Shadow Networks: Financial Disorder

And The System That Caused Crisis

Francisco Louçã
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S HA D O W N E T WO R K S
OUP CORRECTED PROOF – FINAL, 9/8/2018, SPi
 OUP CORRECTED PROOF – FINAL, 9/8/2018, SPi

Shadow Networks
Financial Disorder and the System
that Caused Crisis

FRANCISCO LOUÇÃ
A N D M I C HA E L A S H

1
OUP CORRECTED PROOF – FINAL, 9/8/2018, SPi

3
Great Clarendon Street, Oxford, OX2 6DP,
United Kingdom
Oxford University Press is a department of the University of Oxford.
It furthers the University’s objective of excellence in research, scholarship,
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© Francisco Louçã and Michael Ash 2018
The moral rights of the authors have been asserted
First Edition published in 2018
Impression: 1
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a retrieval system, or transmitted, in any form or by any means, without the
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address above
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contained in any third party website referenced in this work.
 OUP CORRECTED PROOF – FINAL, 9/8/2018, SPi

In memory of Christopher Freeman—F.L.

For Alison, Larry, Marshall, and Roberta—M.A.
OUP CORRECTED PROOF – FINAL, 9/8/2018, SPi
 OUP CORRECTED PROOF – FINAL, 9/8/2018, SPi

Acknowledgments

In the preparation of the book, assistance from Eugenia Pires is gratefully acknowl-
edged. Her research was crucial for drafting the first chapters describing the
functioning of the shadow banking system. The work of Adriano Campos and
Nuno Moniz was essential for the compilation of data on the revolving door
between politics and business. Katherine Gabriele, Scott Keating, Shannon Kelly,
Zhe Liu, Taylor Smith, and Anna Watzker of the University of Massachusetts
Amherst provided invaluable research assistance, compiling micro-biographies
of center-liberal party and government people in a dozen developed economies
for further analysis of the revolving door. R. Bruce Harper and Roberta Garner
provided thoughtful feedback at many stages. Gerald Friedman and Robert Pollin
reviewed the full manuscript, and we thank them for careful reading and helpful
suggestions. In two different seminars held in Lisbon and Arrábida, Portugal,
our colleagues Tanya Araújo, Ricardo Cabral, Helder Coelho, Samuel Eleutério,
Gerald Epstein, Larry King, and Kevin Young provided important comments
and a fruitful discussion. João Ferreira do Amaral and Mariana Mortágua also
commented on previous versions of the book and we appreciate their careful and
critical assessment, as well as the suggestions of some anonymous referees for OUP.
OUP CORRECTED PROOF – FINAL, 9/8/2018, SPi
 OUP CORRECTED PROOF – FINAL, 9/8/2018, SPi

Contents

List of Figures and Tables xi

Introduction 1

I. T H E WO R L D O F S HA D O W F I NA N C E
1. Greed and the Adventures of Homo economicus 17
2. Shadows in Times of Crash 30
3. The Whole Alphabet Soup 51
Appendix A. The Realm of Shadow Finance: How and How Much 65

II. W H O D E C I D E S ? D E R E G U L AT I O N
AND DEREGULATORS
4. Big Business and Family Business 83
5. The Liberalizers: Justifying Free-Market Finance 104
6. Deeds and Doctrines of the Central Bankers 122
Appendix B. Skeptics and Critics vs. True Believers 147

III. P LU T O C R AC Y A N D O L I G A R C H Y
7. Consensus by Schooling and Power: The Indoctrination of the Elites 171
8. The Revolving Door 208

IV. T H E W E B O F P O W E R
9. The Wild Side of the Street 245
10. Capital Controls: The Emergency Brakes 267
Appendix C. Can the Institutions Be Trusted? 279

V. T H E WO R L D W E L I V E I N
11. A Long Stagnation, or Capitalism without Growth 297
12. China, A New Global Player 315
13. The Shadow Society and Its Fictitious Capital 329

Bibliography 347
Index 385
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List of Figures and Tables

FIGURES

A.1. Market-based credit intermediation through shadow banking 69

A.2. The securitization process 75
4.1. The Wallenberg network of companies 90
4.2. Carlos Slim’s pyramid organization 91
B.1. Capital account liberalization and economic growth 152
B.2. The arc of financial repression 153
B.3. Expected prices are more volatile than the real thing 161
8.1. Education at elite US institutions 220
8.2. Bank affiliation 221
8.3. Education in economics or law 222

TABLES

1.1. Pay of top US bankers, 1975 and 2014 20

8.1. Experience before service, government minister sample, 1975 and 2015 219
8.2. Experience before service, central bank sample, 1975 and 2015 220
8.3. Type of connections among Portuguese politicians and managers 223
8.4. Evolution of connections among Portuguese politicians 224
OUP CORRECTED PROOF – FINAL, 9/8/2018, SPi
 OUP CORRECTED PROOF – FINAL, 9/8/2018, SPi

