The 1857 financial crisis began in the United States and reached England in October of that year with the fall of the Liverpool Boro’ Bank. This essay examines representations of and responses to the crisis by some of the major figures and key sources of the period. While an increasingly widespread acknowledgement of the inevitability, at times even of the desirability, of crisis manifests itself in various representations and discussions of the financial crisis, the diverse ideological assumptions and expectations of various writers, politicians, and journalists proffer widely differing explanations and solutions. These range from Marx and Engels who saw in the crisis the opportunity for revolution, to entrenched capitalists who regarded it as a necessary occurrence for the promotion of further growth, to politicians and bankers who called for new interventions in the Banking system. Through an investigation of political, journalistic, and academic responses to the 1857 crisis and the suspension of the Bank Charter Act of 1844, this paper explores the political and economic significance of the crisis for mid-century global capitalism and the Banking system.
On 27 February 1797, the Bank of England suspended specie payments to preserve its dwindling bullion reserve. Less than three months later, William Pitt’s government shepherded legislation through Parliament codifying the suspension of specie payments. In place of specie, Bank of England notes became the circulating medium of currency. The smaller denomination notes, however, were very poorly produced and were copied with little difficulty and on an unprecedented scale. The governing statute for banknote forgery, which was a capital offense, did not distinguish between the production, distribution and/or handling of counterfeit notes, and hundreds of individuals were either executed or transported for unknowingly accepting and using forged banknotes. For many, the forcing of an easily imitated and alien paper currency on the population, coupled with the severe punishment designed to police this new circulating medium, was a flagrant manipulation of legislative power that prioritized commercial interests over human life.
The crash of 1825-1826 was the first modern financial crisis. Unlike earlier speculative bubbles, the 1825 crisis was not caused only by exogenous circumstances like war or overzealous investment. The real cause of the 1825 crisis was the diversification of the finance economy into tiny investment units—a loan here, an insurance policy there—offered as seemingly responsible ways to maintain credit and generate capital. When the market finally did crash, no single group or class could be blamed for causing it. Economists came to realize that the market was always at the mercy of booms and busts and that no single individuals or professions within it could be said to be in charge of it. In other words, 1825 marks the moment at which capitalism grew from an ideological enterprise into a global condition. 1825 also marks a crucial transition in the publishing industry, the point at which the traditional market for vellum-bound epics and triple-decker novels was eclipsed by cheap reprints and serial publications. It thus signals the end of what we might call the Romantic ideal and the emergence of an existential malaise in English literature that persists in Victorian writing and beyond.
The panic of 11 May 1866, initiated by the collapse of Overend, Gurney, and Company, offers a useful vantage point to survey changes in British finance, economics, and politics, as well as the cultural perception of those changes. The panic exemplifies the expansion of London’s credit markets, the effects of the 1862 Companies Act, and the emergence of a clarified central bank policy. In addition, the panic crystallizes a shift toward statistical, impersonal, and biological descriptions in economic thought alongside the emergence of multi-perspectival character narration in texts like Robert Browning’s The Ring and the Book and Wilkie Collins’s The Moonstone.