Working Paper: The role of Bank of England note issues amongst the causes of the Panic of 1825



“The state of the money market”. A cartoon from the Panic of 1825

I have recently finished the first draft of the paper I’ve been working on during my summer as a Fellow in Residence here at the Mises Institute, and would welcome any comments anyone might have on it.

This paper is based on the same research I did for my BSc Dissertation, but I have completely re-written it, with several new sections, almost entirely new graphs, and some new data and other evidence.

Abstract: Despite the fact that the Panic of 1825 was arguably Britain’s most severe economic crisis of the first half of the nineteenth century, many of the subsequent explanations of its causes have been briefly-stated and incomplete. The goal of this paper is to clarify and deepen the credit expansion explanation of the Panic put forth by certain prior studies. The clarification will be in emphasising that credit expansion after 1822 was significant specifically because it caused a decline in lending standards and borrowing costs, stimulating an unsustainable boom in long-term and risky investments. The deepening of the credit expansion explanation will be by an investigation of the significant and previously under-appreciated influence of Bank of England note issues on the extent to which the British banking system at large was able to expand credit in the years 1822-25, due to the legally privileged status of Bank of England notes.

Link to the paper:

I would be most grateful to hear any comments or suggestions you might have, before I eventually submit it for publication.



My Undergrad Dissertation: Credit Expansion and the Bank of England in the Panic of 1825

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I recently completed my third and final year of undergraduate studies in Economic History at the London School of Economics. A quarter of one’s grade for the final year at the LSE takes the form of a 10,000-word undergraduate dissertation, which I have decided to share here for anyone who might be interested to look at it.

The central argument of my dissertation is that the Panic of 1825 was caused by the British banking system’s expansion of credit in the years 1822-25. This can be regarded as an application of Ludwig von Mises’ Austrian Theory of the Business Cycle to the 1825 crisis. Where my dissertation departs from the previous literature, which has occasionally already highlighted the role of credit expansion in the crisis to some degree, is in my examination of the role of Bank of England note issues as a coordinating and driving force behind the wider credit expansion, due to the legally privileged status of Bank of England notes.

I am reasonably happy with the work and research I put into this dissertation, and with how it turned out. I personally preferred the first draft, from before I received my supervisor’s comments on it, as they advised me to cut part of my beloved literature review and add the over-explaining ‘Theory, Method, and Data’ section to the final draft you see here.  Nevertheless, I was reasonably happy with it, and hope it will receive a respectable final mark. I got its provisional mark back the other day, which was 85, where 70 and above is a first class degree, and marks of 80 and above are reserved for work of publishable quality, and only awarded in exceptional circumstances. Prior to this dissertation, even the best essay of my entire academic career had only been a 78, with a handful of 75s and 74s in my record; I didn’t think a mark as high as 85 was even possible in the idiosyncratic English marking system for social sciences. The comments from my two anonymous markers were also fairly positive.

As I write this I am currently spending the summer of 2018 at the Ludwig von Mises Institute as a Fellow in Residence, where I am working on re-writing the core research of my dissertation into the format of an academic article which I hope to submit for publication with a journal. So hopefully I’ll manage to make some use of the work that went into this dissertation.

Until then, however, you can read and/or download it in PDF form by clicking this link:

Taking Austrian Economics to the Airwaves!

During my stay at the Mises Institute as a Research Fellow last summer, I was fortunate enough to be able to travel to Montgomery, Alabama with two other representatives of the Mises Institute, to appear on The Joey Clark Radio Hour on News Talk 93.1 FM.

During the hour we touched on a huge variety of topics, including Britain’s failing National Health Service, why it’s still important to read the works of “dead white men”, whether the gold standard really caused the Great Depression, the economics of fantasy football, why the Fed is a scam, what freedom means to us individually, and which Rothbard books we would personally recommend to a beginner.

It was my first ever appearance on the radio, as is painfully obvious from the fact that the simple act of introducing myself on air somehow caused me to trip and fall into confused and aimless rambling. I like to think that it was all uphill from there though, and am happy with how the recording turned out overall.

At the very least I certainly enjoyed appearing on Joey Clark’s programme, and hope that the opportunity to for a repeat appearance will arise again someday.


For more info on the Joey Clark Radio Hour, see their Facebook page:

Appearing alongside me were Tho Bishop, the Mises Institute’s Media Coordinator, and my fellow Fellow Joakim Book Jönsson.

For more from Tho Bishop, consider following him on Twitter ( and reading his regular topical articles at (

For more from Joakim Book Jönsson, check out his blog ‘Life of an Econ Student’ (


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Yours truly, during the broadcast. 


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After the show. (l-r: Joey Clark, Joakim Book Jönsson, Tho Bishop.)





