| c. 1800-1860 |
Five hundred fold depreciation of the cowrie in Uganda |
| When cowrie shells are first introduced to Uganda at the end of the eighteenth century
two are sufficient to purchase a woman. Thereafter the wholesale importation of cowries
causes inflation with the result that by 1860 one thousand cowries are needed for such a
purchase. |
| p 35,640 |
|
| 1850-1914 |
Huge amounts of capital are exported from Britain |
| Huge amounts of British capital are invested abroad, especially after 1890, in the
United States, parts of the British Empire, and Argentina. The total reaches billions of
pounds. Britain's later economic problems may be partly due to the neglect of British
industry by the banks during this period. |
| p 348-352 |
|
| 1852-1872 |
New French banks support economic development |
| The Crédit Mobilier, founded in 1852, is the first effective major French bank to be
established specifically for providing funds for industry and infrastructure. It is
followed by many other new banks in the next two decades. Despite the failure of the
Crédit Mobilier in 1867 these banks channel savings into essential investments in
transport, communications, agriculture and industry. |
| p 559 |
|
| 1860-1921 |
Number of banks in the US increases by over 19 times |
| During the same period bank numbers fall in other advanced countries but in the US a
peak of nearly 30,000 is reached in 1921. |
| p 490-491 |
|
| 1860 |
Crédit Agricole founded |
| Its primary function is the supply of credit for French agriculture. The Crédit
Agricole develops into one of the world's largest banks. (During the early 1980s it was
the largest, and in 1991 the sixth largest). |
| p 560 |
|
| 1860 |
The Russian State Bank established |
|
|
| 1861-1865 |
The US Civil War |
| The Confederacy finances its war effort mainly by printing money. In addition to the
Confederate notes, the States, railway, insurance and other companies also issue notes.
The resulting hyperinflation renders Confederate paper worthless. By comparison inflation
in the North is relatively moderate as the Union government raises very substantial sums
of money by taxation and borrowing. |
| p 485-488 |
|
| 1861 |
US Congress suspends convertibility of notes into specie |
| Priority in the use of gold and silver is given to government purposes as a result of
the war. |
| p 486 |
|
| 1861 |
Post Office Savings Bank founded in Britain |
| The widespread geographic coverage of the post offices and their long opening hours
makes them very convenient as savings bank branches. The government too gains since the
savings are under the control of the Treasury and come to provide Gladstone's government
with large funds at a low rate of interest. |
| p 336-337 |
|
| 1862 |
US Legal Tender Act and the issue of Greenbacks |
| The United States Treasury starts issuing notes that are not convertible into silver
or gold but are legal tender for all purposes except payment of customs duties and
interest on government securities. |
| p 488-499 |
|
| 1862 |
Tax placed on US state bank notes |
| The rate is set at 2%. |
| p 489 |
|
| 1864 |
US National Bank Act |
| This amends and expands the provisions of the Currency Act of the previous year. Any
group of five or more persons are allowed to set up a bank, subject to certain minimum
capital requirements. As these banks are authorized by the Federal, not the State
governments, they are known as national banks. To secure the privilege of note
issue they have to buy government bonds and deposit them with the Comptroller of the
Currency. |
| p 489 |
|
| 1865-1926 |
The Latin Monetary Union |
| This comprises France, Italy, Belgium, Switzerland, and later Greece. The gold and
silver coins of each country are legal tender throughout the union. The union has faded
away by the 1920s before its formal ending. |
| p 443,492-493,557 |
|
| 1865 |
French law on cheques simplified |
| French businesses have tended to prefer notes to bank deposits and cheques. The law is
simplified to encourage greater use of cheques. |
| p 557 |
|
| 1865 |
Hong Kong and Shanghai Bank founded |
| Ever since it has been the main bank of issue in Hong Kong. In the 1980s it was still
responsible for about 80% of the colony's note circulation (the other 20% being supplied
by the Chartered Bank) and by 1990 the Hong Kong Banking Group is the 13th largest in the
world. |
| p 626-627 |
|
| 1865 |
US Contraction Act |
| By the end of the Civil War the Greenbacks are only worth half as much in gold
as their nominal value. Under the terms of this act the government begins to withdraw them
from circulation. |
| p 494 |
|
| 1866 |
Tax on US state bank notes is raised to 10% |
| The state bank notes are taxed out of existence and replaced by the national bank
notes which are of uniform design, apart from the name of the particular bank. Despite
the demise of their notes the tax does not lead to the disappearance of the state banks. |
| p 489 |
|
| 1867 |
International Monetary Conference in Paris |
| An attempt is made to widen the area of common currencies based on French gold and
