Should the Bank of England let this major institution fail, with all the knock-on effects on other banks, business sentiment and economic growth? Or should the Bank bail it out and create the moral hazard that Overend Gurney and other banks would take still greater risks, thinking they were too big to fail?īagehot was himself the director of a highly successful bank from the West Country banking paid the bills and gave him time to write. In so doing, it raised one of the perennial questions of central banking. This started life as a specialist in the ultra-safe market for bills of exchange, and sailed through the numerous financial panics of the early 19th century, growing rapidly until it was forced to apply to the Bank of England for support in 1857. Bizarrely, Bagehot declared in the Economist that it was precisely because of his opposition to slavery that ‘we wish for a dissolution of that Union which has hitherto crushed down by its banded, undivided and resistless might’.Tell that to Frederick Douglass or the nearly 200,000 African Americans who joined up to fight in the Union army.īagehot’s flair for epic miscalculation came much nearer home with the ‘banker’s bank’, Overend Gurney. Lacking on-the-ground sources, he wildly underestimated the strength and resolve of the North, predicting a Southern victory.Īs so often, the yearning for paradox bred misjudgment. He led the fashionable dismissal by British liberals and intellectuals of Abraham Lincoln as being out of his depth in the American civil war. What is more telling is that Bagehot’s judgment was wrong on several of the greatest issues of the day. But he was also a prig, a sneerer and a snob, quick to disdain the views of ‘the mob’ and the concerns of ‘little people’.

He was a peerless analyst of British politics, able to cut through flummery and tradition, while giving them their due.

He was a confidant of the rich and powerful, mentioned no fewer than 125 times in Gladstone’s diary. Liebling once said that Bagehot wrote better than anyone who wrote faster, and faster than anyone who wrote better. He was certainly a superb talker and writer the American journalist A. In fact, despite the title, in point of sympathy or genius his Bagehot cuts neither a very attractive nor a very persuasive figure.

To his credit, Grant does not seek to make the case. What about Nightingale, Pankhurst, Eliot or indeed Queen Victoria herself? Bagehot has the vim and vigour of his age. Think of Gladstone, Brunel, Darwin, Clerk Maxwell, Dickens, Tennyson… and that’s just the men. But however defined, it cannot be true of Bagehot. Of course ‘the greatest Victorian’ is a phrase largely empty of meaning.

Lombard street bagehot