Introduction

This book investigates two questions, how did finance become hegemonic in the
capitalist system; and what are the social consequences of the rise of finance? We
do not dwell on other topics, such as the evolution of the mode of production
or the development of class conflict over the longer run. Our theme is not
the genesis, history, dynamics, or contradictions of capitalism but, instead, we
address the rise of financialization beginning in the last quarter of the twentieth
century and continuing into the twenty-first century. Therefore, we investigate
the transnationalization of the circuits and processes of capital accumulation that
originated the expansion and financialization of the mechanisms of production,
social reproduction, and hegemony, including the ideology, the functioning of
the states, and the political decision making. We do not discuss the prevailing
neoliberalism as an ideology, although we pay attention to the creation and
diffusion of ideas, since we sketch an overview of the process of global restructuring
of production and finance leading to the prevalence of the shadow economy.
Shadow finance, or the non-regulated part of the financial system, is a crucial
part of the operation of big banks and financial agencies and lives in their orbit,
notwithstanding the impressive value it manages. It is a form of economic power.
We explore the mechanisms of reproduction of the power of finance and observe
that the fundamental characteristics and successes of finance, with its reliance on
shadow finance, have been projected into an entire shadow economic system.
Beginning with finance, we discuss how the shadow system was developed, how
it recruits its personnel, how it reproduces its ideas and organizations, how it
dominates political decision, how it conditions choices, and how its power grows
in the world of volatile financial markets.
We will thus discuss the shadow system and some of the tensions and dangers it
creates. The threats are always political, but at the end of the second decade of the
twenty-first century, we face a combination of dangerous politics and dangerous
economics. The imminent perils are Trump and his administration, the speculative
bubble generated by the massive injections of liquidity by the central banks, the
mountain of debt in China, and the continued fragility of the euro.
But market indicators—“the numbers”—seem to indicate otherwise: during the
first half of 2017, the FTSE index for banking registered spectacular growth of
24 percent, especially for the US banks and in some cases for the European banks.
By the end of 2017, the S&P500 index reached a historical maximum and peaked
at 82 percent above its 2007 finish. The European stock market has been exuberant
under the ECB and Mario Draghi’s stimuli, and a comfortable wealth effect among
the owners of financial assets stimulated new housing bubbles. Business seems
once again to be back on its feet.
 OUP CORRECTED PROOF – FINAL, 9/8/2018, SPi

2 Shadow Networks

Indeed, confidence abounds. During 2017, the anticipated payouts to sharehold-

ers of the major banks over the next year may disburse nearly all bank earnings.
Some banks even doubled the dividends. The mammoth Citigroup has set its total
dividend at a higher value than its likely earnings. Since 2007 and all through the
long recession, the larger Eurozone banks paid dividends in excess of 40 percent
of total earnings.1 The big bankers meanwhile protest against regulation that
would impose a substantial capital reserve, asking for a return to the glorious and
highly leveraged era before the subprime crisis. In his 2016 letter to shareholders,
Jamie Dimon of Morgan Chase criticizes the increased capital requirements; as
did Blankfein from Goldman Sachs.2 Unfazed by their near-death experience,
big banks are back in business. Their business is not traditional banking, it is
the shadows.
Throughout this book we argue that a dangerous illusion underpins this eupho-
ria. Over the past post-crisis decade the factors of a new crisis have accumulated.
Just as those factors that led to the previous recession emerged from disturbances
in a small niche of the financial market, the current process is being repeated,
under the impulse of deregulation and new waves of growth of shadow finance.
The Eurozone, the speculative bubbles in the stock market or in real estate, political
conflicts, disarrangements in international trade, collapses in confidence, different
factors may ignite a new crash or a major crisis. Zhou Xiaochuan, the governor of
the central bank of China for 15 years, until the end of 2017, decided to leave office
with a solemn warning: a “Minsky moment” may be coming—as we shall see in
the following pages, that means a major financial crash.3 Furthermore, other facts
threaten stability and confidence: the successive cases demonstrating the loss of
legitimacy of political systems, if not their collapse, extending from the coups in
Brazil, Egypt, and Turkey, to the waves of victorious populism in India, Hungary,
and Poland, and to evidence of political fragility of the traditional parties in other
countries, such as Spain, Italy, France, and even Germany.
We will show that finance is a structured power and a mode of social orga-
nization. Finance manages its own reproduction through sophisticated means
mobilizing ideology, universities, think tanks, lobbies, recruitment and indoctri-
nation centers, institutional connections, education of decision makers, and the
naturalization of markets as the center of the economy and life of people. Our
investigation of this civilizational transformation under late capitalism can make
sense of Trump’s election and other recent disruptions of the political systems that
prevailed between the Second World War and the Great Recession. The greatest
shock of this disruption is the convergence of neoliberal politics with authoritarian
solutions, as unmoored populist discontent has mobilized for alternatives without
shedding a strict market ideology.

D O IDEAS MOVE THE WORLD?

We document the emergence of the shadow economy and the role of deliberations
and actions by central bankers, regulators, government officials, and other decision

1 The Economist, 1 July 2017, 6 May 2017.

2 The letters to the shareholders are available: Dimon (2017) and Blankfein (2016).
3 Financial Times, 19 October 2017.
 OUP CORRECTED PROOF – FINAL, 9/8/2018, SPi