silver 10 and 5 franc coins. The US, being on a bimetallic standard, sends
representatives. |
| p 493 |
|
| 1867 |
Singapore makes dollars from Hong Kong, Mexico, Bolivia and Peru legal
tender |
| In the British colonies of Malaya and Singapore the official currency is the Indian
rupee but the general public keep their accounts and make most of their payments,
including taxes, in dollars and cents. Therefore in 1867 the public's preferences are
recognised when legal tender status is given to various foreign coins. |
| p 625 |
|
| 1868 |
US halts withdrawal of the Greenbacks |
| Their withdrawal was exacerbating a depression in the economy. In the following years
some increases in Greenback circulation are made. |
| p 494 |
|
| 1868 |
Meiji restoration in Japan |
| Japan's isolationist policy is ended. As a result the few pre-Meiji banking
organisations set up by the Zaibatsu family groups prove completely inadequate to meet the
needs of liberalized trade. |
| p 581-582 |
|
| 1870-1893 |
Plentiful silver supplies cause fall in value of Indian and other Asian
currencies |
| After 1870 there is a vast increase in the amount of silver coming on to world markets
because of new mines and the demonetization of silver as Germany, Scandinavia and other
countries switch to the gold standard. As a result the undebased silver coinage of India,
and the currencies of China, Japan and south east Asia, countries comprising half the
world's population, suffer an unprecedented fall in value. |
| p 622 |
|
| 1870-1872 |
Huge increase in the number of German joint-stock banks |
| No fewer than 107 are founded in this period. |
| p 569 |
|
| 1870-1871 |
Franco - Prussian War |
| The victorious Germans force France to pay a huge indemnity of 5 billion francs. The
money is raised easily by a loan which is more than 10 times oversubscribed. This
experience partly explains French reliance on borrowing in preference to taxation in the
First World War and French insistence on German reparations afterwards. |
| p 561 |
|
| 1871 |
Germany becomes a united country |
| The German states unite and adopt the Mark as their common currency and base it on the
gold standard. |
| p 356,567-568 |
|
| 1871 |
Japanese Currency Act |
| A national mint is established at Osaka and the decimal system of yen and sen is
introduced. |
| p 582 |
|
| 1872 |
Japanese National Bank Act |
| American rules serve as a model for Japanese commercial banks. |
| p 582 |
|
| 1872 |
Paris Clearing House created |
| This is over 100 years after the creation of the London Bankers' Clearing House. The
backwardness of French banking prior to the second half of the 19th century has retarded
the country's economic development. |
| p 559 |
|
| 1873-1924 |
The Scandinavian Monetary Union |
| Denmark, Sweden and Norway form a monetary union similar to the Latin one but with
gold as the standard for their currency. |
| p 356,443 |
|
| 1873-1886 |
The Great Depression in Britain |
| The British economy is in decline relative to those of the US and Germany. One effect
of the so-called depression is to cause doubts about the merits of the gold standard. |
| p 353,493 |
|
| 1873 |
Dai-Ichi Bank founded in Japan |
| The Dai-Ichi Bank is set up by the government with the support of some of the larger
Zaibatsu banks. It is the first bank to be created under the terms of the 1872 Act. |
| p 582 |
|
| 1873 |
US Coinage Act |
| The silver dollar ceases to be the standard of value. Thus the US is virtually on the
gold standard, in practice if not in law. |
| p 494 |
|
| 1873 |
Bank panic in the US and Germany |
| Lacking a central bank or lender of last resort able and willing to supply sufficient
liquidity to quell crises in their early stages the US proves prone to bank panics. As in
1857 the panic spreads across the Atlantic and causes many bank failures in Germany. |
| p 498-499 |
|
| 1874 |
Singapore makes the Japanese yen and US dollar legal tender |
| This is in addition to the other foreign coins granted legal tender status in 1867. |
| p 626 |
|
| 1875 |
Bank of Prussia becomes the German Reichsbank |
| On becoming the national bank of the whole of Germany it absorbs and replaces the note
issues of about 30 other state banks with its own notes. |
| p 443,567-568 |
|
| 1875 |
Scottish Institute of Bankers founded |
| This is the world's first bankers' institute. In the last couple of decades of the
19th century many trained young bankers from Britain, especially from Scotland, take up
positions in overseas banks. |
| p 360 |
|
| 1875 |
Greenback Party formed in the US |
| It aims to at least secure and preferably increase Greenback circulation. |
| p 494 |
|
| 1875 |
US Resumption Act |
| This is intended to restore the convertibility of banknotes into gold. Full redemption
is promised by 1 January 1879. |
| p 494 |
|
| 1876 |
Canadian Indian Act bans the potlatch |
| The potlatch, a ritualized form of barter involving competitive gift exchange that is
widely used by various Indian tribes, is banned by the Canadian government. |
| p 11 |
|
| 1876 |
Japanese Bank Act revised |
| The regulations are altered to make them more appropriate for Japanese conditions.
