The Banking World of the Nineteenth Century

Abstract

In terms of modern banking, Swiss bankers entered an international world of banking and finance which had already been developed, and there was really nothing they could do about it. Leadership in the banking industry had shifted to Great Britain where the banking system had reached a stage of maturity which was both domestically and internationally well advanced. In the first place it had raised gold to the level of an international currency, and in the second, it had placed its own bank reserves securely on a gold foundation. This it had done through, firstly, the institutional mechanism of the Bank of England and, secondly, the Bank Act of 1844 which strictly limited the issue of banknotes to the amount of gold in the Bank’s reserves. Thus, unless the Bank Act was suspended, which was only resorted to in times of emergency, every pound note was, for all practical purposes, the equivalent of gold.¹