Take a pile of Perspex tubes, a few levers and pulleys and the windscreen-wiper pumps from an old wartime bomber. Add a brilliantly ingenious mind, a bucketful of water, and what do you have? A computer that can model the flow of money around the nation. If the government raises taxes or the public goes on a spending spree, then this bizarre bit of plumbing shows what happens to the country鈥檚 savings and investments. At a quick flick of a switch the strange contraption can reveal the wisdom of increasing government spending or the folly of cutting interest rates. This huge machine, knocked up in a garage by one-time crocodile hunter Bill Phillips, is now on display at the Science Museum in London. But in the 1950s, the computer model that ran on water was streets ahead of its electronic contemporaries.
PLUMBING was something Bill Phillips was good at. Economics he found harder. As a student at the London School of Economics in the late 1940s, Phillips concentrated hard as his teachers tried to explain the latest theories. But money moves in mysterious ways, through a tangled web of taxes, savings and investments, imports, exports and a whole assortment of other variables-all inextricably tied together. How much easier it would be to understand the convoluted workings of the nation鈥檚 economy if you could see what happened when the government finally gave pensioners a few pounds more or froze the tax on petrol. Phillips was convinced that with a nifty bit of plumbing he could show instantly the effects of a penny more here or an extra few per cent there.
Even in 1946, when British universities saw an influx of ex-servicemen of all ages and backgrounds, Phillips was unusual. The New Zealander had just emerged from three and a half years in a Japanese prisoner of war camp, a half-starved, chain-smoking war hero of 32. He had grown up on a dairy farm where ingenuity was taken for granted. His mother installed running water in their house. His father diverted some of it to generate electricity to light the milking shed.
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Bill had similar talents and at 15 he became an apprentice electrician. But it wasn鈥檛 long before the travel bug bit and he was off to Australia, where he picked bananas, mined gold and hunted crocodiles -all the time learning to be an engineer by correspondence course. In 1937 he arrived in London, travelling via Japan and the Trans-Siberian Railway.
When war broke out, Phillips joined the RAF. He was captured by the Japanese in Java. For the next few years his ingenuity and engineering skills proved invaluable. He made a secret radio and picked up news of the first atomic bomb. He also invented a sort of immersion heater to allow the prisoners to make themselves a secret cup of tea before turning in each night. 鈥淭he result was that when some 2000 cups of tea were suddenly brewed, the lights of the camp dimmed alarmingly . . . the Japanese were mystified by this dimming of the lights every night at about 10 pm,鈥� wrote fellow prisoner Laurens Van der Post.
Back in London in 1946, Phillips signed up to study sociology at the LSE. He barely scraped a pass-a miserable result his professors blamed on his nicotine addiction. Phillips was so hooked he kept dashing from the exam room for one more cigarette. But it wasn鈥檛 only that: Phillips had been sidetracked from his sociology studies by his interest in economics and had spent too much time sketching out plans for his hydraulic model of the economy.
In a note to one of the LSE鈥檚 economics teachers, he wrote: 鈥淚 have great difficulty in trying to understand your lectures. I know something about plumbing and have tried to sketch a hydraulic model . . . Could you please comment on it?鈥� Surprisingly, Phillips wasn鈥檛 sent packing. He was sent instead to see James Meade, professor of commerce, who was keen on mechanical devices. Meade was intrigued and told Phillips to go away and prove his idea would work. All that autumn, Phillips beavered away in his landlady鈥檚 garage in south London, constructing a monstrous edifice of tubes, valves and sluices.
In November 1949, Phillips unveiled his creation before a sceptical audience at the LSE. He poured 鈥渃ash鈥� in at the top-coloured red for better visibility-and turned on the pumps. Money gurgled around the pipes, cascaded over sluices and filled tanks. As the water levels settled, the pulleys turned and a pen plotter traced the results. To everyone鈥檚 surprise, the weird machine worked.
The machine might have looked like a bizarre piece of plumbing but it was an analogue computer which accurately modelled the effects of a whole range of factors on the total national income. The movement of money was represented by the water flowing round the Perspex pipes and the accumulation of money by water collecting in tanks. As water flowed through the machine, the stream split, with savings gurgling round one loop, taxes sloshing along a separate pipe and imports trickling through another. The operator could simulate a tax cut, say, or an increase in government spending, by opening and closing valves and raising and lowering sluices. It was soon obvious if the policy led to a stable economy or total chaos.
Even the satirical magazine Punch was impressed. Bemoaning the extent of people鈥檚 ignorance about all things financial, it recommended installing what it called the 鈥渇inancephalograph鈥� in every town hall in Britain. 鈥淭he machine is taller than the man in the street and wider and heavier and much, much cleverer . . . using coloured water (a convenience denied the man in the street) it reacts obediently to every morsel of economic information communicated to it, and records, with its mechanical pens on its calibrated charts, the subtle impact of a slump in the secondhand ship market, the slightest hint of a boom in soap, emery wheels or white fish.鈥�
The model did have a few teething troubles. Inflation was sometimes a problem, just as it is in the real world. If inflation rose too high, water squirted out through a hole, leaving a pink puddle on the floor. Tired of mopping up, Phillips built new, improved models-14 in all. Some went to British universities, others were calibrated in dollars instead of pounds and ended up at Harvard, the Ford Motor Company and the Bank of Guatemala.
The financephalograph was a fantastic creation. It earned Phillips a lowly job at the LSE. His next idea-the Phillips Curve-brought him a professorship and an international reputation as a brilliant economist. The Phillips curve demonstrates how wage hikes lead to lengthening dole queues-which is what he is remembered for today. As electronic computers improved-and punch tape gave way to figures on screens-his marvellous machines were retired. Pink puddles were consigned to history and money never flowed like water again.