In 2008 we witnessed the failures of such giant financial organizations as Lehman Brothers, AIG, Fannie Mae, and Freddie Mac. In order to rescue the last three and prevent major banks from going under, the government produced extensive “bailout” packages.
Although we think of the “bailout” as a modern method of crisis control, it was not unknown in 1860s Britain. The question then, as now, was the form it should take, and the rules that should govern it. This led to a celebrated debate between two leading economists, Thomson Hankey and Walter Bagehot, each of whom had strong views about proper banking policy.
Ben Bernanke, US Federal Reserve chairman during the Crash of 2008, was closer to Bagehot in approach than to Hankey, but he was not very close to Bagehot either.
Do we have anything to learn from the great Victorians who lived so many years ago? It would seem likely that we do. There were banks then and there are banks now. Human nature presumably has not changed much.
About the Editor
Henry Lewis is a recent high school graduate from Charlottesville, Virginia. His previous books include an edition of Two Little Savages by Ernest Thompson Seton, which he co-edited in 2010; A Traveler’s Guide to the Georgian Language (American Friends of Georgia, 2013); and The Essence of David Hume on Religion, Morals, and Economics (Axios Press, 2014).