This leads to a surge in the formation of new banks. |
| p 582 |
|
| 1876 |
Mistsui Bank founded in Japan |
| The new bank is based on the exchange bureau run by the Mitsui family as part of their
Zaibatsu (family-based) trading empire. |
| p 583 |
|
| 1878 |
Greenback Party returns 14 members to Congress |
| A compromise between the Party and its opponents fixes the Greenback circulation at
its existing level, halting the previous trend to scarcer, dearer money. |
| p 494 |
|
| 1878 |
US Bland-Allison Act |
| The silver lobby pushes through this act forcing the US Treasury to buy between $2
million and $4 million of silver each month for coinage and fixes the relative prices the
mint pays for gold and silver. |
| p 495 |
|
| 1878 |
France abandons bimetallism and in practice adopts the gold standard |
| By the end of the 1870s the gold standard has become an international standard with
London as the world's main financial centre. |
| p 356 |
|
| 1879 |
Institute of Bankers (England and Wales) founded |
|
|
| 1879 |
Limping bimetallism in the Latin Monetary Union |
| Vast increases in the world's supplies of first silver and later gold unsettle the
Latin Union's bimetallic policies and only gold coins are universally accepted throughout
the Union. |
| p 493 |
|
| 1879 |
Number of Japanese banks reaches 153 |
| The growth in numbers is a result of the 1876 Act. |
| p 582 |
|
| c. 1800-1860 |
Five hundred fold depreciation of the cowrie in Uganda |
| When cowrie shells are first introduced to Uganda at the end of the eighteenth century
two are sufficient to purchase a woman. Thereafter the wholesale importation of cowries
causes inflation with the result that by 1860 one thousand cowries are needed for such a
purchase. |
| p 35,640 |
|
| 1832 |
Capital punishment for forging banknotes abolished in Britain |
| The maximum penalty for forgery is reduced from death to transportation for life (e.g.
exile to Australia). |
| p 307-308 |
|
| 1832 |
President Jackson vetoes early renewal of the Second Bank's
charter |
| In the presidential election the same year Jackson defeats Henry Clay, a supporter of
the Second Bank. The result makes the Bank's demise certain. |
| p 477 |
|
| 1833-1834 |
Robert Owen's trade unions issue Labour Notes in Britain |
| The National Labour Exchange created by Robert Owen and his followers issues paper
money in the form of labour notes to the value of one, two or five hours redeemable
at designated stores but the experiment comes to an end with the failure of the Grand
National Trades Union. |
| p 322,324 |
|
| 1833 |
Bank of England notes are made legal tender in England and Wales |
| The Bank Charter Act does this in order to discourage other banks from requesting that
Bank of England notes be exchanged for gold at the hint of trouble. Bills of exchange up
to 3 months are removed from the ambit of the usury laws by the same act. |
| p 309,310 |
|
| 1833 |
Jackson removes US government deposits from the Second Bank |
| Instead the deposits are placed in selected State Banks which come to be known as pet
banks. |
| p 477 |
|
| 1834 |
Houses of Parliament destroyed by burning tallies |
| After the death of the last Exchequer Chamberlain in 1826 the redundant tallies are
stored in the House of Commons. In 1834 to save space and economize on fuel the tallies
are thrown into the heating stoves but they burn so fiercely that the fire spreads and
destroys the Houses of Parliament. |
| p 663 |
|
| 1834 |
The Zollverein of the German States |
| A customs union is formed as a first step in unifying the currencies, weights and
measures of the previously independent 39 German states. |
| p 443,566-567 |
|
| 1834 |
US Coinage Act |
| This makes a slight reduction in the value of silver relative to gold in order to
encourage more gold to be brought to the mint. However, it hastens the disappearance of
much of the remaining silver in circulation. |
| p 481 |
|
| 1835 |
East India Company authorized to issue rupees |
| Up to this time India has had 25 varieties of indigenous rupees but after the East
India Company is authorized to issue its own rupee it comes to be accepted as the standard
in India and abroad. At the same time the silver rupee is given legal tender status but