Introduction 3

makers. We establish the coherence of their campaign for deregulation, liberaliza-

tion, and globalization processes and the dominance of this position in the world
economy since the turn of the 1980s.
So are ideas or material conditions at the core? Some of our colleagues in soci-
ology and economics argue that economic doctrines and creeds move the world.
Noting “Economics formatting the market” or emphasizing “the role of economics
as a discipline, in the broad sense of the term, in the formatting of calculative
agencies,” Michel Callon defined a research program on how “economics performs,
shapes and formats the economy, rather than observing how [the economy]
functions.”4
We take the position that rather than simply describing how the economy
functions or directly shaping the economy, economics describes struggles for
power that develop independently of interpretation. For example, the major turn
represented by 1980–1—Margaret Thatcher’s defeat of the miners’ strike and
push for a large privatization plan, Ronald Reagan’s dismissal of the striking air
traffic controllers’ union, and Deng Xiaoping’s consolidation—represented the
culmination of previous dislocations among the relationships of forces. The turn
reversed conditions for the development of socially oriented policies and instead
promoted neoliberal and privatization strategies.5
At an earlier point and at the more micro level of an industry and its leading
firms, the electrical-power industry in the US took shape as Thomas Edison and
J.P. Morgan, the entrepreneurial inventor and the banker, struggled for control
of the standards and regulations defining the industry. There was little role for
theories, models, or economic ideas. Sheer greed motivated the quarrel, and raw
power determined its outcome. The victors triumphed through their capacity
to influence the institutions and to create the markets, more by force than by
persuasive ideas. So bitter and thoroughgoing was the fight that it successfully
locked the United States into an inefficient technology for more than a century.6
Economics also has at times a performative dimension. Take the case of Milton
Friedman, someone whose work and career we will discuss in great detail.
Friedman was a marginal economist outside the scope of the great synthesis
defining macroeconomics after the Second World War and often the object of
derision—until the turn in politics and economics imposed by the stagflation
recession of 1973–4. He then quickly rose in conjunction with a political movement
to launch a neoliberal reconstruction of the social contract and the relationship
among the different social classes. The major turn in social relations and economic
strategies called for Friedman and rescued his ideas from oblivion. Three decades
later, the rise of his radical ideas would be heralded as the “Age of Friedman.”
The notion that economists make, or at least influence, markets deserves some
attention, in any case.7 Social facts and economic processes are the prime movers,
but there is a relevant and creative role of ideas in the formation of networks
of social cohesion and in patterns of decision. The power of recognized experts
and the mimetic behavior of different universities, think tanks, governments, and

4 Callon (1998), pp. 23, 46.

5 Mason (2009), Cowie (2010), J. Stein (2010), Madrick (2011), Frank (2012), and Galbraith (2015),
are among the analyses that document the turn.
6 Granovetter and McGuire (1998). 7 MacKenzie, Muniesa, and Siu (2007); Kennedy (2016).
 OUP CORRECTED PROOF – FINAL, 9/8/2018, SPi

4 Shadow Networks

institutions are robust processes for the definition of social norms, of established
ideas, of public opinion, and even of electoral majorities. Ideas did not create the
world, but they are part of it; they do not invent changes, but can justify them, and
justifications are indeed necessary. The acceleration of capital accumulation and
the vast increase in social inequality was hard for the broader public to swallow.
Acceptance of the new social and economic order required convincing arguments
presented by a coherent ideological apparatus and a demonstration of consensus
by leading social institutions.
As we shall see in the following chapters, as shadow finance and the shadow
economy imposed their rules, the new regime called for armies of imaginative
deregulators, fearless liberalizers, independent central bankers arguing for their
liberation from democratically established norms, professors of economics plan-
ning the indoctrination of the university students from the richest families, coop-
erating think tanks following what they called “good economics,” and networks of
firms and different institutions financing, defining, and applying the new law of
the land.

A TIME OF LIVING DANGEROUSLY

On November 8, 2016, Donald J. Trump was, to the surprise of many, including

the authors, elected President of the United States. US electoral rules enabled
Trump’s election with substantially fewer votes than his Democratic opponent
Hillary Clinton.8
During the same electoral campaign, a left insurgency in the Democratic Party
led by Senators Bernie Sanders and Elizabeth Warren, both northeastern politi-
cians identified with advocacy for expanded social protections and with opposition
to financial interests, threatened but ultimately failed to topple the Clintonian
neoliberal hold on their Party.
The result of this election has led to a dangerous turn in world politics. Trump’s
public positions during the campaign represented a noteworthy departure from
the neoliberal doctrine that was shared by dominant actors within both major
US political parties. Trump declared his opposition to immigration and to free
trade (with no comment on the free movement of capital). His opposition to
immigration was expressed with xenophobic and racist clarity. Trump’s opposition
to free trade broke thoroughly with established economic doctrine. Trump blamed
trade deals for the loss of good jobs in the United States and promised to tear up
the North American Free Trade Agreement and to scuttle the rapidly advancing
Trans-Pacific Partnership. These promises apparently attracted many voters in
the de-industrializing states of the northern midwest, the states that carried Trump
to victory.
In an additional break with orthodoxy in the Republican Party, Trump expressed
openness to deficits, declaring himself the King of Debt. Trump’s economic

8 In the popular election, Hillary Clinton got 2,868,691 more votes than did Donald Trump (CNN,
2017).
 OUP CORRECTED PROOF – FINAL, 9/8/2018, SPi

