26. dubna 2013 02:55:24 | reagovat
Matěj Šuster
Anglické finanční krize z let 1825, 1847, 1857 a 1866
Pozoruhodná tvrzení. ;)Kopíruji výňatek z článku Kevina Dowda "The evolution of central banking in England, 1821–90", z knihy "Laissez-faire banking" (1993).
Dowd tam stručně popsije anglické finanční krize z let 1825, 1847, 1857 a 1866 - víceméně potvrzuje to, co v tomto ohledu tvrdí Herbert Spencer.
s. 229-230
THE 1825 PANIC AND THE ACTS OF 1826
In 1825 there was a major financial crisis. It occurred after a period of considerable expansion of their issues by the Bank of England and the private banks,20 and, perhaps more significantly, after large amounts of speculative British investment in South America. The collapse of the investment boom in mid-1825 left many British financial firms in serious difficulties. The apprehension mounted in the autumn, and there were large bank failures in November. On 5 December it became known that one of the leading City finance houses—Poles & Co.—was in serious difficulties. The Bank arranged assistance, and the firm struggled on for a while. In the meantime the crisis gradually worsened. In London it reached its peak in the week from Monday 12th to Saturday 17th, when the storm ‘raged with an intensity which it is impossible for me to describe’ (Richards, the deputy governor, quoted in MacLeod 1896:122). On the Monday and Tuesday the demand for cash was so great that it was said to have been impossible to convert even the best government securities into cash on any terms.21 The public was clamouring for Bank notes and gold coins, and neither could be produced fast enough, though the printers were working overtime and the Mint was coining sovereigns furiously (Clapham 1944:100).22 That same week the government refused the Bank any form of assistance—the Bank would have to meet demands for redemption until it ran dry—and the Bank decided to reverse the contractionary policy it had followed since May. In the famous words of a Bank spokesman, Jeremiah Harman:
We lent by every possible means and in modes we had never adopted before. We took in stock as security; we purchased exchequer bills, and we made advances on exchequer bills; we not only discounted outright, but we made advances on deposits of bills of exchange to an immense amount; in short, by every possible means consistent with safety of the bank; and we were not on some occasions over-nice…we rendered every assistance in our power. (Quoted in MacLeod 1896:123)
The Bank’s expansionary policy ‘and the resultant issue of £5 million of notes, snatched the country from the brink of the cataclysm which it already overhung’ (Powell 1915:330). By the end of the Saturday the Bank had apparently run out of notes,23 but a new batch arrived from the printers on the Sunday, and a consignment of gold arrived from France on the Monday, 17 December. That day Poles’s failed, and with them some other London banks, and forty-four country banks for which Poles’s were the correspondents. Despite these events, the panic in London started to abate, and, though the panic in the provinces at first got worse, the whole country had calmed down by the end of the week.
s. 234-237
THE CRISES OF 1847, 1857 AND 1866
The critics of the currency school had always claimed that its recommendations would not prevent crisis, and it was not long before they were proved right. The disastrous potato crops of 1845 and 1846 had given rise to large exports of gold to pay for imports of corn. The Bank’s gold reserves fell, and a rise of discount rate to 3 1/2 per cent in January did nothing to stop the outflow. Bank rate was raised to 5 per cent in April, when the Banking Department’s reserve had fallen to just over £2 1/2 million. The market then panicked, the Bank rationed its discounts, and the market discount rate rose to 10 per cent or 12 per cent. At this point gold started to come into the Bank’s reserve again, and the market calmed down. Later in the year, however, a series of failures led to renewed apprehension and further falls in the Bank’s reserve. In October the Bank raised its discount rate to 5 1/2 per cent and again rationed its discounts. The market panicked again, and this time some of the banks began to fail.
The City clamoured for the suspension of the 1844 Act to enable the Bank to issue extra notes. Powell (1915:363) reports the bankers’ appeal to the Chancellor, Sir Charles Wood: ‘Let us have notes. We don’t mean, indeed, to take the notes, because we shall not want them; only tell us that we can get them, and this will at once restore confidence.’ The government held out for a while, but at last gave in. On Saturday 23 October the government informed the Bank that a Bill of Indemnity would be presented to Parliament should the Bank issue notes in excess of those allowed under the 1844 Act. As a condition the Bank was to raise discount rate to 8 per cent. The publication of the government letter the next Monday instantly abated the panic.
