Title Pages University Press Scholarship Online Oxford Scholarship Online British Financial Crises since 1825 Nicholas Dimsdale and Anthony Hotson Print publication date: 2014 Print ISBN-13: 9780199688661 Published to Oxford Scholarship Online: November 2014 DOI: 10.1093/acprof:oso/9780199688661.001.0001 Title Pages (p.i) (p.ii) British Financial Crises since 1825 (p.iii) British Financial Crises since 1825 (p.iv) 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, and education by publishing worldwide Oxford is a registered trade mark of Page of Title Pages Oxford University Press in the UK and in certain other countries © Oxford University Press 2014 The moral rights of the authors have been asserted First Edition published in 2014 Impression: All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by licence or under terms agreed with the appropriate reprographics rights organization Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this work in any other form and you must impose this same condition on any acquirer Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America British Library Cataloguing in Publication Data Data available Library of Congress Control Number: 2014936187 ISBN 978–0–19–968866–1 Printed and bound by Page of Title Pages CPI Group (UK) Ltd, Croydon, CR0 4YY Links to third party websites are provided by Oxford in good faith and for information only Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work Access brought to you by: Orbis Cascade Alliance Page of Title Pages Foreword List of Figures List of Tables List of Contributors 1 Introduction Nicholas Dimsdale and Anthony Hotson 2 British Financial Crises in the Nineteenth and Twentieth Centuries Forrest Capie 3 Financial Crises and Economic Activity in the UK since 1825 Nicholas Dimsdale and Anthony Hotson 4 Government Policy during the British Railway Mania and the 1847 Commercial Crisis Gareth Campbell 5 The Crisis of 1866 Marc Flandreau and Stefano Ugolini 6 ‘How We Saved the City’ Richard Roberts 7 The Financial Crisis of 1931 and the Impact of the Great Depression on the British Economy Nicholas Dimsdale and Nicholas Horsewood 8 Holding Shareholders to Account John Turner 9 Narrow Banking, Real Estate, and Financial Stability in the UK c.1870–2010 Avner Offer 10 Do Financial Crises Lead to Policy Change? Youssef Cassis End Matter Bibliography Index (p.v) Foreword University Press Scholarship Online Oxford Scholarship Online British Financial Crises since 1825 Nicholas Dimsdale and Anthony Hotson Print publication date: 2014 Print ISBN-13: 9780199688661 Published to Oxford Scholarship Online: November 2014 DOI: 10.1093/acprof:oso/9780199688661.001.0001 (p.v) Foreword The invention of money by human cultures was an important step in the creation of the complex and sophisticated societies in which we live today Liberated from the constraints of simultaneous exchange and coincident proximity in the bartering of goods, resources could be traded for mutual benefit across time and space Money was such a valuable invention that it became a universal attribute of advanced societies and in doing so, the fact that it was ever invented at all has been more or less forgotten; we can scarcely now imagine a world without it The invention of money was approximately coincident with the invention of agriculture and these two inventions must have played a part in paving the way for the development of largerscale human social organizations; for towns, for armies, for kings, and for emperors In due course, money in turn gave rise to its own institutions within these societies; banks, currencies, interest, and salaries Taken together the idea of an economy was born, the set of trading and commercial interactions, mediated by money that occupied and sustained human life Reflecting on the functioning of such systems the study of economics very naturally turned for sources of metaphor and analogy to the workings of the human body The role assigned to money within these analogies is