The 1825 Panic That Made the Bank of England a Lender of Last Resort

In 1825, a stock mania in Latin American mining shares and a speculative bubble in British joint-stock companies burst, triggering a banking crisis that nearly collapsed the entire English financial system. Lucas and Luna explore how the Bank of England, after initially tightening credit, was forced to reverse course and lend freely against sound collateral — a move that effectively invented the modern concept of a lender of last resort. They unpack the specific failures: the collapse of 200 banks, the role of country note-issuing banks, and the famous story of the Bank of England discovering a forgotten box of Exchequer bills in its own vault. The episode draws a direct line from that crisis to the thinking of Walter Bagehot, who codified the doctrine forty years later, and to today's central bank emergency lending facilities. This is the forgotten crisis that taught central banks how to stop a panic. #PanicOf1825 #BankOfEngland #LenderOfLastResort #WalterBagehot #FinancialCrisis #CentralBanking #EconomicHistory #BankingPanic #SpeculativeBubble #LatinAmericanMining #JointStockCompanies #ExchequerBills #BankRun #MonetaryPolicy #BusinessCycle #Economics #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo