Paper credit and the multi-personae Mr. Henry Thornton

Abstract

The bicentenary celebration of the publication of Henry Thornton's An Enquiry into the Nature and Effects of the Paper Credit of Great Britain (1802) presents an appropriate time for a reconsideration of this great work on monetary economics. This paper highlights Thornton's criticisms of Adam Smith along with the importance that Thornton attached to the lender of last resort role of the Bank of England. It suggests that there are three Mr. Thorntons who appear in Paper Credit. The first is the concerned anti-inflationist of the first section. The second is the worried anti-inflationist of the second section of the book. Besides these, there may be a third Mr. Thornton. This persona was that of the practical banker who understood the new emerging financial architecture that had resulted in paper credit supplanting metallic money. Thornton understood this new transformation of the monetary system. It is conjectured that the existence of the usury laws, inter alia, may have prevented Thornton from fully investigating the possibility of the UK moving to a specie-less system.