always that of Page of (p.v) Foreword blood, the life-giving substance that, in coursing through the substance and organs of a body, is believed to animate it The analogy is, like all analogies however, imperfect and whilst it may sometimes inform it may equally at other times obscure understanding Given their central importance to the idea of civilization, economies and the role of money and its institutions within, they plead for scholarly attention They exhibit behaviours and give rise to phenomena They have, however, generally resisted the attempts of economic scientists to unmask their guiding principles more successfully than Mother Nature’s resistance to the scrutiny of physical scientists The physical sciences have had great success with general, overarching descriptive theories; electromagnetism, relativity, quantum theory, genetics By contrast, in our attempts to codify the principles guiding the functioning of economics it sometimes seems that we are no further forward than where we started! One of the phenomena that is observed in the behaviour of economies is that of the financial crisis These are often labelled as panics and sometimes precede what are known as depressions in economic activity Such events are of profound import in human history, sometimes even precipitating wars or revolutions It is no wonder that many consider study of such phenomena to (p.vi) be of the utmost importance This is a book of such studies in relation to the history of Britain Let us hope that it will bring some small measure of enlightenment to those who feel that an understanding of the economic past can help to inform better economic policy development and governance in the future David Harding Page of (p.viii) List of Figures University Press Scholarship Online Oxford Scholarship Online British Financial Crises since 1825 Nicholas Dimsdale and Anthony Hotson Print publication date: 2014 Print ISBN-13: 9780199688661 Published to Oxford Scholarship Online: November 2014 DOI: 10.1093/acprof:oso/9780199688661.001.0001 (p.viii) List of Figures Figure 3.1 Bank rate, 1815–191328 Figure 3.2 UK business cycles and financial crises, 1819–4228 Figure 3.3 UK business cycles and financial crises, 1842–6728 Figure 3.4 UK inflation29 Figure 3.5 UK price and real output variability30 Figure 3.6 UK business cycles and financial crises, 1867–9230 Figure 3.7 UK business cycles and financial crises, 1893–191330 Figure 3.8 UK price inflation31 Figure 3.9 Trend UK real output growth32 Figure 3.10 Bank rate, 1910–7253 Figure 3.11 UK business cycles and financial crises, 1908–2354 Figure 3.12 UK business cycles and financial crises, 1921–3854 Figure 3.13 UK business cycles and financial crises, 1938–4954 Figure 3.14 UK business cycles and financial crises, 1949–7555 Page of (p.viii) List of Figures Figure 3.15 UK business cycles and financial crises, 1975–9055 Figure 3.16 UK business cycles and financial crises, 1991–201355 Figure 4.1 Railway share price index and number of railway securities listed on the London Stock Exchange60 Figure 4.2 Railway calls on capital and share price index, 1843–5065 Figure 4.3 Wheat price and company failures, 1843– 5066 Figure 4.4 Wheat imports and duties on foreign wheat, 1843–5067 Figure 4.5 Discount rate for first class bills, 1843–5069 Figure 4.6 Bank of England notes issued, held outside the Bank, and held in the Banking Department, 1844– 5072 Figure 5.1 Stylized structure of England’s financial system in the nineteenth century79 Figure 5.2 Bank and market interest rate in London82 Figure 5.3 Daily discounts and advances by the Bank of England in May 186683 Figure 5.4a Top 30 discounters from the Bank in May 186683 Figure 5.4b Top 30 advances from the Bank in May 186684 Figure 5.5 Geographical origin of the bills discounted by the Bank in May 1866 (per kind of discounter)90 (p.ix) Figure 5.6 International aspects of the 1866 crisis: variation of the Bank of England’s gold reserve, and spot and ‘forward’ franc-pound exchange rates91 Figure 