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

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

Gene That Once Aided Survival in the Arctic Found to Have Negative Impact on Health Today
2014 10 23
In individuals living in the Arctic, researchers have discovered a gene variant that arose thousands of years ago and most likely provided an evolutionary advantage for processing high-fat diets or for surviving in a cold environment; however, the variant also seems to increase the risk of hypoglycemia, or low blood sugar, and infant mortality in today’s northern populations. {snip} “Our work ...
The Ebola hoax: questions, answers, and the false belief in the “One It”
2014 10 23
“The Reality Manufacturing Company doesn’t just sell ‘fake paintings’ that are easy to spot. No. They also sell images that are geared to mesh with people’s deeply held instincts and thereby produce rigid false beliefs. People are sure that if they gave up such beliefs, their world would fall apart and blow away in the wind.” ...
New Controversial Theory Suggests "Hobbits" Were Not Human - Who Were These Mysterious Beings?
2014 10 23
The origin of the Hobbit species remains a challenging subject to scientists. The Hobbit’s discovery confirmed the view that the Earth was once populated by many species of human, but new research the Hobbit’s were not human at all! So, who were these mysterious beings? Where did they come from? The idea that our species, Homo sapiens, was the only species of human on ...
Right into enemy hands? ISIS shows off new weapons allegedly airdropped by US (VIDEO)
2014 10 23
Islamic State has published a new video in which a jihadist shows off brand-new American hardware, which was purportedly intended for the Kurds they are fighting in the Syrian border town of Kobani. The undated video, posted by the unofficial IS mouthpiece “a3maq news”, sees a jihadist showing several boxes of munitions with English-language markings, with a parachute spread out on ...
STAGED INFECTION: Has The Ebola ‘Outbreak’ Narrative Fallen Apart?
2014 10 22
Over the past month, the ‘pandemic’ propaganda surrounding the deadly Ebola virus seemed to reach vitriolic levels – raising serious questions about the validity of this current viral outbreak… On Monday of this week, it was reported that 48 people were released and cleared after a 21-day quarantine due to their contact with the now deceased Ebola-stricken patient Thomas Eric ...
More News »