HMT Seminar Series 9: 300 Years of Financial Crises, 2020

The South Sea Bubble

29 January 2020

Professor Julian Hoppit, UCL

The South Sea Bubble of 1720 is that rare thing, a historical financial crisis that through the ages has endured within the public consciousness. In part that is because it categorically failed in its ambition to remove the national debt from public finance balance sheets, because of gross political miscalculation and corruption. (The Chancellor of the Exchequer ended up in the Tower.) It has also been seen as an archetypal episode of infectious investor irrationality – the madness of crowds brilliantly lambasted by William Hogarth's early print – that led to socially corrosive wealth redistribution. And supposedly it devastated the wider economy. If the first of those lines is true enough, the others involve, however, a heady brew of fact and fiction.


The 1825 Country Bank Crisis

3 March 2020

Professor Larry Neal, University of Illinois

For financial historians, the 1825 financial crisis in Britain resonates very much with the global financial crisis of 2008. Both were preceded by financial innovations and speculative booms (international and domestic) that disconcerted policymakers. Both crises provoked substantive changes in fiscal, monetary, and regulatory policy in response. Then, as now, many felt these changes either fell short of what was needed or were misguided. It may be instructive, then, to re-examine what worked well for Britain in restructuring its financial system of the time in response to the 1825 crisis.


The Great Depression and Great Recession

23 April 2020

Professor Barry Eichengreen, University of California

Both the Great Depression of the 1930s and the Great Recession, which began in 2008, occurred against the backdrop of sharp credit booms, dubious banking practices, and a fragile and unstable global financial system. When markets went into cardiac arrest in 2008, policymakers invoked the lessons of the Great Depression in attempting to avert the worst. While their response prevented a financial collapse and catastrophic depression like that of the 1930s, unemployment in the US and Europe still rose to excruciating high levels. Pain and suffering were widespread.


The 1866 Overend and Gurney Crisis

21 May 2020

Professor Stefano Ugolini, University of Toulouse

The collapse of Overend Gurney and the ensuing Crisis of 1866 was a turning point in British financial history. The achievement of relative stability was due to the Bank of England’s willingness to offer generous assistance to the market in a crisis, combined with an elaborate system for maintaining the quality of bills in the market. We suggest that the Bank bolstered the resilience of the money market by monitoring leverage-building by money market participants and threatening exclusion from the discount window. When the Bank refused to bailout Overend Gurney in 1866 there was panic in the market. The Bank responded by lending freely and raising the Bank rate to very high levels. The new policy was crucial in allowing for the establishment of the sterling as an international currency.


The Latin American debt crisis of the 1980s

17 June 2020

Professor Stephany Griffith-Jones, Columbia University

The talk focused mainly on the Latin American debt crisis of the 1980s, which led to a ‘lost decade to development’ in the region. It examined the causes, management and consequences of this major crisis, as well as policy lessons. It then, more briefly, examined the Eurozone debt crisis with some references to the UK; one aspect highlighted is that, like in Latin America, much of the debt causing the crisis was to the private sector, with Greece being a clear exception. The talk finished with policy lessons, to be drawn from both crises, in general, but also in relation possibly to the current COVID situation.


The 1914 Banking Crisis

15 July 2020

Dr Duncan Needham, University of Cambridge

The week before the outbreak of the First World War saw the breakdown of London’s various financial markets, culminating with the closure for the first time ever of the London Stock Exchange on Friday 31 July. This seminar examined crisis transmission crisis through the stock market, the money market and the foreign exchange market. It showed how the Bank and Treasury managed the liquidity and solvency problems that beset the financial system with a successful series of emergency measures that ultimately netted a profit for HM Government after the Great War.


The East India Company bailout

1 October 2020

William Dalrymple

‘The East India Company was the most advanced capitalist organization in the world...Dalrymple gives us every sword-slash, every scam, every groan and battle cry...The Anarchy is not simply a gripping tale of bloodshed and deceit, of unimaginable opulence and intolerable starvation. It is shot through with an unappeasable moral passion.’ Wall Street Journal.


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