chief Justice of the Common Pleas.

Coke found for Bonham. Much of his reasoning was technical, turning on what the College’s charter and the statutes behind it actually allowed. But the passage that lawyers still quote rested on a different objection. Under its charter the College’s censors summoned the offender, judged him, and took half of the fine. “The censors cannot be judges, ministers, and parties,” Coke wrote: judges to give sentence, ministers to make the summons, “and parties to have the moiety of the forfeiture.” He invoked a maxim that was already ancient, aliquis non debet esse Judex in propria causa, no one ought to be a judge in his own cause, and added a plainer version of his own: “one cannot be judge and attorney for any of the parties.”

Roman law had stated the principle more than twelve centuries earlier, in a decree of the year 376. When James Madison wrote about faction in 1787, in the essay first printed in New York’s Daily Advertiser on November 22 and now known as Federalist No. 10, he gave the reason more bluntly than Coke had. “No man is allowed to be a judge in his own cause,” he wrote, “because his interest would certainly bias his judgment, and, not improbably, corrupt his integrity.”

Notice what the principle does not say. It does not say that judges are stupid or weak. Coke was among the most formidable legal minds England ever produced, and the rule bound him as much as anyone. It makes no claim about the quality of a mind at all. It is a claim about circumstances: that certain arrangements distort judgment whoever is doing the judging, and that the sensible response is not to look for a cleverer judge but to change the arrangement.

Courts have spent centuries acting on that idea. They separate the people who bring cases from the people who decide them. They require judges with an interest to step aside. They give the losing party an appeal to someone else. None of this assumes that judges are fools. All of it assumes that judgment depends on conditions.

Now consider how most of us make our largest financial decisions. When you decide whether to take a job, buy a house, start a business, sell an investment, lend to a relative, or spend a bonus, you are a judge in your own cause. You have the interest. You gather the evidence, frame the question, argue both sides, and deliver the verdict. Later you will decide whether the verdict was sound, and your self-respect may depend on the answer. No court would accept that arrangement. We accept it every day, mostly without noticing that it is an arrangement.