A Comparative Chronology of Money

Monetary History from Ancient Times to the Present Day

1860 - 1879

© 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).

c. 1800-1860 Five hundred fold depreciation of the cowrie in Uganda
When cowrie shells are first introduced to Uganda at the end of the eighteenth century two are sufficient to purchase a woman. Thereafter the wholesale importation of cowries causes inflation with the result that by 1860 one thousand cowries are needed for such a purchase.

p 35,640

1850-1914 Huge amounts of capital are exported from Britain
Huge amounts of British capital are invested abroad, especially after 1890, in the United States, parts of the British Empire, and Argentina. The total reaches billions of pounds. Britain's later economic problems may be partly due to the neglect of British industry by the banks during this period.

p 348-352

1852-1872 New French banks support economic development
The Crédit Mobilier, founded in 1852, is the first effective major French bank to be established specifically for providing funds for industry and infrastructure. It is followed by many other new banks in the next two decades. Despite the failure of the Crédit Mobilier in 1867 these banks channel savings into essential investments in transport, communications, agriculture and industry.

p 559

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

1860 Crédit Agricole founded
Its primary function is the supply of credit for French agriculture. The Crédit Agricole develops into one of the world's largest banks. (During the early 1980s it was the largest, and in 1991 the sixth largest).

p 560

1860 The Russian State Bank established
Two public banks had been established by Catherine the Great in 1768 to finance her wars with the Ottoman Empire (Turkey), but in 1860 a proper state bank with wider functions is belatedly established.

p 553

1861-1865 The US Civil War
The Confederacy finances its war effort mainly by printing money. In addition to the Confederate notes, the States, railway, insurance and other companies also issue notes. The resulting hyperinflation renders Confederate paper worthless. By comparison inflation in the North is relatively moderate as the Union government raises very substantial sums of money by taxation and borrowing.

p 485-488

1861 US Congress suspends convertibility of notes into specie
Priority in the use of gold and silver is given to government purposes as a result of the war.

p 486

1861 Post Office Savings Bank founded in Britain
The widespread geographic coverage of the post offices and their long opening hours makes them very convenient as savings bank branches. The government too gains since the savings are under the control of the Treasury and come to provide Gladstone's government with large funds at a low rate of interest.

p 336-337

1862 US Legal Tender Act and the issue of Greenbacks
The United States Treasury starts issuing notes that are not convertible into silver or gold but are legal tender for all purposes except payment of customs duties and interest on government securities.

p 488-489

1862 Tax placed on US state bank notes
The rate is set at 2%.

p 489

1864 US National Bank Act
This amends and expands the provisions of the Currency Act of the previous year. Any group of five or more persons are allowed to set up a bank, subject to certain minimum capital requirements. As these banks are authorized by the Federal, not the State governments, they are known as national banks. To secure the privilege of note issue they have to buy government bonds and deposit them with the Comptroller of the Currency.

p 489

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

1865 French law on cheques simplified
French businesses have tended to prefer notes to bank deposits and cheques. The law is simplified to encourage greater use of cheques.

p 557

1865 Hong Kong and Shanghai Bank founded
Ever since it has been the main bank of issue in Hong Kong. In the 1980s it was still responsible for about 80% of the colony's note circulation (the other 20% being supplied by the Chartered Bank) and by 1990 the Hong Kong Banking Group is the 13th largest in the world.

p 626-627

1865 US Contraction Act
By the end of the Civil War the Greenbacks are only worth half as much in gold as their nominal value. Under the terms of this act the government begins to withdraw them from circulation.

p 494

1866 Tax on US state bank notes is raised to 10%
The state bank notes are taxed out of existence and replaced by the national bank notes which are of uniform design, apart from the name of the particular bank. Despite the demise of their notes the tax does not lead to the disappearance of the state banks.

p 489

1867 International Monetary Conference in Paris
An attempt is made to widen the area of common currencies based on French gold and silver 10 and 5 franc coins. The US, being on a bimetallic standard, sends representatives.

p 493

1867 Singapore makes dollars from Hong Kong, Mexico, Bolivia and Peru legal tender
In the British colonies of Malaya and Singapore the official currency is the Indian rupee but the general public keep their accounts and make most of their payments, including taxes, in dollars and cents. Therefore in 1867 the public's preferences are recognised when legal tender status is given to various foreign coins.

p 625

1868 US halts withdrawal of the Greenbacks
Their withdrawal was exacerbating a depression in the economy. In the following years some increases in Greenback circulation are made.

p 494

1868 Meiji restoration in Japan
Japan's isolationist policy is ended. As a result the few pre-Meiji banking organisations set up by the Zaibatsu family groups prove completely inadequate to meet the needs of liberalized trade.