Mises on why the State shouldn’t ban War Profits

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I was recently reading Ludwig von Mises’ book Interventionism: An Economic Analysis, and came across a particularly well-worded passage on why governments shouldn’t resort to economic central planning in times of war. Specifically, Mises was arguing that it was economically unwise for governments to try to prevent private companies from making profits by supplying the war effort, even though war profiteering is regarded with distaste by almost everybody and banning it would be a very popular policy.

The fact that Mises argued so ably against this policy, and did so in 1940 of all years, is a testament not only to his characteristically brilliant economic insight but also to his extraordinary moral courage and perseverance in pursuing the truth above all other considerations.

Due to the length of the quote, I have decided to share it here rather than on Twitter, which is my usual repository for particularly pithy Mises lines I come across.

“In England, too, the government was concerned primarily with preventing war profiteering, rather than with the procurement of the best possible equipment for the armed forces. For example, the 100 percent war profits tax might be cited. …

The anti-capitalist says, ‘This is precisely the point. Business is unpatriotic. The rest of us are told to leave our families and to give up our jobs; we are placed in the army and have to risk our lives. The capitalists, however, demand their profits even in time of war. They ought to be forced to work unselfishly for the country, if we are forced to fight for it.’ Such arguments shift the problem into the sphere of ethics. This, however, is not a matter of ethics but of expediency.

Those who detest war on moral grounds because they consider the killing and maiming of people as inhumane, should attempt to replace the ideology which leads to war by an ideology which would secure permanent peace. However, if a peaceful nation is attacked and has to defend itself, only one thing counts: the defense must be organized as quickly and as efficiently as possible; the soldiers must be given the best weapons and equipment. This can only be accomplished if the working of the market economy is not interfered with. …

When the capitalist nations in time of war give up the industrial superiority which their economic system provides them, their powers to resist and their chances to win are considerably reduced.

That some incidental consequences of warfare are regarded as unjust can readily be understood. The fact that entrepreneurs get rich on armament production is but one of many unsatisfactory and unjust conditions which war creates. But the soldiers risk their lives and health. That they die unknown and without reward in the front line, while the army leaders and staff remain safe and secure to win glory and to further their careers is ‘unjust’ too. The demand to eliminate war profits is not any more reasonable than the demand that the army leaders, their staff, the surgeons, and the men on the home front should do their work under the privations and dangers to which the fighting soldier is exposed.

It is not the war profits of the entrepreneurs that are objectionable. War itself is objectionable!”    (pp.73-74)

For more information on Mises’ book Interventionism, which stands alongside his better-known books Socialism and Liberalism in his writings comparing different economic systems, follow this link to for information about the book’s significance and where to find a copy:

Book Review: The Progressive Era by Murray N. Rothbard

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I recently finished reading a great new book published by the Mises Institute, entitled The Progressive Era. This new work is mostly formed of previously unpublished material – 9 previously unpublished chapters and 6 previously published essays, which have been edited together into a cohesive whole  – written by the great ‘Austrian’ economist, historian, and libertarian theorist Murray N. Rothbard. As the title would tend to suggest, the book covers the ‘Progressive’ period of American history (generally dated from the 1890s to the 1920s), during which the relatively laissez-faire politics and economics of 19th century America gave way to the modern corporatist and interventionist state as we know it today.

Rothbard began writing the book in the 1970s during his association with the Cato Institute, but due to a number of reasons – ranging from his other projects to the characteristic way in which his great enthusiasm for the subject matter propelled the book far beyond its initial word limit, and ultimately due to his premature death in 1995 – the book was never completed in his lifetime. Fortunately however, the book’s editor Dr. Patrick Newman (with whom I was a Mises Institute Fellow in Residence in the summer of 2017) was able to unearth the unpublished manuscripts from Rothbard’s voluminous archives and piece this great work back together for publication over 22 years after the author’s death. The result is a brilliant account of this important period of American history, and a towering achievement in its own right, even aside from the significance of its author and the story of its troubled journey to publication.

Typical accounts of the Progressive Era usually paint it as a glorious victory of benevolent government which, in faithful response to the demands of the people, put an end to the dog-eat-dog competition and robber barons of 19th-century capitalism. In light of how naive and simplistic such traditional accounts of the era have been, it is particularly refreshing to hear Rothbard’s revisionist history of the period, particularly given the extraordinary scope and depth of the work.