Introduction 5

proposal also includes enormous tax cuts for the wealthy with appeal to the
potential for job creation and trickle-down benefits. While Republican delivery
of this standard proposal typically uses accounting gimmicks to mask the effect
on deficits, which traditional Republicans claim to deplore, Trump evinced less
concern about the effect on fiscal balance. Trump also promised infrastructure
investment—adding a xenophobic spin, the most heralded infrastructure project
was a wall on the US-Mexico border to keep out “illegal immigrants,” a favorite
scapegoat of the populist wing of the Republican Party. The promise of jobs
building infrastructure was undoubtedly a key element of Trump’s electoral
success in traditionally Democratic rustbelt states. Wisconsin had last voted for
a Republican in Reagan’s 1984 landslide, and neither Michigan nor Pennsylvania
had voted Republican since 1988.
Neoliberal scolds associated with the Democratic Party emphasized the fiscal
irresponsibility of the Trump proposals but failed to create an alternative vision of
developing infrastructure, providing good jobs, or improving the distribution of
income with redistributive fiscal policy.9
Trumponomics is a puzzle from which coherence has yet to emerge. Some
elements, in particular trade skepticism and infrastructure spending, represent a
break with the neoliberal consensus. Other portions, including continued free rein
given to finance, the reduction of social protections, and the likelihood that any
infrastructure spending that does emerge will be carried out in the form of public-
private partnerships, conforms more closely to the neoliberal model.
There is no question that Trumpism carries some of the trappings of populism
and right-wing extremism, including, per Robert O. Paxton’s definition, an “obses-
sive preoccupation with community decline, humiliation, or victimhood and by
compensatory cults of unity, energy and purity . . . ”10 Yet it is not clear that a really
distinct model will emerge.
The greatest long-term dangers of Trumponomics are military spending
(including a domestic security state) and denial of climate change. With respect to
the military, Trump has turned heavily to hawks for positions in his cabinet and has
already seeded conflict with China with an ostentatious and provocative dalliance
with Taiwan. Military expenditure has historically proven a reliable means of
generating bipartisan support for public spending and fiscal stimulus without
the usual concern for balanced budgets. Trump is additionally committed to an
overhaul of US nuclear capabilities, to leaning on allies to purchase American-
made military hardware, and to wiping out Islamist insurgencies in southwest
Asia. Although the stimulative capacity of military spending is less than that of
domestic spending,11 military Keynesianism remains a potent economic force.
The risk of escalating conflict that accompanies increased military spending is
substantial.

9 During the campaign, Trump was evasive on the subject of worker protections. At her speech at the
Republican Convention, Trump’s daughter Ivanka, a close confidant and adviser, suggested support for
paid family leave for new parents—a longstanding gap in social protection in the United States. Trump
also expressed support for an increase in the minimum wage to $10 per hour from the current $7.25 per
hour which has prevailed since 2009. At the same time, Trump campaigned against the Obama health
care reforms which extended health insurance coverage to tens of millions of Americans.
10 Paxton (2007). 11 Pollin and Garrett-Peltier (2009).
 OUP CORRECTED PROOF – FINAL, 9/8/2018, SPi

6 Shadow Networks

With respect to climate change, Trump has surrounded himself with climate-
change deniers and executives of fossil-fuel companies. Chasing key votes in
depressed mining states, Trump promised to restore the US coal industry by lifting
regulations that he blamed for the decline of coal employment. A difficulty for
Trump is that market forces, in particular, the rapid reduction in the price of
electricity thanks to new technologies in both natural gas and in renewables, have
likely placed the coal industry beyond the help of deregulation. But coal can still do
enormous climate damage on its way out the door. The consequences of inaction
on climate change are grave and cumulative.
For our analysis, does Trump fit into the shadow economy? In terms of person-
nel, Trump’s cabinet is drawn from the elite nomenklatura of the shadow economy,
complete with MBAs from the best schools, with C-suite experience, and with long
engagement in the financialized economy, especially at Goldman Sachs. Trump’s
men (overwhelmingly) are coarser and cruder than the operatives whom they
displace. They come from an uglier, xenophobic and racist, part of the shadows.
Trump’s working-class supporters expect their candidate to do something. But it is
hard to picture Trump’s men significantly intervening in the flows of labor, goods,
and capital, the system of tubes that carry wealth for the one percent.
In terms of consequences, the outcomes are harder to predict. The failure to
reckon fully with the crash of 2007–8 and to acknowledge and remedy the broad
decay of working class wellbeing for a generation has sown seeds of which Trump’s
election is but one sprout.
At one of the magic moments of his electoral run, Donald Trump chastened
finance as “a global power structure that is responsible for the economic decisions
that have robbed our working class, stripped our country of its wealth, and put that
money into the pockets of a handful of large corporations.”12
In short, money still rules Washington. The enshrinement of Goldman Sachs
in the Trump administration signals the maturity and resilience of a political
and economic force unequaled since the House of Morgan, the empire of the

