© Roy Davies & Glyn Davies, 1996 & 1999.
Based on the book: A History of Money from Ancient Times to the Present Day by Glyn Davies, rev. ed. Cardiff: University of Wales Press, 1996. 716p. ISBN 0 7083 1351 5. (Page numbers in the 3rd edition published in 2002 may be slightly different).
1860-1921 | Number of banks in the US increases by over 19 times |
---|---|
During the same period bank numbers fall in other advanced countries but in the
US a peak of nearly 30,000 is reached in 1921.
p 490-491 |
|
1865-1926 | The Latin Monetary Union |
This comprises France, Italy, Belgium, Switzerland, and later Greece. The gold
and silver coins of each country are legal tender throughout the union. The
union has faded away by the 1920s before its formal ending.
p 443,492-493,557 |
|
1873-1924 | The Scandinavian Monetary Union |
Denmark, Sweden and Norway form a monetary union similar to the Latin one but
with gold as the standard for their currency.
p 356,443 |
|
1920 | Keynes publishes his Economic Consequences of the Peace |
He argues against German war reparations and in favour of mutual cancellation
of Allied war debts.
p 376-377,518 |
|
1920 | Japanese economy enters a chronic depression |
By 1920 the boom generated by the First World War has petered out and a
depression starts.
p 585 |
|
1921 | Note issuing by commercial banks in England ceases |
Fox, Fowler & Co. of Wellington, Somerset, the last note-issuing country
bank in England and Wales is taken over by Lloyds. However Scottish banks
continue to issue their own notes.
p 320,375 |
|
1921 | The Imperial Bank formed in India |
It is formed by the merger of the three presidency banks. The Imperial Bank
performs some of the functions of a central bank and so some of the relevant
recommendations of the Chamberlain Report of 1913 are partly and belatedly put
into effect.
p 623-624 |
|
1922-1923 | Germany suffers from hyperinflation |
The situation gets so bad that wages are paid as frequently as twice a day to
give people a chance to spend them before the notes lose their value. Other
countries agree to ease the burden of war reparations. A new, interim currency,
the Rentenmark, secured on mortgages on land and industrial property, restores
stability.
p 377,572-574 |
|
1923 | Tokyo earthquake |
On 1 September an earthquake kills around 140,000 people and devastates large
parts of Tokyo and its port, Yokohama. The Bank of Japan coordinates the
activities of the main banks to finance reconstruction.
p 585 |
|
1924 | Germany adopts the Reichsmark and returns to the gold standard |
The Reichsmark, which replaces the Rentenmark, has a value equivalent to the
pre-war gold mark.
p 574 |
|
1924 | US Federal Reserve System adopts easy money policy |
The decision is taken in order to combat a decline in business activity and to
encourage international capital flows. This action helps Britain to import
enough gold to return to the gold standard the following year.
p 506 |
|
1925-1926 | Florida land boom |
Massive speculation in land in Florida is halted by devastating hurricanes in
September 1926. Subsequently the interest of speculators moves to the stock
market.
p 508 |
|
1925 | Britain returns to the gold standard |
Keynes argues that the value of sterling has been fixed at an unsustainably
high rate.
p 375,378 |
|
1926 | General Strike in Britain |
The over-valued pound and the attempt to reduce prices and wages to compete
overseas provoke a general strike.
p 379 |
|
1927 | New York Federal Reserve Bank cuts rediscount rate |
The rate is cut from 4% to 3½% partly in order to help Britain to stay
on the gold standard. However the supply of credit is eased just as a
speculative boom is starting on the stock market.
p 509 |
|
1927 | Canadian ban on potlatches is strengthened |
The 1876 act proscribing potlatches has proved ineffective and therefore a new
act stipluating maximum and minimum prison sentences is passed.
p 12 |
|
1927 | Japanese financial crisis started by a run on the Bank of Taiwan |
Taiwan became a Japanese colony in 1895 and therefore the crisis spreads to
Japan. As many as 37 Japanese banks are closed, at least temporarily.