7.1 GDP and unemployment127 Figure 7.2 Consumption and investment127 Figure 7.3 UK exports and a measure of world trade127 Figure 7.4 UK imports and the terms of trade128 Figure 7.5 Investment in private sector housing and short-term rate of interest (TBR)128 Figure 7.6 Private sector investment, excluding housing, and GDP129 Page of (p.viii) List of Figures Figure 7.7 Government expenditure on goods and services and GDP129 Figure 7.8 Civil employment and GDP129 Figure 7.9 Real earnings and unemployment130 Page of (p.190) (p.191) Bibliography Redmond, J (1980), ‘An indicator of the effective exchange rate of the pound in the 1930s’, Economic History Review, 33: 83–91 Redmond, J (1984), ‘The sterling overvaluation in 1925: a multilateral approach’, Economic History Review, 37: 520–32 Reid, M (1982), The Secondary Banking Crisis, 1973–75: Its Causes and Course, London: Macmillan Reinhart, C M., and Rogoff, K S (2009), This Time Is Different: Eight Centuries of Financial Folly, Princeton: Princeton University Press Richardson, H W (1967), Economic Recovery in Britain 1932– 39, London: Weidenfeld and Nicolson Roberts, R (1992), Schroders: Merchants and Bankers, Basingstoke and London: Macmillan Romer, C D (1990), ‘The Great Crash and the Onset of the Great Depression’, Quarterly Journal of Economics, 105(3): 597–624 Samuelson, P A., and Samuelson, W (1980), Economics, New York: McGraw-Hill Samy, L (2010), ‘The building society promise: the accessibility, risk, and efficiency of building societies in England, c.1880–1939’, DPhil thesis, University of Oxford Sayers, R S (1967), Modern Banking, Oxford: Clarendon Press Sayers, R S (1976), The Bank of England 1891–1944, vols Cambridge: Cambridge University Press Schwartz, A J (1986), ‘Real and pseudo financial crises’, in F Capie and G E Wood (eds) Financial Crises and the World Banking System, London: Macmillan, 11–31 Schwartz, A J (1987), ‘Real and Pseudo-Financial Crises’, in A J Schwartz (ed.) Money in Historical Perspective, Chicago: University of Chicago Press, 271–88 Page 23 of 28 (p.190) (p.191) Bibliography Schwartz, A J (1995), ‘Why financial stability depends on price stability’, Economic Affairs, 15(4): 21–5 Seyd, E (1868), Bullion and Foreign Exchanges, Theoretically and Practically Considered, London: Effingham Wilson Sheppard, D K (1971), The Growth and Role of U.K Financial Institutions, 1880–1962, London: Methuen Shiwakoti, R K., Ashton, J K., et al (2004), ‘Conversion, performance and executive compensation in UK building societies’, Corporate Governance, 12(3): 361–70 Skidelsky, R (1983), John Maynard Keynes, i: Hopes Betrayed 1883–1920, London: Macmillan Smith, G D., and Sylla, R (1993), ‘Wall Street and the U.S capital markets in the twentieth century’, Financial Markets, Institutions, and Instruments, Cambridge, Massachusetts Solomou, S., and Weale, M (1997), ‘Personal sector wealth in the United Kingdom, 1920–56’, Review of Income and Wealth, 43(3): 297–318 Sonne, H C (1915), The City: Its Finance July 1914 to July 1915 and Future, London: Effingham Wilson Speight, G (2000), ‘Building society behaviour and the mortgage-lending market in the interwar period: Risk-taking by mutual institutions and the interwar house-building boom’, DPhil thesis, University of Oxford Spero, J E (1979), The Failure of the Franklin National Bank: Challenge to the International Banking System, New York: Columbia University Press Spring-Rice, D (1923), ‘The money market since the War’, Bankers’ Magazine, 115 (March) Straus, A (1992), ‘Structures financières et performances des entreprises industrielles en France dans la seconde moitié du XXe siècle’, Entreprises et Histoire, 2: 19–33 Page 24 of 28 (p.190) (p.191) Bibliography Sykes, J (1926), The Amalgamation Movement in English Banking, 1825–1924, London: P S King & Son Sykes, J (1928), The Present Position of English Joint Stock Banking, London: Ernest Benn Ltd Sykes, E (1915), ‘Some effects of the war on the London money market’, Journal of the Institute