Bagehot for beginners: The making of lender-of-last-resort operations in the mid-nineteenth century

Economic History Review

Volumn 65, Issue 2, 2012, Pages 580-608

  Bignon, Vincent ^a   Flandreau, Marc ^a   Ugolini, Stefano ^b  

^a Graduate Institute   (Switzerland)

^b SCUOLA NORMALE SUPERIORE   (Italy)

Author keywords

[No Author keywords available]

Indexed keywords

BANKING; ECONOMIC HISTORY; EXCHANGE RATE; FINANCIAL MARKET; FINANCIAL SYSTEM; LENDING BEHAVIOR; NINETEENTH CENTURY; THEORETICAL STUDY;

ENGLAND; UNITED KINGDOM;

EID: 84860202884     PISSN: 00130117     EISSN: 14680289     Source Type: Journal    
DOI: 10.1111/j.1468-0289.2011.00606.x     Document Type: Article

References (68)

1. Allen, F. and Gale, D., 'Optimal financial crises', Journal of Finance, 53 (1998), pp. 1245-84.
2. Andolfatto, D., Nosal, E., and Wallace, N., 'The role of independence in the Green-Lin Diamond-Dybvig model', Journal of Economic Theory, 137 (2007), pp. 709-15.
3. Antinolfi, G., Huybens, E., and Keister, T., 'Monetary stability and liquidity crises: the role of the lender of last resort', Journal of Economic Theory, 99 (2001), pp. 187-219.
4. Bagehot, W., Lombard Street: a description of the money market (5th edn. 1873).
5. Bindseil, U., Monetary policy implementation: theory, past, present (Oxford, 2004).
6. Bordo, M. D., 'The lender of last resort: alternative views and historical experience', Federal Reserve Bank of Richmond Economic Review (1990), pp. 18-29.
7. Champ, B., Smith, B. D., and Williamson, S. D., 'Currency elasticity and banking panics: theory and evidence', Canadian Journal of Economics, XXIX (1996), pp. 828-64.
8. Chari, V. V. and Jagannathan, R., 'Banking panics, information, and rational expectations equilibrium', Journal of Finance, XLIII (1988), pp. 749-61.
9. Chatziioannou, M.-C. and Harlaftis, G., 'From the Levant to the City of London: mercantile credit in the Greek international commercial networks of the eighteenth and nineteenth centuries', in P. L. Cottrell, E. Lange, and U. Olsson, eds., Centres and peripheries in banking: the historical development of financial markets (Aldershot, 2007), pp. 13-40.
10. Clapham, J. H., The Bank of England: a history, 2 vols. (Cambridge, 1944).
11. Collins, M., 'The Langton papers: banking and Bank of England policy in the 1830s', Economica, new ser., 39 (1972), pp. 47-59.
12. Collins, M., 'The Bank of England as lender of last resort, 1857-1878', Economic History Review, XLV (1992), pp. 145-53.
13. Collins, M. and Baker, M., Commercial banks and industrial finance in England and Wales, 1860-1913 (Oxford, 2003).
14. Cooper, R. and Ross, T. W., 'Bank runs: liquidity costs and investment distortions', Journal of Monetary Economics, 41 (1998), pp. 27-38.
15. Diamond, D. W. and Dybvig, P. H., 'Bank runs, deposit insurance, and liquidity', Journal of Political Economy, 91 (1983), pp. 401-19.
16. Fetter, F. W., Development of British monetary orthodoxy, 1797-1875 (Oxford, 1965).
17. Flandreau, M., The glitter of gold: France, bimetallism and the emergence of the international gold standard, 1848-1873 (Oxford, 2004).
18. Flandreau, M., 'Pillars of globalization: a history of monetary policy targets, 1797-1997', in A. Beyer and L. Reichlin, eds., The role of money: money and monetary policy in the twenty-first century (Frankfurt, 2008), pp. 208-43.
