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- Title
The Bank of England as lender of last resort, 1857-1878.
- Authors
Collins, Michael
- Abstract
The article cites a study that investigates into bank lending and industrial finance over the whole period 1850-1914 is done. This study will also analyze the general effect of liquidity pressures on the asset holdings of banks. Only when this research is complete should it be possible to assess properly the effects of the 1878 crisis within the long-term context. Theoretically, in such crises the Bank might have done nothing more radical than discount bills for, and make loans to, solvent customers on sound collateral and/or invest in sound, profitable securities. The motive, indeed, could have been purely self-interested, one of profit. But the effect could well have led to a transfer of high-powered money from the Bank to other parts of the monetary system. Overall, the data offer strong support the original contention that it was the Bank of England that substantially met the increased demand for cash and near-cash assets during the crisis of 1878. However, in all three crises examined here, financial institutions, including provincial banks, were able to tap into the Bank's reserves only if they had access to securities which were readily saleable in the London money market.
- Subjects
ENGLAND; BANK failures; LIQUIDITY (Economics); BANKING industry; LOANS; MONETARY policy
- Publication
Economic History Review, 1992, Vol 45, Issue 1, p145
- ISSN
0013-0117
- Publication type
Article
- DOI
10.2307/2598333