Assessing the Impacts of British Monetary Policy in the Advent of the Panic of 1825. (BSc Dissertation, London School of Economics, 2018)

Abstract

This dissertation will analyse the degree to which Bank of England note issues influenced the extent of credit expansion by the British banking system during the 1819-26 business cycle. The evidence presented, both theoretical and empirical, tends to suggest that such an influence did indeed exist to a considerable extent, partly due to the use of Bank of England notes by other banks as cash reserves and for clearing balances. It will therefore be argued that credit expansion by the country banks — often cited by previous studies as the primary cause of the Panic of 1825 — seems more likely to have been a proximate cause, with the neglected role of Bank of England note issues as a possible ultimate cause warranting greater consideration.