The 1772–73 British Credit Crisis (eBook)
XXIV, 334 Seiten
Springer International Publishing (Verlag)
978-3-319-70908-6 (ISBN)
Nowadays remembered mostly through Adam Smith's references to the short-lived Ayr Bank in the Wealth of Nations, the 1772-3 financial crisis was an important historical episode in its own right, taking place during a pivotal period in the development of financial capitalism and coinciding with the start of the traditional industrialisation narrative. It was also one of the earliest purely financial crises occurring in peacetime, and its progress showed an impressive geographical reach, involving England, Scotland, the Netherlands and the North American colonies.
This book uses a variety of previously unpublished archival sources to question the bubble narrative usually associated with this crisis, and to identify the mechanisms of financial contagion that allowed the failure of a small private bank in London to cause rapid and severe distress throughout the 18th century financial system. It re-examines the short and turbulent career of the Ayr Bank, and concludes that its failure was the result of cavalier liability management akin to that of Northern Rock in 2007, rather than the poor asset quality alleged in existing literature. It furthermore argues that the Bank of England's prompt efforts to contain the crisis are evidence of a Lender of Last Resort in action, some thirty years before the classical formulation of the concept by Henry Thornton.
Paul Kosmetatos is Lecturer for International Economic History at the University of Edinburgh. Prior to embarking in his academic career in History, he studied Materials Science and Engineering and spent a decade trading financial derivatives in the City of London.
Paul Kosmetatos is Lecturer for International Economic History at the University of Edinburgh. Prior to embarking in his academic career in History, he studied Materials Science and Engineering and spent a decade trading financial derivatives in the City of London.
Preface 7
Contents 12
List of Abbreviations 13
List of Figures 14
List of Tables 19
Chapter 1: ‘A Year of Confusion, Dismay, and Distress’: The 1772–73 Financial Crisis and Its Potential Significance 21
Potential Significance of the 1772–73 Crisis 28
Literature Specific to the 1772–73 Crisis 46
Lines of Inquiry and Outline of This Work 52
Sources 56
Chapter 2: A Minsky Bubble? Economic Growth and the Financial Sector in 1763–72 61
In Search of an Economic Displacement 62
Aggregate Economy 66
Production 68
Transport and Communications 72
Foreign Trade 77
The Potential Role of Finance in Inflating a 1763–72 Bubble 81
Equity Growth 88
Credit Growth 98
The Payment System: Bills of Exchange and Paper Money 124
Did Finance ‘Fan the Flames’? 140
Chapter 3: ‘Roguery’, ‘Stupidity’, and Permissive Regulation: Asset Speculation and Speculative Projects in 1763–72 143
Regulatory Constraints 152
Speculation and Opportunism: The East India Battleground 160
Speculative Projects in the Primary Market: The Ayr Bank 174
What Sort of 1763–72 ‘Bubble’? 191
Chapter 4: Propagation and Containment: Financial Contagion and the Lender of Last Resort in 1772–73 194
The Facts of Intervention 201
The Motives of Intervention 208
Alternative Agents of Containment 218
The Mechanisms of Domino Contagion 225
Informational Contagion 242
Contagion and the LOLR in 1772: Supporting the Bills of Exchange Network 252
The Golden Age of Free Banking or the Birth of Last Resort Lending? 264
Appendix: A Note on Bank of England Sources 268
Chapter 5: Impact and Resolution 273
Impact on the Wider Economy 276
Impact on Financial Institutions 289
Resolving ‘The Involved Affairs of a Great Company’: Unwinding the Ayr Bank 296
Regulatory Impact 305
‘The Most Violent and Fatal Storm Since the South Sea Blast’ 310
Chapter 6: Conclusion 312
Bibliography 316
Primary Sources 316
Manuscript 316
Printed 318
Databases and Reference Works 322
References 323
Index 342
| Erscheint lt. Verlag | 21.3.2018 |
|---|---|
| Reihe/Serie | Palgrave Studies in the History of Finance | Palgrave Studies in the History of Finance |
| Zusatzinfo | XXIV, 334 p. 45 illus., 9 illus. in color. |
| Verlagsort | Cham |
| Sprache | englisch |
| Themenwelt | Wirtschaft ► Allgemeines / Lexika |
| Schlagworte | asset speculation • Ayr bank • British credit crisis • credit growth • Economic displacement • equity growth • monetary expansion |
| ISBN-10 | 3-319-70908-9 / 3319709089 |
| ISBN-13 | 978-3-319-70908-6 / 9783319709086 |
| Informationen gemäß Produktsicherheitsverordnung (GPSR) | |
| Haben Sie eine Frage zum Produkt? |
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