Britain and banking: Back to the 1830s
2012-07-12 0:00

By Lee Williams | Independent.co.uk

Unparalleled levels of imprudent lending; corrupt banking practices; soaring inflation and rising unemployment; government bank bailouts and an economy dependent on increasing levels of debt to sustain growth. Sound familiar? It would have done to Britons in the 1830s. The fact is that we have been in a remarkably similar economic crisis before and the reasons for it could be almost identical.

In Britain during the early 19th century, paper money was not as we know it today – all reassuringly bearing the head of the Queen and the stamp of the Bank of England. Back then, the Bank of England had the monopoly on the creation of metal coins but private banks – literally – had a license to print money of the paper variety and stick whatever images they liked on it. The result of the bank’s power to print money had disastrous consequences: inflation, as too much money flooded the economy and unsustainable lending, as banks lent out more in paper money than they could possibly back up with real reserves.


George Cruikshank’s famous bank note of 1819, a comment on stringent measures to protect the paper currency by hanging forgers. (Getty Images)


When the bubble finally burst in the late 1830s, catalysed by a similar crisis in America (sounding familiar again?) the ensuing lack of confidence in the system led to a run on the banks which had to be hastily curtailed by the Bank of England bailing out a prominent northern bank (how about that one?). In 1839 a similar predicament forced the Bank of England into the ignominious position of having to borrow £2 million from France.

The problem was ultimately resolved by an act of parliament. In 1844 the Bank Charter Act curbed the private banks’ ability to create paper money and ultimately phased it out altogether. The power to create money was now solely in the hands of the Bank of England, a situation which today we think of as the norm, so much so, in fact, that money being created willy-nilly by any private organisation with sufficient (or even insufficient) funds is pretty much unthinkable.

But wait a minute, because, unthinkable as it may be, that’s exactly what is going on today. The causes of our modern banking crisis may be uncomfortably similar to what happened in the 1830s. Today it’s not paper money that the banks have a license to print, but electronic money.

[...]


Read the full article at: independent.co.uk





Related Articles
Barclays rate rigging crisis shows ’corruption at heart of banking’
Barclays chairman quits bank after interest rate-rigging scandal
Government by the Banks, for the Banks: The ESM Coup D’Etat in Europe
CNBC Admits We’re All Slaves To Rothschild Central Bankers Global Government
Bank downgrade "shocker" aims to plant fear & panic
More Icelandic bankers arrested
The Biggest Financial Scam In World History
Financial Collapse At Hand: When is "Sooner or Later"?


Latest News from our Front Page

Viking Heathen Origin of Horse Meat Taboo
2015-04-21 4:07
YouTube description: The recent horse meat scandal involving Tescos burgers, Ikea meatballs, Findus lasagne and Taco Bell has got people wondering why the English don't eat horses. I covered this subject in my recent dissertation. The answer is to do with paganism. The Catholic church realised that eating horse meat was connected to pagan rites in the North of Europe, ...
Generation Identitaire - Declaration of War
2015-04-21 2:50
We are Generation Identitaire. We are the generation who get killed for glancing at the wrong person, for refusing someone a cigarette, or having an "attitude" that annoys someone. We are the generation of ethnic fracture, total failure of coexistence, and forced mixing of the races. We are the generation doubly punished: Condemned to pay into a social system so ...
No Jab, No Pay reforms: Religious exemptions for vaccination dumped
2015-04-20 20:03
Religious exemptions for childhood vaccinations will be scrapped to toughen Australia’s new “no jab, no pay’’ laws stripping welfare from parents who refuse to vaccinate their children. Social Services Minister Scott Morrison revealed he is dumping the last remaining exemption on the books after holding talks with religious leaders. Just a week after The Sunday Telegraph revealed Mr Morrison was scrapping exemptions ...
Inside David Lynch: An Esoteric Guide to Twin Peaks
2015-04-20 18:24
‘I learned that just beneath the surface there’s another world, and still different worlds as you dig deeper.’ – David Lynch If you’ve ever sensed the flimsy, thin veneer of what parades itself as the good ole US of A, and felt a bit like you’ve been sold a fake, then David Lynch’s Twin Peaks is a series you must see. ...
Third-gender toilet sign – now a reality in Sweden
2015-04-20 18:29
If you don’t identify yourself as a man, a woman or are officially handicapped — where should you go to relieve yourself? In Sweden, the social justice warriors have solved the problem by inventing a third-gender toilet sign. A couple of years ago, the Swedish language was introduced to a new personal pronoun, “hen“, to replace gender specific hon (she) and ...
More News »