The certainty that money could be got took away all desire to have it. The Bank prepared …additional notes, but there was no need to use them. Notes which had been hoarded under the impression that the limit fixed by the Act of 1844 would shortly be reached, and that the Bank would be unable to assist the commercial world, were brought out in a mass from their hiding places; the same thing happened with regard to gold.39 (Andrèades 1909:336–7)
Another crisis occurred in October 1857. It appears to have been precipitated by a crisis in the United States which provoked a series of failures among British firms with large American investments. The Bank responded by steadily increasing Bank rate and lending extensively, but its reserve fell sharply. By the evening of 12 November its reserve had fallen to only £384,144. With bankers’ balances alone of over £5 million, the governor afterwards acknowledged that ‘the Bank could not have kept its doors open an hour [more]’ (MacLeod 1896:161). With ‘universal ruin…at last impending’, the government sent a letter to the Bank indicating that it was prepared to present a Bill of Indemnity to release the Bank from the note restrictions of the Bank Charter Act, the relaxation to operate for as long as the discount rate was at least 10 per cent (p. 160). As in 1847, ‘the public alarm was at once abated’, but this time high demand for discounts continued for more than a fortnight (Andrèades 1909:349). Unlike 1847, the Bank Charter Act was actually breached, and the Bank issued an additional £2 million of notes in excess of the 1844 limit, although the amount of these notes in circulation never reached £1 million.40
A third crisis occurred in 1866. A series of failures in early 1866 had produced an atmosphere of mounting alarm. Then on Wednesday 9 May a judgement was delivered to the effect that certain bills held by the great broking firm of Overend Gurney were worthless. There was already considerable public concern about Overend’s, and the firm had not the resources to withstand a major run. It therefore appealed to the Bank for assistance, but was refused a loan because it could not meet the Bank’s demands for security, and the firm suspended at the end of the next day (10 May). The market opened on Friday to complete panic: there was a wild rush to sell virtually anything for notes, and asset prices plummeted. As Powell later wrote, that was a day ‘of tragic memory, even at the distance of half a century’ (1915:401). That evening the Chancellor announced to Parliament that, following the earlier precedents, the government would bring in a Bill to indemnify the Bank if the Bank thought it proper to exceed the note limits specified by the 1844 Act.41
The Chancellor’s announcement had ‘such an effect that the next day the crisis seemed to be at an end’ (Andrèades 1909:359). Once again, the knowledge that the Bank had the power to issue the extra notes was sufficient to abate the panic, and in the event no additional notes needed to be issued. None the less the demand for discounts continued to be considerable—the Bank made over £12
million in discounts over the next week—a number of failures occurred the week after Black Friday, and Bank rate remained at 10 per cent until early August. After that, however, the markets returned to normal and the crisis was followed by a comparatively long period of calm.42
It is highly significant that each of the last three panics was cured by a promise to relax the note restrictions of the Bank Charter Act. Each panic was a panic for notes—an excess demand, in other words, to convert one form of bank liability into another—and the panic abated as soon as it became clear that the notes could be obtained. At no point was the gold standard itself in danger—the danger was always that the Banking Department would default while the Issue Department remained full of gold which it could neither lend out nor issue notes against. It is therefore difficult to avoid the conclusion that, whatever the shocks that triggered off the panics, it was the note restrictions that converted those shocks into crises. The situation was somewhat different in 1825, but even then the main demand wascto get rid of country bank notes, and most of those who wanted to do that would have been happy to take Bank of England notes if they could have got them. As in the crises of 1847, 1857 and 1866, it was the unwillingness to meet the demand for Bank notes that really fed the panic, and the panic subsided once people became convinced that Bank notes could be got. There is much truth in MacLeod’s assessment:
Monetary panics, in this country at least, have been invariably produced by bad banking legislation, or by bad management of the Bank of England, sometimes by both. Monetary panics are therefore…avoidable. (1896:95)