19. Flandreau, M., Galimard, C., Jobst, C., and Nogués-Marco, P., 'The bell jar: commercial interest rates between two revolutions, 1688-1789', in J. Atack and L. Neal, eds., The origins and development of financial markets and institutions: from the seventeenth century to the present (Cambridge, 2008), pp. 161-208.
20. Flandreau, M. and Ugolini, S., 'Where it all began: lending of last resort and the Bank of England during the Overend-Gurney panic of 1866', in M. D. Bordo and W. Roberds, eds., A return to Jekyll Island: the origins, history, and future of the Federal Reserve (Cambridge, forthcoming).
21. Freeman, S., 'The payments system, liquidity, and rediscounting', American Economic Review, 86 (1996), pp. 1126-38.
22. Freixas, X., Parigi, B. M., and Rochet, J.-C., 'The lender of last resort: a twenty-first century approach', Journal of the European Economic Association, 2 (2004), pp. 1085-115.
23. Friedman, M. and Schwartz, A. J., A monetary history of the United States, 1867-1960 (Princeton, NJ, 1963).
24. Gilbart, J. W., A practical treatise on banking (6th edn. 1856).
25. Goodfriend, M. and King, R. G., 'Financial deregulation, monetary policy, and central banking', in W. S. Haraf and R. M. Kushmeider, eds., Restructuring banking and financial services in America (Washington, DC, 1988), pp. 216-53.
26. Goodhart, C. A. E., 'Why do banks need a central bank?', Oxford Economic Papers, 39 (1987), pp. 75-89.
27. Goodhart, C. A. E., The evolution of central banks (Cambridge, Mass., 1988).
28. Goodhart, C. A. E., 'Myths about the lender of last resort', International Finance, 2 (1999), pp. 339-60.
29. Gorton, G., 'Banking panics and business cycles', Oxford Economic Papers, 40 (1988), pp. 751-81.
30. Gorton, G. B., 'The panic of 2007', in Maintaining stability in a changing financial system: proceedings of the 2008 Jackson Hole conference (Kansas City, 2009), pp. 131-262.
31. Gorton, G. and Huang, L., 'Banking panics and the origin of central banking', in D. E. Altig and B. D. Smith, eds., Evolution and procedures of central banking (Cambridge, 2003), pp. 181-219.
32. Gorton, G. and Huang, L., 'Bank panics and the endogeneity of central banking', Journal of Monetary Economics, 53 (2006), pp. 1613-29.
33. Green, E. J., and Lin, P., 'Implementing efficient allocations in a model of financial intermediation', Journal of Economic Theory, 109 (2003), pp. 1-23.
34. Hankey, T., The principles of banking, its utility and economy; with remarks on the working and management of the Bank of England (1867).
35. Haupt, O., Arbitrages et parités (8th edn. Paris, 1894).
36. Hughes, J. R. T., Fluctuations in trade, industry and finance: a study of British economic development, 1850-1860 (Oxford, 1960).
37. Humphrey, T. M., 'The classical concept of the lender of last resort', Federal Reserve Bank of Richmond Economic Review (Jan./Feb. 1975), pp. 2-9.
38. Humphrey, T. M. and Keleher, R. E., 'The lender of last resort: a historical perspective', Cato Journal, 4 (1984), pp. 275-321.
39. Jacklin, C. J. and Bhattacharya, S., 'Distinguishing panics and information-based bank runs: welfare and policy implications', Journal of Political Economy, 96 (1988), pp. 568-92.
40. Jobst, C., 'Gouverner une banque centrale décentralisée: l'exemple austro-hongrois (1847-1914)', in O. Feiertag and M. Margairaz, eds., Gouverner une banque centrale: du XVIIe siècle à nos jours (Paris, 2010), pp. 113-42.
41. Kaufman, G. G., 'Lender of last resort: a contemporary perspective', Journal of Financial Services Research, 5 (1991), pp. 95-110.
42. King, W. T. C., History of the London discount market (1936).