p 585 |
|
1927 | Japanese Banking Act |
This act, passed in response to the crisis of the same year, tightens up the
definition of a bank and prohibits banks from engaging in non-banking business.
p 585-586 |
|
1928 | France returns to the gold standard |
Silver convertibility is no longer guaranteed, ending France's attachment to
bimetallism. Gold convertibility is only for wholesale transactions of a
minimum of 215,000 francs.
p 562 |
|
1928-1929 | Stock Market boom in US |
The Fed takes no effective action to stop the boom getting out of control.
p 509 |
|
1929 | The Great Crash |
The New York stock market crashes on 24 October. The Fed, whose easy money
policy stoked the boom, now tightens credit causing a slump in the US economy.
p 509-510 |
|
1929-1930 | The Great Depression |
Widespread bank failures and the surviving banks' curbs on lending cause
businesses of all kinds to go bankrupt. The US net national product falls by
over half.
p 510 |
|
1930 | Bank for International Settlements founded |
Its initial task is to help with reparations and with large financial transfers
for reconstruction. Later it plays a key role as a forum for central bankers.
p 378 |
|
1931 | Report of the Central Banking Enquiry Committee in India |
The Imperial Bank, which performs some of the functions of a central bank, is
not allowed to issue notes, which have been a government monopoly since 1861.
The Committee accepts the case for the creation of a proper central bank.
p 624 |
|
1931 | Macmillan Report on Finance and Industry |
The committee tends to side with bankers in the dispute over whether or not the
banks are doing enough for British industry and criticises other countries for
not adhering to the rules of the gold standard. However, it emphatically points
to a lack (henceforth famous as the Macmillan Gap) in the long-term
finance available for small and medium firms.
p 376,379-380 |
|
1931 | Failure of the Austrian Creditanstalt Bank |
A number of bank failures in Germany ensue and the resulting large
international currency movements trigger off Britain's decision to abandon the
gold standard.
p 381,575 |
|
1931 | Därmstadter and National Bank collapses |
As a result of the crisis German banks cut back on lending, leading to a steep
rise in unemployment.
p 575 |
|
1931 | US and France hold 75% of world's gold stock |
This figure is reached by September. During the previous 6 weeks over
£200 million worth of gold was withdrawn from London.
p 562 |
|
1931 | Britain abandons the gold standard |
This marks the beginning of the move from classical to Keynesian economics. The
Commonwealth (except Canada), Ireland, Scandinavia, Iraq, Portugal, Thailand,
and some South American countries follow Britain off gold.
p 380-382,387,604 |
|
1931 | Japan abandons the gold standard |
Japan's military actions along the Manchurian border with China frighten
foreign creditors into withdrawing gold and are therefore partly responsible
for the decision to abandon the gold standard in December.
p 586 |
|
1932-1941 | Japan enjoys strong economic growth |
Reflation and competitive devaluation stimulate production and exports with the
result that Japan recovers rapidly form the world slump of the 1930s and is
able to devote increasing resources to rearmament.
p 586 |
|
1932 | Bank rate as a policy tool is abandoned by the Bank of England |
Until the financial crisis the Bank of England has sought to control the
monetary system by varying the interest rate it charges. After June 1932 bank
rate remains unchanged for nearly 20 years, apart from a brief period just
before and after the outbreak of the Second World War.
p 380,388 |
|
1932 | The Great Conversion reduces the burden of Britain's national debt |
The rate on over £2,000 million of loan stock is reduced from 5% to
3½%. Cheap money, and the effect of the world slump in reducing
investment opportunities abroad, lead to a housing boom and investment in new
industries, helping Britain to make a relatively early recovery from the
Depression.
p 384-386 |
|
1932 | Ottawa Agreement on Commonwealth Preference in Trade |
This provides a more stable basis for trade arrangements than can be obtained
elsewhere and strengthens the attractions of membership of the sterling area.
