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Crisis Chronicles: Railway Mania, the Hungry Forties, and the Commercial Crisis of 1847

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  • Donald P. Morgan
  • James Narron

Abstract

Money was plentiful in the United Kingdom in 1842, and with low yields on government bonds and railway shares paying handsome dividends, the desire to speculate spread?as one observer put it, ?the contagion passed to all, and from the clerk to the capitalist the fever reigned uncontrollable and uncontrolled? (Francis?s History of the Bank of England). And so began railway mania. Just as that bubble began to burst, a massive harvest failure in England and Ireland led to surging food imports, which drained gold reserves from the Bank of England. Constrained by the Bank Charter Act, the Bank responded by tightening policy. When food prices fell in the spring of 1847 on the prospects for a successful harvest, commodity speculators were caught short and a crisis, one of the worst in British history (Bordo), ensued. In this edition of Crisis Chronicles, we cover the Commercial Crisis of 1847.

Suggested Citation

  • Donald P. Morgan & James Narron, 2015. "Crisis Chronicles: Railway Mania, the Hungry Forties, and the Commercial Crisis of 1847," Liberty Street Economics 20150605, Federal Reserve Bank of New York.
  • Handle: RePEc:fip:fednls:87036
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    Keywords

    railway mania; lender of last resort; panic; Federal Reserve;

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G1 - Financial Economics - - General Financial Markets

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