of Bankers, 36(2) Takeshita, T., and Ida, M (2003), ‘An empirical study of economic reporting and public opinion’, Seiki ronsô (Meiji University), 72(1): 1–42 (translated from Japanese by M Bourqui) Taylor, J B (1993), ‘Discretion versus policy rules in practice’, Carnegie-Rochester Conference Series on Public Policy, 39: 195–214 Temin, P (1974), ‘The Anglo-American business cycle, 1820– 1860’, Economic History Review, 27: 201–21 Thomas, M (1983), ‘Rearmament and recovery in the late 1930s’, Economic History Review, 36: 552–79 Thomas, S E (1934), The Rise and Growth of Joint-Stock Banking, London: Pitman Thornton, H (1802), An Enquiry into the Nature and Effects of the Paper Credit of Great Britain, London: Hatchard, (London: Allen and Unwin, edition with introduction by F A Hayek, 1939; Fairfield, NJ: Augustus M Kelley, 1978) Transparency International UK (2011), Cabs for Hire? Fixing the Revolving Door between Government and Business, London: Transparency International UK Treasury, H M and Bank of England (1980), Green Paper on Monetary Control, Cmnd 7858, London: HMSO Treasury Select Committee (2009–10), Too Important to Fail— Too Important to Ignore House of Commons-261-II, London: The Stationery Office Truptil, R J (1936), British Banks and the London Money Market, London: Jonathan Cape Page 25 of 28 (p.190) (p.191) Bibliography Tucker, P (2004), ‘Managing the central bank’s balance sheet: Where monetary policy meets financial stability’, Bank of England Quarterly Bulletin, 44(3): 359–82 Turner, J D (2009a), ‘The last acre and sixpence: Views on bank liability regimes in nineteenth-century Britain’, Financial History Review, 16: 111–28 Turner, J D (2009b), ‘Wider share ownership? Investors in English bank shares in the nineteenth century’, Economic History Review, 62: 167–92 Ugolini, S (2010), ‘The international monetary system 1844– 1870: Arbitrage, efficiency, liquidity’, Norges Bank Working Paper 2010/23 Ugolini, S (2012), ‘Foreign exchange reserve management in the nineteenth century: The National Bank of Belgium in the 1850s’, in A Ögren and L F Øksendal (eds) The Gold Standard Peripheries: Monetary Policy, Adjustment and Flexibility in a Global Setting, Basingstoke: Palgrave Macmillan, 107–29 Velde, F R (2007), ‘John Law’s System’, American Economic Review, 97(2): 276–9 Vickers Commission (2011), Final Report of the Independent Commission on Banking, London: The Stationery Office (12 September) Viner, J (1937), Studies in the Theory of International Trade, London: George Allen & Unwin Vogler, R (2001), ‘The genesis of Swiss banking secrecy: Political and economic environment’, Financial History Review, 8(1): 73–84 Waley, S D (1964), Edwin Montagu, London: Asia Publishing House Ward-Perkins, C N (1962), ‘The commercial crisis of 1847’, reprinted in E M Carus Wilson (ed.) Essays in Economic History, iii, London: Arnold Page 26 of 28 (p.190) (p.191) Bibliography Wells, H G (1916), Mr Britling Sees It Through, London: Cassell Wetenhall, J (1843–50), Course of the Exchange, London White, E N (1983), The Regulation and Reform of the American Banking System, 1900–1929, Princeton: Princeton University Press White, E N (1986), ‘Before the Glass-Steagall Act: An analysis of the investment banking activities of the national banks’, Explorations in Economic History, 23: 33–54 White, E N (2000), ‘Banking and finance in the twentieth century’, in S L Engerman and R E Gallman (eds) The Cambridge Economic History of the United States, iii: The Twentieth Century, Cambridge: Cambridge University Press White, L H (1995), Free Banking in Britain: Theory, Experience and Debate 1800–1845, 2nd edition, London: Institute of Economic Affairs Wicker, E (2000), Banking Panics of the Gilded Age, Cambridge: Cambridge University Press Wilson, A (1879), Banking Reform: An Essay on the Prominent Dangers and the Remedies They Demand, London: Longmans, Green and Co Winton, A (1993), ‘Limitation of liability and the ownership structure of the firm’, Journal of Finance, 