12 The New York Times quoted this speech and noted the contradiction, as the nominees for the
new administration were presented and the “elite was embraced” (30 November 2016). Beginning
with the election, Trump rapidly and fully aligned with the most anti-worker wing of the Republican
Party. The first nominee for Secretary of Labor, an executive of the fast-food industry, the sector of
the economy most dependent on low wages, held such a long and flamboyant record of opposition to
the minimum wage, overtime, and other worker protections that he was ultimately forced to withdraw
from consideration. The commitment to overturning the Obama health care reforms indicates that the
populist rhetoric of the campaign can find no place in Trump’s government.
As the Trump administration took shape, the financiers emerged and took office as possibly the
richest government in history. Trump named Wilbur L. Ross, Jr., an investor in distressed assets, as
Secretary of Commerce and billionaire Betsy DeVos, to head the Department of Education. Elaine
Chao, the Secretary of Transportation, joins the government directly from the board of Murdoch’s
News Corporation and also enjoyed experience at Wells Fargo Bank.
Perhaps most striking is the reliance on veterans of Goldman Sachs. Steven Mnuchin, a co-investor
of George Soros and ex Goldman Sachs man, serves as the powerful Secretary of the Treasury.
Steve Bannon, whose interregnum between Goldman Sachs and the White House, was marked by
management of the right-wing media site Breitbart.com, was special adviser to the President. While
Goldman was merely a stop on Mnuchin’s and Bannon’s circuits through power, Gary Cohn, a longtime
and senior Sachs executive served as National Economic Adviser. Three months after Trump’s election,
shares of Goldman Sachs were up by 36 % (The Economist, March 18, 2017).
 OUP CORRECTED PROOF – FINAL, 9/8/2018, SPi

Introduction 7

banker J.P. Morgan (1837–1913). President Trump built his unexpected triumph
on a declaration of war against Wall Street and Washington. Trump even singled
out Goldman Sachs by name, first in attacks on his Republican rival Senator
Ted Cruz, whose wife is a Goldman Sachs executive, then on his Democratic rival
Hillary Clinton whose paid confidential speeches to it and other banks deflated
Democratic support and convinced undecided voters of the insincerity of her more
populist stances, and finally in a thinly veiled appeal to anti-Semitic stereotypes
about secret leagues of Jewish bankers seeking to control the world.13
Throughout the campaign, Trump dabbled in economic populism, promising
a return to Glass-Steagall as a symbol of a once-great America led by industry
not finance, in spite of the fact that his aides promised to annihilate the Volcker
Rule regulating banking. Yet immediately upon his victory, Trump wholeheartedly
embraced these creatures from the financial swamp. As a matter of fact, Trump’s
campaign and, even more so, his cabinet picks rejected financial regulation. As
a consequence, a repeal or substantial diminishment of the Dodd-Frank Act, the
relatively mild financial reform law passed in the wake of the scandals and crash
of 2007–8, seems likely. Trump’s dance with finance reflects a longstanding tension
on the right between a populist tendency and a fundamental alignment with the
goals of elites.
“He can speak their language,” explained Gary Kaminsky, a former vice chair-
man of J.P. Morgan Stanley, defending Mnuchin’s appointment.14 Precisely.
To understand the arrival of the Trump era and what has and has not changed,
we explore the language, social behavior, and rules and organization of the finan-
cialized economy and its shadows.

THE INTERPRETERS OF THE SHAD OW EC ONOMY

The shadow economy is moved by economic powers, by social groups, and by

a community of thought.15 One important component of the shadow economy
is that network of practitioners and academics—often without sharp delineation
between the two—whose authoritative claims to policy-relevant knowledge have
reshaped the rules, regulations, and practices of many domestic economies and the
global economy over the past four decades. But beyond expertise and competence,
the shadow economy comprises one or more concrete networks with access to
political and economic power—the ability to shape and make decisions. The
shadow economy is distinct because of its capacity to put ideas into practice.
In an article-length obituary in the Journal of Economic Literature, Andrei
Shleifer refers to this community as he declares the past half-century to be the
Age of Friedman.16 Milton Friedman resides at the intellectual core of the shadow
economy. Other key intellectual figures include Friedrich Hayek, James Buchanan,

13 Marshall (2016). 14 Washington Post, 30 November 2016.

15 Haas (1992), p. 3, defined an epistemic community as “a network of professionals with recognized
expertise and competence in a particular domain and an authoritative claim to policy relevant
knowledge within that domain or issue-area.”
16 Shleifer (2009).
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conveniently, and pour to them as much of the gravy as will nearly
cover them; add the very thin rind of half a fine fresh lemon, and
simmer the fowls gently from half to three quarters of an hour; throw
in sufficient salt, pounded mace, and cayenne, to give the sauce a
good flavour, thicken it with a large teaspoonful of arrow-root, and
stir to it the third of a pint of rich boiling cream; then lift the stewpan
from the fire, and shake it briskly round while the beaten yolks of
three fresh eggs, mixed with a spoonful or two of cream, are added;
continue to shake the pan gently above the fire till the sauce is just
set, but it must not be allowed to boil, or it will curdle in an instant.
1/2 to 3/4 hour.
 ENGLISH CHICKEN CUTLETS. (ENTRÉE).

Skin and cut into joints one or two young chickens, and remove
the bones with care from the breasts, merrythoughts, and thighs,
which are to be separated from the legs. Mix well together a
teaspoonful of salt, nearly a fourth as much of mace, a little grated
nutmeg, and some cayenne; flatten and form into good shape, the
boned joints of chicken, and the flesh of the wings; rub a little of the
seasoning over them in every part, dip them into beaten egg, and
then into very fine bread-crumbs, and fry them gently in fresh butter
until they are of a delicate brown. Some of the bones and trimmings
may be boiled down in half a pint of water, with a roll of lemon-peel,
a little salt, and eight or ten white peppercorns, to make the gravy
which, after being strained and cleared from fat, may be poured hot
to some thickening made in the pan with a slice of fresh butter and a
dessertspoonful of flour: a teaspoonful of mushroom-powder would
improve it greatly, and a small quantity of lemon-juice should be
added before it is poured out, with salt and cayenne if required. Pile
the cutlets high in the centre of the dish, and serve the sauce under
them, or in a tureen.
 CUTLETS OF FOWLS, PARTRIDGES, OR PIGEONS. (ENTRÉE.)

