Alternative Forms of Currency and FInancial Crises In England in Late Eighteenth and Early Nineteenth Rural England

Iain Frame, University of Kent, Canterbury, Kent Law School, has published ‘Country Rag Merchants’ and English Local Currencies in the Late Eighteenth and Early Nineteenth Century at 42 Journal of Law and Society 588 (2015). Here is the abstract.

In the late eighteenth and early nineteenth century, communities across England used country bankers’ notes almost as much as they used coins and Bank of England notes. Accounting for the relative success of these alternative currencies is challenging, however, due to the frequency of financial crisis during the period. If, during a crisis, all note holders attempted to enforce the promise to pay in gold coin against the issuing banker, the ‘law‐finance paradox’ would leave some note holders with gold coin, but would leave many more with merely ‘country rags’ or worthless pieces of paper. Building on both the credit approach to money and the relational approach to contract, this article shows note‐using communities successfully responding to financial crisis. They frequently did so by formalizing the bonds of reciprocity and trust tying the community to its note‐issuing banker – bonds sometimes made all the stronger by legal enforceability.

The full text is not available from SSRN.