48: 487–512 Wirth, M (1890), Geschichte der Handelskrisen, 4th edition, Frankfurt am Main: Sauerländer Withers, H (1909), The Meaning of Money, London: Smith and Elder Withers, H (1910), ‘The English banking system’, in R H I Palgrave, E Sykes, and R M Holland, The English Banking System (Sixty-First Congress, Second Session, Senate Document No 492: 3–148), Washington, DC: US Government Printing Office Page 27 of 28 (p.190) (p.191) Bibliography Withers, H (1915), War and Lombard Street, London: Smith, Elder Withers, H., and Palgrave, R H I (1910), National Monetary Commission: The English Banking System, Washington, DC: Government Printing Office Wood, E (1939), English Theories of Central Banking Control 1819–1858, Cambridge, Massachusetts: Harvard University Press Woodward, S (1985), ‘Limited liability in the theory of the firm’, Journal of Institutional and Theoretical Economics, 141: 601–11 Wormell, J (2000), The Management of the National Debt of the United Kingdom, 1900–1932, London: Routledge Worswick, G D N (1984), ‘The sources of recovery in the UK in the 1930s’, National Institute Economic Review, 110: 85–93 Xenos, S T (1869), Depredations: Or, Overend, Gurney & Co., and the Greek and Oriental Steam Navigation Company, London: The author Ziegler, P (1988), The Sixth Great Power: Barings, 1762– 1929 London: Collins Page 28 of 28 (p.206) (p.207) Index University Press Scholarship Online Oxford Scholarship Online British Financial Crises since 1825 Nicholas Dimsdale and Anthony Hotson Print publication date: 2014 Print ISBN-13: 9780199688661 Published to Oxford Scholarship Online: November 2014 DOI: 10.1093/acprof:oso/9780199688661.001.0001 (p.206) (p.207) Index acceptances 41, 88 n.8, 96, 107, 109 Barings 151 sterling 81 acceptance house/bank 4, 7, 47–8, 79, 108, 119 1914 crisis 52–3 Barings 49 new-style 42 rise of 2, 41 accepting house 20, 96, 106, 108–10, see acceptance house solvency of 102 survival of 114 Aldrich, Nelson W. 176 Bagehot, Walter: bank shareholders 154 crises 77, 91, 98, 122 Jeremiah Harman 11 and lender of last resort 2, 12, 40, 74–7, 92 and Overend, Gurney & Company 14, 49, 80–1 paper money 16 and Rae, George 15 bank: joint-stock 5, 17, 19, 33–6, 38, 48, 70 state-chartered 5, 142, 144 see also country bank bank acceptances 151, see acceptances Bank of England: 1833 Bank Charter Act 33 1844 Bank Charter Act 3, 36, 39, 68, 70–3, 159 Page of (p.206) (p.207) Index bill discount policy 11, 33, 86–7 and Overend, Gurney & Company 39–40, 80, 82, 88–9 suspension of 1844 Act 70, 98; see also suspension see also lender of last resort Banking School 36 Banque de France/Bank of France 4, 92 n.15, 120–1, 123, 184 Baring 20, 26–7, 52, 76, 78, 175, 177, 179, 181, 187 1995 failure 152 accepted bills 87, 151 Argentinian exposure 49 Britain’s gold reserves 176 contrast 1866 and 1890 crises 2, 93 contrast 1890 and 1907 crises 6, 176 crisis management 21, 42, 51 Baring, Francis 15 Basel: Basel I 1988 agreement 7, 185 Basel II 2004 agreement 7, 187 Basel III agreement 188 Committee 6–7, 185, 187 Concordat 185 Bevin, Ernest 118 bill: American 34 discounted 3, 13 eligible 49 endorsed 35 finance 37, 48, 96 impaired 4, 48, 106 inland 41–2, 89 prime bank 43, 45, 47 quality of 2, 3, 37, 48 self-liquidating 48 sterling 95–6 trade 38, 107 see also bill of exchange bill broker 12, 34–6, 38, 51, 69, 78–80, 82, 85, 93, 100 bill market: abuses 3, 37–8, 47–8, and discount house 17, 20, 38, 78 and Gurney, Samuel 14 see Bank of England, Treasury notes bill of exchange 95–6, 101–2, 110 bill on London 7, 42, 110; see also bill market; commercial bill Blackett, Basil 101, 106 Bradbury, Sir John 98, 100–1 Page of (p.206) (p.207) Index building societies: constraints 172 conversion/privatization 167, 169 deposits 159, 163 home finance 162–3, 167 housing boom 165 merger 173 mutual 162 capital: contingent 5, 7, 139–40, 142, 145–9, 152–7 uncalled 5, 139, 142–5, 151, 155–6 Chamberlain, Sir Austen 104–5, 110 (p.208) clearing 101, 159; see also payment system clearing