(French Receipt.)
Take closely off the flesh of the breast and wing together, on either
side of the bone, and when the large fillets, as they are called, are
thus raised from three birds, which will give but six cutlets, take the
strips of flesh that lie under the wings, and that of the merrythoughts,
and flatten two or three of these together, that there may be nine
cutlets at least, of equal size. When all are ready, fry to a pale brown
as many diamond-shaped sippets of bread as there are fillets of fowl,
and let them be quite as large; place these before the fire to dry, and
wipe out the pan. Dip the cutlets into some yolks of eggs, mixed with
a little clarified butter, and strew them in every part with the finest
bread-crumbs, moderately seasoned with salt, cayenne, and
pounded mace. Dissolve as much good butter as will be required to
dress them, and fry them in it of a light amber-colour: arrange them
upon the sippets of bread, pile them high in the dish, and pour a rich
brown gravy or Espagnole round, but not over them.
 FRIED CHICKEN À LA MALABAR. (ENTRÉE.)

This is an Indian dish. Cut up the chicken, wipe it dry, and rub it
well with currie-powder mixed with a little salt; fry it in a bit of butter,
taking care that it is of a nice light brown. In the mean time cut two or
three onions into thin slices, draw them out into rings, and cut the
rings into little bits about half an inch long; fry them for a long time
gently in a little clarified butter, until they have gradually dried up and
are of a delicate yellow-brown. Be careful that they are not burnt, as
the burnt taste of a single bit would spoil the flavour of the whole.
When they are as dry as chips, without the least grease or moisture
upon them, mix a little salt with them, strew them over the fried
chicken, and serve up with lemon on a plate.
We have extracted this receipt from a clever little work called the
“Hand-Book of Cookery.”
 HASHED FOWL. (ENTRÉE.)

After having taken off in joints, as much of a cold fowl or fowls as

will suffice for a dish, bruise the bodies with a paste roller, pour to
them a pint of water, and boil them for an hour and a half to two
hours, with the addition of a little pepper and salt only, or with a small
quantity of onion, carrot, and savoury herbs. Strain, and skim the fat
from the gravy, put it into a clean saucepan, and, should it require
thickening, stir to it, when it boils, half a teaspoonful of flour smoothly
mixed with a small bit of butter; add a little mushroom catsup, or
other store-sauce, with a slight seasoning of mace or nutmeg. Lay in
the fowl, and keep it near the fire until it is heated quite through, and
is at the point of boiling: serve it with fried sippets round the dish. For
a hash of higher relish, add to the bones when they are first stewed
down a large onion minced and browned in butter, and before the
fowl is dished, add some cayenne and the juice of half a lemon.
 FRENCH AND OTHER RECEIPTS FOR MINCED FOWL.
(ENTRÉE.)

Raise from the bones all the more delicate parts of the flesh of
either cold roast, or of cold boiled fowls, clear it from the skin, and
keep it covered from the air until it is wanted for use. Boil the bones
well bruised, and the skin, with three quarters of a pint of water until
reduced quite half; then strain the gravy and let it cool; next, having
first skimmed off the fat, put it into a clean saucepan, with a quarter
of a pint of cream, an ounce and a half of butter well mixed with a
dessertspoonful of flour, and a little pounded mace, and grated
lemon-rind; keep these stirred until they boil, then put in the fowl,
finely minced, with three or four hard-boiled eggs chopped small,
and sufficient salt, and white pepper or cayenne, to season it
properly. Shake the mince over the fire until it is just ready to boil, stir
to it quickly a squeeze of lemon-juice, dish it with pale sippets of fried
bread, and serve it immediately. When cream cannot easily be
obtained, use milk, with a double quantity of butter and flour. To
make an English mince, omit the hard eggs, heat the fowl in the
preceding sauce or in a common béchamel, or white sauce, dish it
with small delicately poached eggs (those of the guinea-fowl or
bantam for example), laid over it in a circle and send it quickly to
table. Another excellent variety of the dish is also made by covering
the fowl thickly with very fine bread-crumbs, moistening them with
clarified butter, and giving them colour with a salamander, or in a
quick oven.[90]
90. For minced fowl and oysters, follow the receipt for veal, page 231.
 FRITOT OF COLD FOWLS.

Cut into joints and take the skin from some cold fowls lay them into
a deep dish, strew over them a little fine salt and cayenne, add the
juice of a lemon, and let them remain for an hour, moving them
occasionally that they may all absorb a portion of the acid; then dip
them one by one into some French batter (see Chapter V.), and fry
them a pale brown over a gentle fire. Serve them garnished with very
green crisped parsley. A few drops of eschalot vinegar may be mixed
with the lemon-juice which is poured to the fowls, or slices of raw
onion or eschalot, and small branches of sweet herbs may be laid
amongst them, and cleared off before they are dipped into the batter.
Gravy made of the trimmings, thickened, and well flavoured, may be
sent to table with them in a tureen; and dressed bacon (see page
259), in a dish apart.
 SCALLOPS OF FOWL AU BÉCHAMEL. (ENTRÉE.)

