Bank of England: The Week It Nearly Ran Out of Money (1825)

Bank of England, December 1825: its vaults fell from more than ten million pounds in gold to a little over a million, and in the worst week it did the opposite of what a careful company does. A year earlier the Bank held well over a billion pounds in today's money. Then a boom in Latin American bonds and mines, financed by banknotes printed in market towns, turned into a run. A bank in London shut, more than forty small banks found their money locked behind it, and everyone wanted gold from the same counter in Threadneedle Street. At first the Bank, a private company, guarded its gold. Then it lent to rival bankers against almost anything they could carry through the door: almost six million pounds of bills in a week, twelve times as much as a year earlier. A forgotten box of notes turned up just in time, and gold crossed the Channel from France. Britain's most famous writer, Walter Scott, was ruined anyway. Central banks still follow the rule the Bank used that week, and it was written down in 1802 by a banker whose son ended up on the wrong side of it. CHAPTERS 0:00 The Bank of England's vaults 1:09 Two men with no clerks 3:37 Why the vaults were empty 6:04 The storm 7:45 Every possible means 9:52 The box 11:12 Gold from France 12:15 The bill 13:50 The rule 15:22 Outro SOURCES · Andrew Odlyzko, "The 1825 Crisis and Bank of England as Lender of Last Resort" (Review of the History of Economic Thought and Methodology) · Yale Program on Financial Stability, New Bagehot: "The Bank of England's Lending during the Panic of 1825" · Walter Bagehot, "Lombard Street" (1873), Project Gutenberg · Henry Thornton, "An Enquiry into the Nature and Effects of the Paper Credit of Great Britain" (1802) · Thomas M. Humphrey, "Lender of Last Resort: The Concept in History" (FRB Richmond Economic Review, 1989) · Alexander J. Dick, "On the Financial Crisis, 1825-26" (BRANCH) · NatWest Group Heritage Hub, "Henry Sykes Thornton"; E. M. Forster, "Marianne Thornton" (1956) · Ray Perman, "The Financial Ruin of Sir Walter Scott" (Walter Scott Club) MUSIC Music: "Clenched Teeth - The Descent" by Kevin MacLeod Licensed under Creative Commons Attribution 4.0 · https://creativecommons.org/licenses/... Source: http://incompetech.com/music/royalty-... Artist: http://incompetech.com/ Music: "Dark Walk" by Kevin MacLeod Licensed under Creative Commons Attribution 4.0 · https://creativecommons.org/licenses/... Source: http://incompetech.com/music/royalty-... Artist: http://incompetech.com/ Music: "Hidden Agenda" by Kevin MacLeod Licensed under Creative Commons Attribution 4.0 · https://creativecommons.org/licenses/... Source: http://incompetech.com/music/royalty-... Artist: http://incompetech.com/ Music: "Retro Dreamscape" by Twin Musicom Licensed under Creative Commons Attribution 4.0 · https://creativecommons.org/licenses/... Source: http://www.twinmusicom.org/song/283/r... Artist: http://www.twinmusicom.org FOLLOW · YouTube ·    / @libro_mastro   · Instagram ·   / libro_mastro   · Facebook ·   / historysaccounts   Libromastro · History's Accounts. Every empire kept a ledger. We open them.