British Currency School
Encyclopedia
The British Currency School was a group of British economists, active in the 1840s and 1850s, who argued that the excessive issuing of banknote
s was a major cause of price inflation, and believed that, in order to restrict circulation, issuers of new banknotes should be required to hold an equivalent value of gold
as a reserve. In these beliefs they were supporting the provisions of the 1844 Bank Charter Act
, which had been passed by the Conservative
government of Robert Peel
.
The leading figure of the school was Samuel Jones-Loyd, Baron Overstone, the British politician and banker. His role in the debate was analysed and criticised by Henry Meulen
, an opponet of the Act.
The currency school was opposed by members of the British Banking School
, who argued that currency issue could be naturally restricted by the desire of bank depositors to redeem their notes for gold.
Banknote
A banknote is a kind of negotiable instrument, a promissory note made by a bank payable to the bearer on demand, used as money, and in many jurisdictions is legal tender. In addition to coins, banknotes make up the cash or bearer forms of all modern fiat money...
s was a major cause of price inflation, and believed that, in order to restrict circulation, issuers of new banknotes should be required to hold an equivalent value of gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
as a reserve. In these beliefs they were supporting the provisions of the 1844 Bank Charter Act
Bank Charter Act 1844
The Bank Charter Act 1844 was an Act of the Parliament of the United Kingdom, passed under the government of Robert Peel, which restricted the powers of British banks and gave exclusive note-issuing powers to the central Bank of England....
, which had been passed by the Conservative
Conservative Party (UK)
The Conservative Party, formally the Conservative and Unionist Party, is a centre-right political party in the United Kingdom that adheres to the philosophies of conservatism and British unionism. It is the largest political party in the UK, and is currently the largest single party in the House...
government of Robert Peel
Robert Peel
Sir Robert Peel, 2nd Baronet was a British Conservative statesman who served as Prime Minister of the United Kingdom from 10 December 1834 to 8 April 1835, and again from 30 August 1841 to 29 June 1846...
.
The leading figure of the school was Samuel Jones-Loyd, Baron Overstone, the British politician and banker. His role in the debate was analysed and criticised by Henry Meulen
Henry Meulen
Henry Meulen was a British individualist anarchist and economist. He was an editor of the periodical called The Individualist, published by the Personal Rights Association and actively promoted the philosophy of free banking...
, an opponet of the Act.
The currency school was opposed by members of the British Banking School
British Banking School
The British Banking School was a major part of British history. They were created to oppose the British Currency School; they argued that currency issue could be naturally restricted by the desire of bank depositors to redeem their notes for gold....
, who argued that currency issue could be naturally restricted by the desire of bank depositors to redeem their notes for gold.
External links
- The Bullionist Controversy at the History of Economic Thought website