Raise the flesh from a couple of fowls as directed for cutlets in the
foregoing receipt, and take it as entire as possible from either side of
the breast; strip off the skin, lay the fillets flat, and slice them into
small thin scallops; dip them one by one into clarified butter, and
arrange them evenly in a delicately clean and not large frying-pan;
sprinkle a seasoning of fine salt over, and just before the dish is
wanted for table, fry them quickly without allowing them to brown;
drain them well from the butter, pile them in the centre of a hot dish,
and sauce them with some boiling béchamel. This dish may be
quickly prepared by taking a ready-dressed fowl from the spit or
stewpan, and by raising the fillets, and slicing the scallops into the
boiling sauce before they have had time to cool.
Fried, 3 to 4 minutes.
 GRILLADE OF COLD FOWLS.

Carve and soak the remains of roast fowls as for the fritot which
precedes, wipe them dry, dip them into clarified butter, and then into
fine bread-crumbs, and broil them gently over a very clear fire. A little
finely-minced lean of ham or grated lemon-peel, with a seasoning of
cayenne, salt, and mace, mixed with the crumbs will vary this dish
agreeably. When fried instead of broiled, the fowls may be dipped
into yolk of egg instead of butter; but this renders them too dry for
broiling.
 FOWLS À LA MAYONNAISE.

Carve with great nicety a couple of cold roast fowls; place the
inferior joints, if they are served at all, close together in the middle of
a dish, and arrange the others round and over them, piling them high
in the centre. Garnish them with the hearts of young lettuces cut in
two, and hard-boiled eggs, halved lengthwise. At the moment of
serving, pour over the fowls a well-made mayonnaise sauce (see
Chapter VI.), or, if preferred, an English salad-dressing, compounded
with thick cream, instead of oil.
 TO ROAST DUCKS.

[Ducks are in season all the year, but are thought to be in their
perfection about June or early in July. Ducklings (or half-grown
ducks) are in the greatest request in spring, when there is no game
in the market, and other poultry is somewhat scarce.]
In preparing these for the spit, be careful
to clear the skin entirely from the stumps of
the feathers; take off the heads and necks,
but leave the feet on, and hold them for a
few minutes in boiling water to loosen the
skin, which must be peeled off. Wash the
inside of the birds by pouring water through
Ducks trussed.
them, but merely wipe the outsides with a
dry cloth. Put into the bodies a seasoning of
parboiled onions mixed with minced sage, salt, pepper, and a slice of
butter when this mode of dressing them is liked; but as the taste of a
whole party is seldom in its favour, one, when a couple are roasted,
is often served without the stuffing. Cut off the pinions at the first joint
from the bodies, truss the feet behind the backs, spit the birds firmly,
and roast them at a brisk fire, but do not place them sufficiently near
to be scorched; baste them constantly, and when the breasts are
well plumped, and the steam from them draws towards the fire, dish,
and serve them quickly with a little good brown gravy poured round
them, and some also in a tureen; or instead of this, with some which
has been made with the necks, gizzards, and livers well stewed
down, with a slight seasoning of browned onion, some herbs, and
spice.
Young ducks, 1/2 hour: full sized, from 3/4 to 1 hour.
Obs.—Olive-sauce may be served with roast as well as with
stewed ducks.
 STEWED DUCK. (ENTRÉE.)

A couple of quite young ducks, or a fine, full-grown, but still tender

one, will be required for this dish. Cut either down neatly into joints,
and arrange them in a single layer if possible, in a wide stewpan;
pour in about three quarters of a pint of strong cold beef stock or
gravy; let it be well cleared from scum when it begins to boil, then
throw in a little salt, a rather full seasoning of cayenne, and a few
thin strips of lemon-rind. Simmer the ducks very softly for three
quarters of an hour, or somewhat longer should the joints be large;
then stir into the gravy a tablespoonful of the finest rice-flour, mixed
with a wineglassful or rather more of port wine, and a
dessertspoonful of lemon-juice: in ten minutes after, dish the stew
and send it to table instantly.
The ducks may be served with a small portion only of their sauce,
and dished in a circle, with green peas à la Française heaped high in
the centre: the lemon-rind and port wine should then be altogether
omitted, and a small bunch of green onions and parsley, with two or
three young carrots, may be stewed down with the birds, or three or
four minced eschalots, delicately fried in butter, may be used to
flavour the gravy. The turnips au beurre, prepared by the receipt of
Chapter XVII., may be substituted for the peas; and a well made
Espagnole may take the place of beef stock, when a dish of high
savour is wished for. A duck is often stewed without being divided
into joints. It should then be firmly trussed, half roasted at a quick
fire, and laid into the stewpan as it is taken from the spit; or well
browned in some French thickening, then half covered with boiling
gravy, and turned when partially done: from an hour to an hour and a
quarter will stew it well.
 TO ROAST PIGEONS.

[In season from March to Michaelmas, and whenever they can be

had young.]
These, as we have already said, should
be dressed while they are very fresh. If
extremely young they will be ready in twelve
hours for the spit, otherwise in twenty-four.
Take off the heads and necks, and cut off
the toes at the first joint; draw them
carefully, and pour plenty of water through
them: wipe them dry, and put into each bird
Pigeons for roasting.
a small bit of butter lightly dipped into a little
cayenne (formerly it was rolled in minced
parsley, but this is no longer the fashionable mode of preparing
them). Truss the wings over the backs, and roast them at a brisk fire,
keeping them well and constantly basted with butter. Serve them
with brown gravy, and a tureen of parsley and butter. For the second
course, dish them upon young water-cresses, as directed for roast
fowl aux cressons, page 272. About twenty minutes will roast them.
18 to 20 minutes; five minutes longer, if large; rather less, if very
young.
 BOILED PIGEONS.