gold coins lose that privilege. |
| p 622 |
|
| 1836 |
President Jackson issues his Specie Circular |
| The circular lays down that future purchases of government land must be paid in gold
or silver, or their strict equivalent, rather than in local notes or promises to pay. This
has the effect of swelling the US government's coffers with specie. |
| p 479 |
|
| 1836 |
Number of German savings banks reaches 280 |
|
|
| 1837 |
US States acquire legal power to issue paper money |
| This reverses attempts to uphold the constitutional denial of the power of the states
to emit bills. |
| p 480 |
|
| 1837 |
Free Banking movement triumphs in Massachusetts |
| The free banking movement claims that citizens have a right to set up banks
rather than being dependent on a privilege granted by the state. The State of
Massachusetts passes an act in accordance with these principles. |
| p 480 |
|
| 1837 |
US banking crisis |
| The uncontrolled, chaotic expansion of banking in the US is slowed, then partly
reversed by a financial crisis in which every bank is forced to suspend specie payment of
notes. The crisis leads to a depression in the economy which lasts until 1843. |
| p 480,483-484 |
|
| 1838 |
Dresden convention fixes the exchange rate between the thaler and gulden |
| The Prussian thaler is used mainly in northern Germany and the gulden in the south. A
fixed rate of 4:7 is adopted. |
| p 567 |
|
| 1838 |
Caisse Général du Commerce et de l'Industrie founded |
| The bank is created to support French industry and commerce but it has only a
troubled, ten year existence. |
| p 559 |
|
| 1840 |
US establishes an independent Treasury |
| Its powers are more firmly established by a later act in 1846. Without a central bank
the US Treasury has to carry out its own banking operations, relying as far as possible on
specie for government payments and receipts. |
| p 479 |
|
| 1840 |
Bank of Bombay founded |
| This is the second of the presidential banks to be established during British
rule to supplement the internal money supply of India. |
| p 622 |
|
| c. 1840-1844 |
Currency School versus Banking School |
| With hundreds of banks issuing notes in Britain in uncoordinated fashion the value of
the currency is difficult to control. A controversy arises between the currency school
which believes that gold and Bank of England notes are the only real money and the banking
school which believes that notes are just one among many forms of money. |
| p 310-313 |
|
| 1841 |
The Second Bank of the United States crashes |
| By this time it is simply a private bank and no longer a national institution. When it
ran into difficulties during the 1837 crisis it was still the largest bank in the world,
but it finally crashes in 1841. |
| p 484 |
|
| 1842 |
Oriental Bank founded in India |
| This is an exchange bank established for financing external trade and foreign
exchange, from which the presidency banks are debarred by their charters. |
| p 622 |
|
| 1843 |
Chartered Bank founded in India |
| This is another exchange bank for financing external trade and foreign
exchange. |
| p 622 |
|
| 1843 |
Bank of Madras founded |
| This is the third of the presidential banks to be established during British
rule to supplement the internal money supply of India. |
| p 622 |
|
| 1844 |
Bank Charter Act passed in Britain |
| This Act combines most of the rules demanded by the currency school with just a
few of the discretionary powers demanded by the banking school for commercial
banks, but these powers are mostly grabbed by the Bank of England. |
| p 313-315 |
|
| 1846 |
Royal Giro and Loan Bank becomes the Bank of Prussia |
|
|
| 1846 |
Germany's first rural credit co-operatives are founded |
| Friedrich Wilhelm Raiffeisen starts the movement. |
| p 570 |
|
| 1846 |
Minimum legal banknote size in France still too high for most purposes |
| Up until 1846 the minimum legal denomination is 250 francs, or more than a month's
wages for the average worker. In the following years it is gradually reduced. |
| p 557 |
|
| 1847-1848 |
Numerous local banks fail in France |
| Only in Paris has the Bank of France enjoyed a monopoly of note issues since its
foundation. The rest of the country is largely dependent on the note issues and bill