house 181 clearing banks 21, 49, 119, 152, 166, 183 avoid home finance 6 before 1970 5, 165, 172 and building societies 163 and Competition and Credit Control 43 gold reserves 160, 176 money supply 159 payments 160 see also High Street banks commercial bill 4, 37, 40, 47, 96, 113–14; see also bill market Competition and Credit Control (CCC) 2, 6, 166–7, 172 and clearing banks 43 contingent capital 5, 7, 139–40, 142, 145–9, 152–7 see also capital controls: banks 44, 47, 165, 166 capital 56, 167 credit/lending 21, 44 exchange 44, 53, 119, 120 German 53, 119–20 country bank: banker to 18 banknotes 33, 70 failure/insolvency 70, 147 finance 11, 15 small size 148 Credit Anstalt 119–20 Credit Mobilier 40 Crewe, Lord 101 Cunliffe, Walter, Baron 98, 101 currency: Bank note 36 in circulation 71, 91 Page of (p.206) (p.207) Index demand for 9 foreign 123 international 4, 78, 89, 93, 95 Issue Department 70 local 95 metallic 70 paper 70, 119 two sides of 77 value of 159 see also sterling currency crisis 4, 36, 89, 91, 116, 122, 124 currency note 103, 114, 119, see Treasury note Currency School 36 Currency theorist 36 discount house 18, 20, 41, 80, 150, 183 1914 crisis 96–7, 99–100, 106–7, 113–14 1931 crisis 119 money at call 38–9, 48 origins 17, 36, 38, 78 discount window 82, 85, 88, 88 n.9, 89 n.11 access to 13, 80 exclusion from 3 frosted-glass 77 Eurocurrency market 179, see Euromarket Euromarket 43, 47, 167, see Eurocurrency market exchange controls 44, 53, 120, see controls foreign 119 Exchequer bill 11, 34, 70 Federal Reserve: Federal Reserve 4, 120, 178, 181, 184–5 Federal Reserve Bank 181 Federal Reserve Board 181 Federal Reserve System 6, 177, 181–2 free-rider problem 141 fringe banks, 21, 178, see secondary banking crisis functional specialization 5, 6, 7, 158, 172 functional barriers/boundaries 166, 173 gold standard: Bank rate 122 classical 91 consequences 50, 76, 88, 95, 130–1, 136 leave or suspend 4, 5, 20, 41, 50, 116, 120–3, 125–6, 134–5 operation of 19, 42 parity 95, 106 question or doubt 90 n.13, 121 remain on 4, 34 Page of (p.206) (p.207) Index restored 32, 117–18, 135, 177, 182 rule 76 Glass-Steagall Act 172, 182, 184, 186 Gurney, Samuel 14 Harcourt, Lord 101 Harman, Jeremiah 11 Harvey, Sir Ernest 121 Henderson, Hubert 117 High Street banks 5, 24, 26, 43, see clearing banks Holden, Sir Edward 98, 109, 177 international/foreign bill 27, 41–2, 119; see also bill International Monetary Fund (IMF) 56, 179 Keynes, John Maynard 101, 104, 118, 178, 184 and Henderson, Hubert 117 gold standard 4 Keynesian 1, 125, 179 (p.209) Lawson, William R. 97, 101, 106–7, 110–12 Leaf, Walter 160 lender of last resort: 1847 crisis 75 1866 crisis 77 1914 crisis 98, 113 anonymous, non-anonymous 2, 3, 16, 77, 86, 88 Bank’s role 2, 7, 14, 16, 19 and Bagehot, Walter 12, 40, 74, 76–7, 92 and Barings 21 and Baring, Francis 15 collateral provided 41 and Federal Reserve System 181 international 179 liquidity provision 22 market supervision 89 and moral hazard 3, operation of 17–18 and Rae, George 15 suspension of 1844 Act 75, see suspension systemic 16 and Thornton, Henry 15 see also discount window Lesley Alexander and Co 69 leverage: banks 48, 140, 169 building societies 163 money market participants 7, 48, 78, 80 railway shares 64–6 lifeboat rescue/operation 20–1, 76–7, 152 Page of (p.206) (p.207) Index Lloyd George, David 95, 101–13, 115, 117, 177 Local authority bill 43 MacDonald, James Ramsay 121 Macmillan Committee 42, 49, 53, 96, 118–19, 120, 122 maturity mismatch/transformation 5, 41, 48, 78, 159 money market, London 12 asset-backed securities 45 bi-causal effects 3, 24, 26, 32 crisis in 24, 26, 51 international finance 41, 44, 91 monitoring of 7 pressures on 2 pro-cyclical risk 41, 44, 47 resilience of 2 wheat price 3 Montagu, Edwin S. 100, 102, 108 moral hazard: bail outs and rescues 16, 22, 49, 141 control of 77, 80, 88, and lender of last resort 3, suspension of 1844 Act 59, 75; see also suspension moratorium bank 102 bill 4, 102, 106–9, 115 general 103–4, 106, 