Truss them like boiled fowls, drop them into plenty of boiling water,
throw in a little salt, and in fifteen minutes lift them out, pour parsley
and butter over, and send a tureen of it to table with them.
CHAPTER XV.

Game.
 TO CHOOSE GAME.

Buck venison, which is in season only from June to Michaelmas, is

considered finer than doe venison, which comes into the market in
October, and remains in season through November and December:
neither should be cooked at any other part of the year. The greater
the depth of fat upon the haunch the better the quality of the meat
will be, provided it be clear and white, and the lean of a dark hue. If
the cleft of the hoof, which is always left on the joint, be small and
smooth, the animal is young; but it is old when the marks are the
reverse of these.[91] Although the haunch is the prime and favourite
joint of venison, the neck and shoulder are also excellent, dressed in
various ways, and make much approved pies or pasties as they are
usually called. If kept to the proper point, and well dressed, this is the
most tender of all meat; but care is necessary to bring it into a fitting
state for table without its becoming offensive. A free current of air in
a larder is always a great advantage, as it assists materially in
preserving the sweetness of every thing which is kept in it, while a
close damp atmosphere, on the contrary, is more destructive of
animal food of all kinds even than positive heat. The fumes of
creosote are said to be an admirable preservative against
putrescence, but we have not ourselves yet had experience of the
fact. All moisture should be wiped daily, or even more frequently,
from the venison, with soft cloths, when any appears upon the
surface; and every precaution must be taken to keep off the flies,
when the joint is not hung in a wire-safe. Black pepper thickly
powdered on it will generally answer the purpose: with common
care, indeed, meat may always be protected from their attacks, and
to leave it exposed to them in warm weather is altogether
inexcusable in the cook.
91. It must be observed that venison is not in perfection when young: like
mutton, it requires to be of a certain age before it is brought to table. The
word cleft applies also to the thickest part of the haunch, and it is the depth
of the fat on this which decides the quality of the joint.

Hares and rabbits are stiff when freshly killed, and if young, the
ears tear easily, and the claws are smooth and sharp. A hare in cold
weather will remain good from ten to fourteen days; care only must
be taken to prevent the inside from becoming musty, which it will do
if it has been emptied in the field. Pheasants, partridges, and other
game may be chosen by nearly the same tests as poultry: by
opening the bill, the staleness will be detected easily if they have
been too long kept. With few exceptions, game depends almost
entirely for the fine flavour and the tenderness of its flesh, on the
time which it is allowed to hang before it is cooked, and it is never
good when very fresh; but it does not follow that it should be sent to
table in a really offensive state, for this is agreeable to few eaters
and disgusting to many, and nothing should at any time be served of
which the appearance or the odour may destroy the appetite of any
person present.
 TO ROAST A HAUNCH OF VENISON.

To give venison the flavour and the

tenderness so much prized by epicures, it
must be well kept; and by taking the
necessary precautions, it will hang a
considerable time without detriment. Wipe it
with soft dry cloths wherever the slightest
moisture appears on the surface, and dust it plentifully with freshly-
ground pepper or powdered ginger, to preserve it from the flies. The
application of the pyroligneous or acetic acid would effectually
protect it from these, as well as from the effects of the weather; but
the joint must then be, not only well washed, but soaked for some
considerable time, and this would be very detrimental. To prepare
the venison for the spit, wash it slightly with tepid water or merely
wipe it thoroughly with damp cloths, and dry it afterwards with clean
ones; then lay over the fat side a large sheet of thickly-buttered
paper, and next a paste of flour and water about three quarters of an
inch thick; cover this again with two or three sheets of stout paper,
secure the whole well with twine, and lay the haunch to a sound
clear fire; baste the paper immediately with butter or clarified
dripping, and roast the joint from three hours and a half to four and a
half, according to its weight and quality. Doe venison will require half
an hour less time than buck venison. Twenty minutes before the joint
is done remove the paste and paper, baste the meat in every part
with butter, and dredge it very lightly with flour; let it take a pale
brown colour, and send it to table as hot as possible with gravy in a
tureen, and good currant jelly. It is not now customary to serve any
other sauces with it; but should the old-fashioned sharp or sweet
sauce be ordered, the receipt for it will be found at page 100.
3-1/2 to 4-1/2 hours.
Obs.—The kind of gravy appropriate to venison is a matter on
which individual taste must decide. When preparations of high
savour are preferred to the pure flavour of the game, the Espagnole
(or Spanish sauce) of Chapter IV. can be sent to table with it; or
either of the rich English gravies which precede it. When a simple
unflavoured one is better liked, some mutton cutlets freed entirely
from fat, then very slightly broiled over a quick fire, and stewed
gently down in a light extract of mutton prepared by Liebeg’s
directions, Chapter I., for about an hour, will produce an excellent
plain gravy: it should be seasoned with salt and pepper (or fine
cayenne) only. When venison abounds, it should be used for the
gravy instead of mutton.