Week 7 case study: Banking Crisis June 1772. Christopher Hansom 10120726
1) In the 1970’s Gold backed money was seen as the system one must follow until John Law believed that confidence was the basis of credit. Gold backed money was clearly a more stable option for the bank but to create more flow in the lending sector confidence backed money was seen as the future. I believe that confidence is better than gold because it creates more growth in numerous sectors although tighter regulation was needed for it to be a success in 1972. 2) Similar mistakes were made between both, as firstly both were failures. Lack of composure and rash lending by both the Irish banks and also the Ayr resulted in both becoming bust. Unfortunately for the Ayr their government weren’t kind enough to bail them out with tax payers money. 3) I did not think the reward was a great idea as eventually they were going to be found out. In the end the bank just drove themselves into deeper death which certainly did not help there case in becoming nationalized. 4) There are certain similarities that both banks needed support to survive, as clearly the Irish banks would have gone bust if the government didn’t intervene. The offer by the aristocrats was in the end not followed true due to them been unable to come to terms with the English Banks. 5) In 1772 the lack of personal baking on loans and also ignoring the rules and regulations led to the downfall of the banks.
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