British Financial Crises since 1825

313 Pages·2014·2.025 MB·English

by  Nicholas Dimsdale, Anthony Hotson

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) British Financial Crises since 1825
(p.ii) (p.iii) British Financial Crises since 1825
(p.iv)
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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
Foreword
(p.v)
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 larger-
scale 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
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(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 do 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 2 of 3
(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
List of Figures
(p.viii)
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
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(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
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(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
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