43. Martin, A., 'Liquidity provision vs. deposit insurance: preventing bank panics without moral hazard', Economic Theory, 28 (2006), pp. 197-211.
44. Martin, A., 'Reconciling Bagehot and the Fed's response to September 11', Journal of Money, Credit and Banking, 41 (2009), pp. 397-415.
45. Matthews, R. C. O., A study in trade-cycle history: economic fluctuations in Great Britian, 1833-42 (Cambridge, 1954).
46. Mints, L. W., A history of banking theory in Great Britain and the United States (Chicago, Ill., 1945).
47. Morgan, E. V., 'Railway investment, Bank of England policy and interest rates, 1844-1848', Economic History, 4 (1940), pp. 329-40.
48. Morier Evans, D., The commercial crisis, 1847-1848 (1849).
49. Nishimura, S., 'The French provincial banks, the Banque de France, and bill finance, 1890-1913', Economic History Review, XLVIII (1995), pp. 536-54.
50. Plessis, A., Histoires de la Banque de France (Paris, 1998).
51. Postlewaite, A. and Vives, X., 'Bank runs as an equilibrium phenomenon', Journal of Political Economy, 95 (1987), pp. 485-91.
52. Repullo, R., 'Who should act as a lender of last resort? An incomplete contracts model', Journal of Money, Credit, and Banking, 32 (2000), pp. 580-605.
53. Rochet, J.-C. and Vives, X., 'Coordination failures and the lender of last resort: was Bagehot right after all?', Journal of the European Economic Association, 2 (2004), pp. 1116-47.
54. Roulleau, G., Les règlements par effets de commerce en France et à l'étranger (Paris, 1914).
55. Sayers, R. S., Bank of England operations, 1890-1914 (1936).
56. Schwartz, A. J., 'The misuse of the Fed's discount window', Federal Reserve Bank of St Louis Review (Sept./Oct. 1992), pp. 58-69.
57. Seyd, E., Bullion and foreign exchanges, theoretically and practically considered (1868).
58. Sheng, A., 'Role of the central bank in banking crisis: an overview', in P. Downes and R. Vaez-Zadeh, eds., The evolving role of central banks (Washington, DC, 1991), pp. 193-217.
59. Sleet, C. and Smith, B. D., 'Deposit insurance and lender-of-last-resort functions', Journal of Money, Credit, and Banking, 32 (2000), pp. 518-75.
60. Summers, B. J., 'Clearing and payment systems: the central bank's role', in P. Downes and R. Vaez-Zadeh, eds., The evolving role of central banks (Washington, DC, 1991), pp. 30-45.
61. Svensson, L. E. O., 'Social value of public information: comment: Morris and Shin (2002) is actually pro-transparency, not con', American Economic Review, 96 (2006), pp. 448-52.
62. Vitu, A., Guide financier: répertoire géneral des valeurs financières et industrielles cotées sur les bourses françaises et sur les principaux marchés de l'Europe, de l'Amérique et des Indes (Paris, 1864).
63. Wallace, N., 'Another attempt to explain an illiquid banking system: the Diamond and Dybvig model with sequential service taken seriously', Federal Reserve Bank of Minneapolis Quarterly Review, 12 (1988), pp. 3-16.
64. Williamson, S. D., 'Discount window lending and deposit insurance', Review of Economic Dynamics, 1 (1998), pp. 246-75.
65. Williamson, S. D., 'Limited participation, private money, and credit in a spatial model of money', Economic Theory, 24 (2004), pp. 857-75.
66. Withers, H., The meaning of money (1909).
67. Wood, E., English theories of central banking control, 1819-1858: with some account of contemporary procedure (Cambridge, Mass., 1939).
68. Ziegler, D., Central bank, peripheral industry: the Bank of England in the provinces, 1826-1913 (Leicester, 1990).