110–11, 114, 119 payment 97, 113; see also payments Morgan & Co, J.P. 121, 177, 182 Morgan, Stanley & Co 182 multiplier, money/banking 10 National Monetary Commission 155, 176, 177 n.6 Niemeyer, Sir Otto 122 Norman, George W. 12 Norman, Montagu, Baron 121 Overend Gurney & Company: 1866 crisis 2, 40, 48, 51, 69, 76–7, 79, 150 collapse of 3, 13–14, 81 and Bagehot, Walter 14, 49, 80–1 and Bank of England 39, 40, 80, 82, 88–9 currency crisis 90, 93 reasons for decline 3, 40 systemic significance 113 and too-big-to-fail 18, 40, 49, 77 n.1, 93 Paish, Sir George 96, 98–9, 101–2, 104, 106–7 paper 69: accommodation 35, 37, 40 Page of (p.206) (p.207) Index Anglo-American 12 and Barings 93 commercial 159 discount 34 excess 87–8 good-quality 45, 49, 77 Government note 103, 105 poor-quality 12, 14 short-term 37, 40 short-term government 42, see Treasury bill see also bill paper currency 70, 119; see also currency paper discounted by the Bank 84; see also Bank of England paper money 16 paper pound 33; see also pound partnership 5, 19, 33, 81, 142, 147 note-issuing 35 Scottish 148 payments: clearing 101, 159 clearing house 181 electronic 172 mechanism 2, 5–6, 33, 94 system 2, 5, 7, 9, 20–1, 159, 161, 164, 172 Post Office 160–1 payment moratorium 97, 113; see also moratorium (p.210) pound: fate of 178 gold standard 117, 125 paper 33 strong 168 see also sterling Pujo Committee 177, 184 Radcliffe Committee 6, 43, 49, 165–6 Rae, George 15, 144, 154, 162, 172 railway: mania 2, 3, 12, 34, 36–7, 39, 50, 58–61, 75, 148 calls on partly paid shares 64–5, 149 regulation 62, 63–4 Reading, Rufus Isaacs, Lord 101–2 real-bills doctrine 159, 160 n.1 repo (sale and repurchase): agreement 45 collateralized 47 funding 45–6 gilt 45 Regulation Q 182, 186 Page of (p.206) (p.207) Index Rothschild 175 Rothschild Committee 175 Runciman, Walter 101 sale and repurchase agreement 45, see repo Sanderson & Co 69 savings and loans association 164, 172, 186 secondary banking crisis 2, 27, 44, 152, 165–6, 181 Securities and Exchange Commission (SEC) 182, 186 shares: partly paid shares/stocks 3, 5, 37 see also railway Smith St Aubyn 99–101 sterling: attack on 122, 135 convertibility of 104 crisis 40, 53, 56, 89, 90–1, 123–4 defend 122, 135 departure from gold 95, 136 devaluation/depreciation of 5, 53, 130, 131, 135 exchange rate 106, 95 floating of 56 illiquidity of 120 international currency 4, 78, 89, 92–3 lack of competitiveness of 118 management of 134 outlook for 124 overvalued 117–8 strengthen 122, 125 suspend convertibility of 114 swapped into 46 vulnerable 4, 53, 119, 120 see also acceptances; bills, sterling; currency Stock Exchange, Berlin 120 Stock Exchange, London 97 1875 inquiry 176 Big Bang reforms of 186 closure of 99, 102 protect viability of 4 railway listings on 60 regulation 184 reopening 112 Stock Exchange firms, London 111, 113 Stock Exchange, New York 182, 186 suspension: of 1844 Act 3, 37, 40, 70, 74–5, 98, 100–1, 103, 113 of corn import duties 68 Page of (p.206) (p.207) Index of French gold parity 41 Overend Gurney & Company 82 Sanderson & Co 69 of specie payments 104; see also gold standard see also Bank of England Thornton, Henry 15, 40 too-big-to-fail 141 and Overend Gurney & Company 18, 40, 49, 77 n.1, 93 Treasury bill 4, 42–3, 45, 112–14, 120 Treasury bill rate (TBR) 126, 128, 131–2, 136 Treasury note 4, 103–4, 111–12, 113–4, 151, see currency note Page of ... 10.1093/acprof:oso/9780199688661.001.0001 Title Pages (p.i) (p.ii) British Financial Crises since 1825 (p.iii) British Financial Crises since 1825 (p.iv) Great Clarendon Street, Oxford, OX2 6DP, United... Nicholas Dimsdale and Anthony Hotson 2 British Financial Crises in the Nineteenth and Twentieth Centuries Forrest Capie 3 Financial Crises and Economic Activity in the UK since 1825 Nicholas Dimsdale and Anthony Hotson. .. 11 of 11 British Financial Crises in the Nineteenth and Twentieth Centuries University Press Scholarship Online Oxford Scholarship Online British Financial Crises since 1825 Nicholas Dimsdale