the bank act of 1844 seems a predecessor of Milton Friedman's monetary rule. The policy implemented in 1866 sounds a lot like Bernanke's response to the current crisis.
On Fri, Jul 31, 2009 at 1:44 PM, Julio Huato<[email protected]> wrote: > I mentioned this in the previous note. But re. the English Act of > 1844, here's an interesting anecdote: > > http://chestofbooks.com/finance/economics/Commerce-and-Finance/English-Banking-Bank-Of-England-Peel-s-Act-1844-One-Rese.html > > "But the panics of 1847, 1857 and 1866 were not prevented by the > stability of the currency, and in fact the panic of 1866 was only > allayed by the announcement that the Bank of England had authority > from the government to issue notes in excess of the redemption fund on > hand. On the worst day of the panic, May 11, 1866, called "Black > Friday," the bank found its reserve in the Banking Department reduced > to nearly £3,000,000 at the close of business. That evening the > chancellor of the exchequer recommended that the bank act be > suspended, and this was promptly done by the government. The > announcement on the following morning that the Bank of England had > authority to issue notes beyond the limit to whatever extent was > necessary, quieted the fears of the people, and affairs returned to > their normal condition." > > So, the Act of 1844 was aimed at currency "stability." The more the > law was enforced, the more fearful people became of the economy > collapsing, and the more they rushed to metal. By the Bank of England > easing credit, expectations shifted. Or, as Marx puts it, the "faith" > in the continuous reproduction of capitalism, weakened by the law, > recovered. As people expected the economy to recover sooner, they > felt more comfortable retaining or taking non-liquid assets. -- Jim Devine / "All science would be superfluous if the form of appearance of things directly coincided with their essence." -- KM _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