Rothbard begins his study with an analysis of the rise of the railroads in the 1840s as America’s first big business and extends it through the cartelisation and regulation which characterised the Progressive Era, the collapse of the Third Party System, and ultimately to the ‘fulfillment’ of the new progressive state in World War One and the Great Depression. Far from a benevolent government response to the spontaneous outcries of the people, Rothbard finds that the key policies of the Progressive era can more often be characterised as attempts at cartelisation by big businesses in the pursuit of higher profits. Having failed to successfully cartelise on the relatively free markets of the preceding decades, such big businesses increasingly turned to government in the latter years of the 19th century, to enforce such cartels and impose burdensome regulations on their smaller competitors. This revisionist interpretation is strongly supported by Rothbard’s characteristically details-oriented approach to history writing, making this book an excellent resource for students and researchers, with plenty of pointers to further reading implied by the vast number of figures and events referenced.

Rothbard’s analysis is also set apart from others on the subject by the great weight it gives to religious divisions in US for understanding the Third Party System and its ultimate collapse. Reduced to its absolute essentials, Rothbard’s argument is that postmillennial Pietists (usually Protestants) believed that the Second Advent of Jesus Christ could not occur until a thousand-year Kingdom of God on Earth was established, which they believed required the stamping out of a great number of personal sins, significantly including alcohol. This led the Pietists to favour a much higher degree of state intervention into the economic and personal lives of its subjects, in the pursuit of this lofty and vital goal. The Pietists were consequently much more likely to vote for the statist parties of the time, including the Republicans, the Abolitionists, and the strongly anti-immigrant ‘Know-Nothing’ party. Liturgicals (such as Catholics) conversely believed that the thousand-year Kingdom of God on Earth would occur after the Second Advent of Jesus Christ, causing them to concern themselves more with adhering to religious rituals, keeping an eye out for portents that His coming was near, and so forth. The Liturgicals were therefore less concerned with stamping out personal sin and enforcing holiness, and hence were much more likely to vote for the more laissez-faire Democratic party. While most modern historians are inclined to dismiss such religious considerations in favour of ‘real’ factors, such as economic class, ethnicity, geography and so forth, Rothbard’s case is nevertheless made extremely convincing by his extensive application of demographic and electoral data from the time. Even if you’re inclined to disagree with Rothbard’s conclusions, it is now difficult for me to believe, having read the book, that one’s understanding of the Progressive Era and the Third Party System could be complete without this understanding of the religious factors at play.

In conclusion, I am simply amazed that such strong material was able to go unpublished for so many years, and am grateful to Dr. Patrick Newman and the Mises Institute for their efforts in bringing this masterful book to publication at last. Rothbard’s Progressive Era provides an account of that important time in American history that is both sweepingly broad and deeply details-oriented in a way that will satisfy both serious researchers and interested lay readers.

Furthermore, thanks to the generosity of the Mises Institute’s donors, the book is available for free on their website as a PDF, an ebook, and an audiobook! For more details, see this link:

If you would like to own a physical copy of the book, you can buy one at this link:

Finally, if you’re interested to learn more about the book and this period of history before reading, the book’s editor Dr. Patrick Newman gave an excellent talk about the subject at the Mises Institute’s Mises University summer programme last year.

Was Hayek really saying that Free Markets create genius consumers?

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It’s interesting how often the most memorable and thought-provoking parts of a given discussion are to be found in the tangents away from it.

Yesterday I was in a seminar on the history of economic thought in which we were supposed to be discussing Thorstein Veblen and the American Institutionalists, but toward the end of the session we got side-tracked into a discussion of the modern economy’s use of big data and the way companies gather information to provide targeted advertising. The lecturer somehow tied this into Hayek’s famous explanation of how a free price system efficiently conveys information to economic actors, dispersed and local information which could not possibly all be known to an economic central planner, and hence allows for those resources to be economised in a way that more rationally reflects their supply and demand.

Our lecturer, however, seemed to misunderstand the nature of Hayek’s argument and the sort of information to which he was referring. The lecturer sarcastically remarked something to the effect of “Do you think consumers are really well informed about the products they consume, thanks to the free market?” Surely, he seemed to be implying, the fact that most real-world consumers don’t have a full and deep intellectual understanding of every product they consume and where they come from – especially compared to the nefarious producers of those products – proves that Hayek was wrong. Thank goodness our modern understanding of asymmetrical information has superseded Hayek’s naive fantasy of consumers who are automatically kept fully informed by the magic of the market!

This is not only a misinterpretation of Hayek’s conclusions, but a misinterpretation which highlights an incorrect way of even approaching Hayek’s argument to begin with. Therefore I feel it might be worthwhile to briefly clarify what kind of information Hayek was actually talking about, in case anyone else reading this may have fallen prey to the same misunderstanding.

