ABSTRACT
Bagehot dates our modern Money Market from the resumption of cash payments by the Bank of England in 1819. 1 As this was four years after Waterloo, we may well begin from the latter event, when the National Debt was £758,000,000, and the charge for interest and annuities reached £27,652,000, our analysis of the characteristic modern force which influences the lives and destinies of all of us, “ and not least those who never have understood and never will understand anything about the rules which govern it.” 2 Looking back, from the centenary of Waterloo to the year of the great battle itself, it is extremely remarkable how the process of financial organisation has fallen into watertight compartments, composed of half and quarter centuries, since that date. In accordance with a well-known economic law, the conditions existing in the old pre-Waterloo era were some of them projected into the post-Waterloo period. They introduced an element of weakness and malaise which, as we shall see, brought recurring complication and disaster, until it culminated in the Overend-Gurney smash, in 1866, almost exactly fifty years from Waterloo itself. The Overend-Gurney crisis marks the final elimination of the old economic infirmities, just as truly as the Battle of Bosworth signalised the close of the Middle Ages in political and social 244England. From the time of the Overend-Gurney crisis onwards the modern Money-Power has been gradually centralising the entire financial control of the world–and this of deliberate purpose, knowing its own aim. The passing of the Elementary Education Act, just after the Overend-Gurney crisis, began the genesis of the small investor, as it also marked the partial reversal of the biological law of Natural Selection in the economic realm. Within twenty-five years of the Overend-Gurney affair, almost to a month, we reach another milestone on the pathway of modern economic evolution when we are confronted by the Baring crisis. But in that instance, in contrast to the Overend-Gurney affair, the crash was not allowed to come. The modern Money-Power was strong enough to grapple with the difficulty, and to prevent the cataclysmic upheaval which must otherwise inevitably have occurred. Once more, practically within a quarter of a century from the Baring emergency, we found ourselves face to face with the greatest crisis that we have ever witnessed in our whole history–that which accompanied the outbreak of the war with Germany. That emergency was boldly grappled with, and in military terminology “ held.” Success in the struggle was all the more vital to the safety of the economic fabric because the crisis came at the end of another quarter century of economic development–namely, that which had witnessed the adolescence of the small investor under the fostering guardianship of centralised financial control and responsibility. It is not often that history, particularly the history of such a period as the nineteenth century, falls into watertight compartments in this fashion.
