Annual EBHS Conference, 39th Annual Economic and Business History Society Conference

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Title: Credit Boom and Credit Crisis in Lancashire, 1826-1850
Geoffrey Fain Williams

Last modified: 2014-03-10



After the passage of the Joint Stock Banking Law in the United Kingdom in 1826, many British entrepreneurs and investors founded new joint stock banks. In Lancashire (including Liverpool and Manchester) dozens of banks were founded in the 1820s and 1830s and more than three dozen new bank branches are reported between 1822 and 1838. This credit liberalization seems to have led to an expansion in credit and the money supply, followed by a series of bank collapses, panics, frauds and scandals by 1850.

It is now appreciated that for much of the period since the New Deal the world financial system was unusually stable; the period from 1934 to 2008 in the United States has been termed “The Quiet Period” by several leading economists, and scholarship on financial regulation and financial crises has grown enormously in the past few years. Ironically, the very stability of financial systems after 1934 poses a serious problem: there are relatively few examples since then of successful economies with unstable financial sectors. As a result, a major avenue of research into financial crises has been to look at panics or crises in the United States and Europe in the 1800s.

This paper will present a summary, based on archival materials and some secondary sources, of the development of the banking sector in Lancashire between 1826 and 1850, focusing on this as a liberalization-credit boom-banking crisis story. I will examine the effect of the credit boom and bust on the local economy and the specifics of the banking failures in the late 1830s and 1840s.  I will also tie the story in Lancashire to general business cycle fluctuations in the United Kingdom and elsewhere.

The first stage of this project was a survey article looking at fraud and mismanagement in the banking industry during the Victorian era which I presented at the Economic and Business History Society conference at Baltimore, Maryland in May 2013. In July 2013 I went to the United Kingdom and visited seven archives, acquiring digital copies of a wide range of materials pertinent to the banking sector in Lancashire in the 1820s to 1850s.