It is certainly true to say that consumers in a relatively free market tend to lack some information about the products they consume. Standing before the bread aisle in a supermarket, most consumers would not be able to tell you off the top of their heads the differences between the different brands of loaves, their ingredients, the companies which made them, and so forth. The same would be true for this sort of information for almost any other product and any other consumer; none of us are omniscient, and Hayek never claimed that a free price system would make us so.

However, this is not the sort of information Hayek was claiming the price system transmits. What the price system does, according to Hayek, is convey the relevant information about the supply and demand for different goods on the market, in a way that allows people to economise those goods as if they did have a conscious, intellectual understanding of those factors, even if they don’t.

To use Hayek’s own famous example, suppose that a major tin mine collapses, making the supply of tin in a given economy even more restricted than it had been before. This information will be reflected by a rise in the price of tin, and this price change will in turn affect the distribution of tin between the different producers who require it. For the producers whose tin-based products are more highly valued by consumers, those consumers will consequently be willing to pay enough for those products that the producers will still be able to sell them at a profit, despite the increased price of the tin the producer needs to buy. For other companies which make tin-based products less highly valued by consumers, those consumers will consequently be less likely to continue buying those products at the increased price, leading those companies to restrict their production of those less highly valued products, hence freeing up tin to be used by the producers of more highly valued products. In this way, the price system has conveyed ‘information’ (the fact that the tin mine has collapsed) to all relevant parties, forcing producers to economise the increasingly scarce tin in a way that sees it being channeled toward the production of the goods most highly valued by consumers.

The critic of Hayek’s theory might object that the price system hasn’t really made anyone more informed about anything, as the above-mentioned consumers and producers wouldn’t necessarily even have to know why the price of tin had risen. But that’s the whole point and the whole beauty of the system! (Indeed, in Hayek’s original argument this was what led him to the conclusion that free markets and free prices would always lead to a more preferable (from the perspective of consumers) distribution of resources than a central planner ever could, as a central planner would have to consciously know such information in order to distribute resources appropriately, whereas economic actors in a free price system are automatically encouraged to do so even without having to consciously grasp why.)

I suppose therefore it is possible, in a certain sense, to criticise Hayek’s preferred system because it does allow consumers to get by despite potentially being ignorant of certain information about the products they consume. An opponent of Adam Smith could likewise lament that, thanks to Smith’s beloved division of labour, many people today are ignorant of how to make bread, a skill which would have been indispensable for survival in previous times. However, rather than sneering at this as evidence of how the division of labour creates consumers who are too stupid to even bake bread, the correct response is to celebrate the fact that many people are now able to enjoy the delicious boon of bread as much as if they did know how to bake it, even if they don’t.

Just as with Smith’s division of labour, so too with Hayek’s division of knowledge. Far from deriding Hayek’s preferred system of free prices because not every consumer under it is perfectly informed about every product they consume, the system should be celebrated for allowing scarce resources to be distributed as if everyone knew all the information concerning their supply and demand, even if they don’t.


Some readers might wonder why I even bothered clarifying such an elementary point about what Hayek was saying. Indeed, as a writer, my own instincts usually tell me to focus on more specific, technical, and arcane points, as my own personal inclination is usually to assume that all of the simple, broad, and sweepingly important things that could be said about economics or libertarianism must already have been said by writers more intelligent and eloquent than I could ever hope to be. However, elementary errors sometimes require elementary responses, and if a lecturer in one of the top economics faculties in the world was capable of misunderstanding what Hayek was saying in this way, hopefully my writing this will have helped clarify the thinking of at least some reader on this topic.

And even if not, I’m still going to publish this post anyway; I have to write about something on this cursed blog, after all.

Live Stream with That Guy T

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This week I have been attending the ‘Mises University’ summer programme, the Mises Institute’s week-long crash course in Austrian Economics, for the second year in a row. It’s always an incredibly fun and intense week of learning, which brings together around 150 students each year from all over the world, and teaches them more economics in one week than most of them have learned in years of university study.

For more info about attending MisesU in future years, as well as about other Mises Institute events, follow this link:

One of my fellow MisesU attendees this year is Taleed Brown, better known as ‘That Guy T‘, an infamous libertarian/alt-right social media personality, whose YouTube channel has over 100,000 subscribers. Last night, he invited Tho Bishop, the Mises Institute’s social media director, and me to do a YouTube live stream with him, to talk about the importance of the Mises Institute, as well as other more general topics.

There were a lot of questions about immigration and… *sigh* “ethno-states”, as well as other ultra-edgy alt-right topics which are apparently of considerably greater interest to Taleed’s audience than they are to me. But we managed to get a few bits of economics in there too, as well as raising some very generous donations to the Mises Institute, so that’s what matters.

If you’re interested in watching, I’m attaching the recording of the stream below.