p 581-582

1870-1893 Plentiful silver supplies cause fall in value of Indian and other Asian currencies
After 1870 there is a vast increase in the amount of silver coming on to world markets because of new mines and the demonetization of silver as Germany, Scandinavia and other countries switch to the gold standard. As a result the undebased silver coinage of India, and the currencies of China, Japan and south east Asia, countries comprising half the world's population, suffer an unprecedented fall in value.

p 622

1870-1872 Huge increase in the number of German joint-stock banks
No fewer than 107 are founded in this period.

p 569

1870-1871 Franco - Prussian War
The victorious Germans force France to pay a huge indemnity of 5 billion francs. The money is raised easily by a loan which is more than 10 times oversubscribed. This experience partly explains French reliance on borrowing in preference to taxation in the First World War and French insistence on German reparations afterwards.

p 561

1871 Germany becomes a united country
The German states unite and adopt the Mark as their common currency and base it on the gold standard.

p 356,567-568

1871 Japanese Currency Act
A national mint is established at Osaka and the decimal system of yen and sen is introduced.

p 582

1872 Japanese National Bank Act
American rules serve as a model for Japanese commercial banks.

p 582

1872 Paris Clearing House created
This is over 100 years after the creation of the London Bankers' Clearing House. The backwardness of French banking prior to the second half of the 19th century has retarded the country's economic development.

p 559

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

1873-1886 The Great Depression in Britain
The British economy is in decline relative to those of the US and Germany. One effect of the so-called depression is to cause doubts about the merits of the gold standard.

p 353,493

1873 Dai-Ichi Bank founded in Japan
The Dai-Ichi Bank is set up by the government with the support of some of the larger Zaibatsu banks. It is the first bank to be created under the terms of the 1872 Act.

p 582

1873 US Coinage Act
The silver dollar ceases to be the standard of value. Thus the US is virtually on the gold standard, in practice if not in law.

p 494

1873 Bank panic in the US and Germany
Lacking a central bank or lender of last resort able and willing to supply sufficient liquidity to quell crises in their early stages the US proves prone to bank panics. As in 1857 the panic spreads across the Atlantic and causes many bank failures in Germany.

p 498-499

1874 Singapore makes the Japanese yen and US dollar legal tender
This is in addition to the other foreign coins granted legal tender status in 1867.

p 626

1875 Bank of Prussia becomes the German Reichsbank
On becoming the national bank of the whole of Germany it absorbs and replaces the note issues of about 30 other state banks with its own notes.

p 443,567-568

1875 Scottish Institute of Bankers founded
This is the world's first bankers' institute. In the last couple of decades of the 19th century many trained young bankers from Britain, especially from Scotland, take up positions in overseas banks.

p 360

1875 Greenback Party formed in the US
It aims to at least secure and preferably increase Greenback circulation.

p 494

1875 US Resumption Act
This is intended to restore the convertibility of banknotes into gold. Full redemption is promised by 1 January 1879.

p 494

1876 Canadian Indian Act bans the potlatch
The potlatch, a ritualized form of barter involving competitive gift exchange that is widely used by various Indian tribes, is banned by the Canadian government.

p 11

1876 Japanese Bank Act revised
The regulations are altered to make them more appropriate for Japanese conditions. This leads to a surge in the formation of new banks.

p 582

1876 Mistsui Bank founded in Japan
The new bank is based on the exchange bureau run by the Mitsui family as part of their Zaibatsu (family-based) trading empire.

p 583

1878 Greenback Party returns 14 members to Congress
A compromise between the Party and its opponents fixes the Greenback circulation at its existing level, halting the previous trend to scarcer, dearer money.

p 494

1878 US Bland-Allison Act
The silver lobby pushes through this act forcing the US Treasury to buy between $2 million and $4 million of silver each month for coinage and fixes the relative prices the mint pays for gold and silver.

p 495

1878 France abandons bimetallism and in practice adopts the gold standard
By the end of the 1870s the gold standard has become an international standard with London as the world's main financial centre.

p 356

1879 Institute of Bankers (England and Wales) founded
This is 4 years after its Scottish counterpart. Soon there is a brain-drain of young bankers from Britain to other parts of the world.

p 360

1879 Limping bimetallism in the Latin Monetary Union
Vast increases in the world's supplies of first silver and later gold unsettle the Latin Union's bimetallic policies and only gold coins are universally accepted throughout the Union.

p 493

1879 Number of Japanese banks reaches 153
The growth in numbers is a result of the 1876 Act.

p 582

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Roy Davies - Last updated 25 May 2005.