Episode 3 of 4

Bank of England Response and Bagehot's Critique

When: 12 May 1866
Where: London
Part of: Collapse of Overend, Gurney and Company and the Panic of 1866

Walter Bagehot criticized the Bank of England's refusal to lend with Consol bonds, highlighting the conflict between maintaining reserves and providing liquidity.

In the 12 May 1866 issue of The Economist, Walter Bagehot noted that the Bank of England's refusal to lend with Consol bonds as collateral was troubling. He highlighted the conflict between the Bank's role in maintaining domestic liquidity and maintaining reserves for foreign currency exchange. The Bank Charter Act 1844 mandated reserves, leading to hesitation, while the suspension of requirements confused foreign investors.

Sources

Panic of 1866 Wikipedia, revision of 2026-07-31

Machine-drafted from the cited Wikipedia passages and checked by a reviewing model, not by a human editor. Every passage cites the revision it was written from; dates and places follow those passages.