Retrospectives regulating banks versus managing liquidity: Jeremy Bentham and Henry Thornton in 1802

Abstract

Great Britain's system of banking and finance was under duress in the 1790s. Revolutionary France declared war with Britain on February 1, 1793, setting in motion a dramatic credit crunch and wave of country bank failures (as detailed in Montefiore 1803). Napoleon Bonaparte had not yet gained political leadership (1799) or become Emperor of France (1804), but as a brigadier general he was leading the French army through victorious battles in Sardinia and what is now northern Italy, and then later on a campaign to Egypt. Meanwhile, Britain was part of coalitions that provided financial and diplomatic support to continental allies fighting against France. Britain's Royal Navy was also involved as in its victories over the French fleet in the Battles of the Nile in 1798 and Trafalgar in 1805.