p 605 |
|
1932 | President Hoover sets up the Reconstruction Finance Corporation |
Its purpose is to provide emergency financing for US financial institutions and
to help agriculture, commerce and industry.
p 511 |
|
1932 | US Federal Home Loan Banks created |
Eleven of these banks are set up to provide housing finance.
p 511 |
|
1933-1938 | Housing boom in Britain |
The bulk of construction takes place in the Midlands, London and the South East
where most of the new, light industries are being established.
p 386 |
|
1933 | Adolf Hitler becomes German Chancellor |
The social turmoil resulting from mass unemployment leads to Hitler's
installation as Chancellor. Thereafter Germany's financial system and the
economy in general are geared to rearmament.
p 575 |
|
1933 | Roosevelt becomes US President and launches his New Deal |
Roosevelt's first action is to declare a national bank holiday closing every
bank in the US. After a week the Federal Reserve Banks reopen and later other
banks are allowed to reopen if investigators declare them solvent. This
restoration of confidence in the financial system is a necessary preliminary to
the New Deal involving aid to industry and agriculture.
p 511-515 |
|
1933 | US Home Owners Loan Corporation created |
Like the Federal Home Loans Banks created the previous year this institution is
intended to combat the depression by stimulating the building industry.
p 511 |
|
1933 | US Agricultural Adjustment Act |
Existing financial institutions are given greater resources and their efforts
coordinated through the Farm Credit Association. The Thomas Amendment to the
Act authorizes an increase in note circulation, a reduction in the dollar's
gold value, and promotes and subsidizes official purchases of silver.
p 511-512 |
|
1933 | US Federal Deposit Insurance Corporation created |
Through payments of a small premium by practically all banks a fund is set up
to guarantee repayment of customers' deposits.
p 513 |
|
1933 | National Bank of Nigeria founded |
This is one of only 3 indigenous banks to be founded in Nigeria before 1945.
The other two fail after only a short period.
p 611 |
|
1934 | US Gold Reserve Act |
The official price of gold is raised from $20.67 to $35 per ounce, a
substantial devaluation of the dollar, and the internal circulation of gold is
ended.
p 514-515 |
|
1934 | US Silver Purchase Act |
The Act obliges the government to buy large quantities of silver. This raises
its price in world markets to such an extent that China is forced off its
silver standard and many other countries demonetize their silver currencies.
Thus in the long run the Act reduces the demand for silver, contrary to the
intention of its supporters.
p 515 |
|
1934 | German Banking Act |
This establishes a national Banking Supervisory Board authorized to license
every bank.
p 575 |
|
1935 - c.1970 | Continuous moderate inflation in Britain |
The general level of prices rises every year but at a moderate rate.
p 395-396 |
|
1935 | US Banking Act |
The changes this makes in the Federal Reserve System have the effect of
shifting power away from New York and the Federal Reserve Districts towards
Washington.
p 513-514 |
|
1935 | Reserve Bank of India begins operations |
India's central bank is modelled on the Bank of England.
p 624 |
|
c. 1935 | Cowries still used as money in Nigeria |
Their use in fairs in rural areas is not uncommon before the Second World War
but declines rapidly afterwards.
p 35,608 |
|
1936 | France abandons the gold standard |
The French government's policy of a strong franc is undermined by competitive
devaluation. After abandoning the gold standard France continues to be the
centre of a Franc bloc including most of the non-German European countries
south of Scandinavia until the Second World War.
p 443,562-563 |
|
1936 | Tripartite Agreement between Britain, France and the US on exchange rates |
The aim of the agreement is to stabilize exchange rates. It falls apart with
the advent of the Second World War.
p 563 |
|
1938 | US Federal National Mortgage Association created |
The Association, known as Fanny Mae, increases the availability of
finance for housing.
p 511 |
|
c. 1938 | Cattle still used as money in parts of Africa |
Even scrawny cattle are highly valued because of their monetary functions.
Overgrazing resulting from attachment to cattle as a store of value continues
to cause environmental problems as late as the 1980s.
p 43 |
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