Panic of 1825
Encyclopedia
The Panic of 1825 was a stock market crash
that started in the Bank of England
arising in part out of speculative investments in Latin America
, including the imaginary country of Poyais. The crisis was felt most acutely in England where it precipitated the closing of six London banks including Henry Thornton
's bank and sixty country banks in England, but was also manifest in the markets of Europe
, Latin America, and the United States
. An infusion of gold reserves from the Banque de France
saved the Bank of England from complete collapse.
The panic has been referred to as the first modern economic crisis not attributable to an external event, such as a war, and thus the start of modern economic cycles.
. The Bank of England (a for-profit bank at the time), was blamed for not policing the banks. The Bank of England raised the lending rate to protect its investors, instead of lowering it to protect the public. The self interest of the Bank of England caused additional failures, and England was saved from financial disaster by France. Later policies were changed.
, Ovington's Bank, is centered on the Panic of 1825.
Stock market crash
A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of paper wealth. Crashes are driven by panic as much as by underlying economic factors...
that started in the Bank of England
Bank of England
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world...
arising in part out of speculative investments in Latin America
Latin America
Latin America is a region of the Americas where Romance languages – particularly Spanish and Portuguese, and variably French – are primarily spoken. Latin America has an area of approximately 21,069,500 km² , almost 3.9% of the Earth's surface or 14.1% of its land surface area...
, including the imaginary country of Poyais. The crisis was felt most acutely in England where it precipitated the closing of six London banks including Henry Thornton
Henry Thornton (abolitionist)
Henry Thornton was an English economist, banker, philanthropist and parliamentarian.-Early life:He was the son of John Thornton of Clapham, London, who had been one of the early patrons of the evangelical movement in Britain...
's bank and sixty country banks in England, but was also manifest in the markets of Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
, Latin America, and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. An infusion of gold reserves from the Banque de France
Banque de France
The Banque de France is the central bank of France; it is linked to the European Central Bank . Its main charge is to implement the interest rate policy of the European System of Central Banks...
saved the Bank of England from complete collapse.
The panic has been referred to as the first modern economic crisis not attributable to an external event, such as a war, and thus the start of modern economic cycles.
Bank Improvements
Seventy banks failed. The current view puts a lot of the fault of the crash on the banks for not doing simple due diligenceDue diligence
"Due diligence" is a term used for a number of concepts involving either an investigation of a business or person prior to signing a contract, or an act with a certain standard of care. It can be a legal obligation, but the term will more commonly apply to voluntary investigations...
. The Bank of England (a for-profit bank at the time), was blamed for not policing the banks. The Bank of England raised the lending rate to protect its investors, instead of lowering it to protect the public. The self interest of the Bank of England caused additional failures, and England was saved from financial disaster by France. Later policies were changed.
In fiction
An historical novel by Stanley J. WeymanStanley J. Weyman
Stanley John Weyman was an English novelist sometimes referred to as the "Prince of Romance".-Biography:Weyman was born at Ludlow, Shropshire. The second son of a solicitor, he was educated at Shrewsbury School, and at Christ Church, Oxford...
, Ovington's Bank, is centered on the Panic of 1825.