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British Currency School

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Title: British Currency School  
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Subject: Classical economics, British Banking School, History of economic thought, Inflation, Friedrich Hayek
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British Currency School

The British Currency School was a group of British economists, active in the 1840s and 1850s, who argued that the excessive issuing of banknotes was a major cause of price inflation, and believed that, in order to restrict circulation, issuers of new banknotes should be required to hold an equivalent value of gold as a reserve. In these beliefs they were supporting the provisions of the Bank Charter Act 1844, which had been passed by the Conservative government of Robert Peel.

The leading figure of the school was Samuel Jones-Loyd, Baron Overstone, the British politician and banker. More than fifty years later his role in the debate was analysed and criticised by Henry Meulen, an opponent of the Act. See Viner's book .

The Currency School was opposed by members of the British Banking School, who argued that currency issue could be naturally restricted by the desire of bank depositors to redeem their notes for gold.

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