discounting of local banks, many of which are weak. |
| p 556 |
|
| 1847 |
The Woolwich, Britain's first permanent building society,
is registered |
| Previous building societies were temporary associations which terminated when all
members had purchased houses. The Woolwich, which was actually founded a few years before
its official registration, is the first permanent building society and thereafter
permanent societies quickly become the norm. |
| p 327 |
|
| 1848 |
Bank of France is given a nationwide monopoly of note issues |
| The national bank is given a monopoly of note issuing to fill the gap left by the
failure of numerous local banks. The Bank of France also begins to develop a large network
of branches in different parts of the country. |
| p 556 |
|
| 1848 |
Schaaffenhausen is reconstituted as Germany's first joint-stock bank |
| The banking house of Schaaffenhausen in Cologne runs into difficulties and is
reconstituted as a joint-stock company with the help of the Prussian state which acts in
order to save the bank's industrial customers from the consequences of its failure. |
| p 568 |
|
| 1848 |
Gold Rush in California |
| The discovery of gold in California leads in the following decade to a massive
increase in the production of gold coins by the mint with the result that in practice the
US moves away from bimetallism towards a gold standard. |
| p 481 |
|
| 1850-1914 |
Huge amounts of capital are exported from Britain |
| Huge amounts of British capital are invested abroad, especially after 1890, in the
United States, parts of the British Empire, and Argentina. The total reaches billions of
pounds. Britain's later economic problems may be partly due to the neglect of British
industry by the banks during this period. |
| p 348-352 |
|
| 1850 |
Number of German savings banks reaches 1,200 |
|
|
| 1850 |
Germany's first industrial credit co-operatives are founded |
| Herman Schultz-Delitzsch inspires the movement. |
| p 570 |
|
| 1850 |
National Bank of Belgium founded |
| Later, in 1882, the National Bank of Belgium serves as a model for the Bank of Japan. |
| p 582 |
|
| 1851 |
Gold discovered in Australia |
| Along with the discovery in California 3 years earlier this leads to a huge expansion
in the world's supplies of gold for money. |
| p 482 |
|
| 1852-1872 |
New French banks support economic development |
| The Crédit Mobilier, founded in 1852, is the first effective major French bank to be
established specifically for providing funds for industry and infrastructure. It is
followed by many other new banks in the next two decades. Despite the failure of the
Crédit Mobilier in 1867 these banks channel savings into essential investments in
transport, communications, agriculture and industry. |
| p 559 |
|
| 1853 |
Association for the Prevention of Counterfeiting founded in the USA |
| During the 1850s many thousands of different types of banknotes, both genuine and
counterfeit, are in circulation causing considerable problems for bankers and traders. |
| p 481 |
|
| 1853 |
US Subsidiary Coinage Act |
| The silver content of half-dollars, quarters and dimes is reduced by about 7% making
it no longer worthwhile to sell them to silver metal dealers. Therefore the new coins
remain in circulation. |
| p 481 |
|
| 1856 |
The Mercantile Bank becomes the first note-issuing bank in Singapore and
Malaya |
| This London-registered bank expands from its Indian base to Malaya and Singapore. |
| p 626 |
|
| 1857 |
The Mü, German coinage union |
| Different German states use different currencies, e.g. the thaler in the north and the
gulden in the south. The Münzverein is a step towards the wider acceptance of different
currencies. |
| p 566-567 |
|
| 1857 |
US removes legal tender status from all foreign coins |
| By this time coins are merely the small change of commerce. |
| p 468 |
|
| 1857 |
World-wide banking crisis starts in the US |
| In the month of October 1,415 US banks are forced to suspend specie payments. Because
of huge European, especially British, investment in the US the effects are felt on the
other side of the Atlantic. In Germany many of the new idustrial banks founded in the
early 1850s fail. However recovery from the crisis is rapid. |
| p 484-485,568 |
|
