walter bagehot lombard street a description of the money market

Federal Reserve, founded in late 1913, and the Central Bank of Central Banks-the International Monetary Fund (IMF)-have ever since been influenced by the enduring independent thought and extraordinary clarity provided by Bagehot in this famous book.īagehot’s book was so readable and so remarkable that it was re-issued three times within a year, and was republished in many editions both during his lifetime and afterwards. The constitutions of most national Central Banks were reinvented and forever changed as a consequence. In the process, he illuminated in a mere few hundred brilliant pages what distinguishes a Central Bank from a commercial bank, both on a daily basis and during crises such as bank panics and recessions. When Walter Bagehot wrote Lombard Street: A Description of the Money Market, in 1873, he did the unthinkable: In language as fresh and clear today as it was over 100 years ago, he respectfully dissected the Bank of England’s foundations, economic incentives, goals, and functions.

Because I was a graduate student, I doubted that any writer on “institutions” from the 1800s could be worth my time, so of course I didn’t even look the book up. But in the ensuing pages I mean to speak as little as I can of the Act of 1844 and when I do speak of it, I shall deal nearly exclusively with its experienced effects, and scarcely at all, if at all, with its refined basis.When I was a graduate student in international monetary theory, my adviser and others occasionally suggested that I read Walter Bagehot some time. 'difficulty' of the Money Market has arisen out of the controversies as to 'Peel's Act,' and the abstract discussions on the theory on which that act is based, or supposed to be based. Half, and more than half, of the supposed In one respect, however, I admit that I am about to take perhaps an unfair advantage. But I maintain that the Money Market is as concrete and real as anything else that it can be described in as plain words that it is the writer's fault if what he says is not clear. A notion prevails that the Money Market is something so impalpable that it can only be spoken of in very abstract words, and that therefore books on it must always be exceedingly difficult.

I venture to call this Essay 'Lombard Street,' and not the 'Money Market,' or any such phrase, because I wish to deal, and to show that I mean to deal, with concrete realities.

Walter bagehot lombard street a description of the money market