Lombard Street (Bagehot)
Lombard Street (Bagehot)
In the second half of the nineteenth century, world financial activity was centered in London. Within the city, the core of the financial district was Lombard Street, named after the bankers and financiers from northern Italy who centuries before had established their businesses there. In 1873, Walter Bagehot, editor of The Economist magazine, published a book that explained the workings of the London financial market. He titled it Lombard Street: A Description of the Money Market.
Lombard Street quickly became the main resource for understanding the workings of the London financial industry, replacing Henry Thornton’s Enquiry into the Nature and Effects of the Paper Credit of Great Britain, published seven decades earlier in 1802. In Lombard Street, Bagehot briefly surveyed the origins of the London market and the reasons for its existence before undertaking a detailed description of the functions of a host of financial market participants, both public and private.
Lombard Street examines both the technical workings of the market and the government’s policy actions within the market, as determined by the chancellor of the Exchequer and the directors of the Bank of England. It describes the activities of joint-stock banks, private banks, and bill brokers, all of which was of great interest to large numbers of contemporary readers. But the signal contribution of Lombard Street is Bagehot’s discussion of how the Bank of England should behave toward other banks, especially when the money market was under stress.
The Bank Charter Act of 1844 had separated the Bank of England into an Issue Department, which issued bank notes backed by gold reserves, and a Banking Department, which was free to behave like an ordinary commercial bank. Critics of the Bank Act, including Bagehot’s father-in-law James Wilson, founder of The Economist, argued throughout the 1850s and 1860s that the Bank’s support of the money market during commercial crises was crucial and that the Bank of England should hold larger reserves of gold to meet the increased demand for gold during such periods. However, none of the critics developed a well-rounded case for the Bank to act as a central bank before Bagehot wrote.
Bagehot recognized that, though the Bank of England had no legal obligation to act as the nation’s central bank, it in fact had done so since before 1800. Because the Bank kept the gold reserve for the entire economy, it had no choice but to act as a central bank. This meant that the Bank of England had to meet the banking system’s liquidity needs during crises and that the Bank should act as lender of last resort when the increased demand to hold gold by individuals threatened the ability of solvent banks to meet their commitments.
Although the principle that the Bank of England would act as the banking system’s lender of last resort was widely accepted after 1873, the British government implemented no legislation requiring the Bank to do so. Rather, the government assumed that the Bank would conduct its business appropriately. The Bank in fact did not hold larger gold reserves after 1873; in relation to the size of the banking system, the Bank’s reserve shrank. The absence of any major crises over the next four decades prevents historians from knowing how the Bank of England would have behaved during a crisis.
Bagehot, Walter.  1999. Lombard Street: A Description of the Money Market. New York: John Wiley & Sons.
Thornton, Henry.  1978. An Enquiry into the Nature and Effects of the Paper Credit of Great Britain, ed. F. A. von Hayek. Fairfield, NJ: A. M. Kelley.
Wood, John H. 2003. Bagehot’s Lender of Last Resort: A Hollow Hallowed Tradition. The Independent Review 7 (3): 343–351.
Neil T. Skaggs
A nation of Germanic barbarians who entered the Italian peninsula in 568. Their kingdom survived until 774, when it fell to Frankish conquest under charlemagne. The invading Lombards are thought to have been Arian Christians (although some may still have been heathen), but their settlement among a Catholic population, the influence of a series of Catholic queens (especially the Bavarian Theodolinda), and steady pressure from the papacy produced conversion to the Roman form of Catholicism by the mid-7th century.
Settlement. The Lombards entered the western Roman world at a time when the earlier barbarian invaders of the Empire had been settled on Roman soil for many years and had absorbed a considerable amount of Latin culture. In contrast with these other Germanic peoples, the warlike Lombards were uncouth and barbarous, and they impressed the peoples among whom they settled as well as those with whom they came into less intimate contact as being harsh and cruel—these descriptive terms appear frequently in contemporary records. Such charges, however, were undoubtedly exaggerated, due in
no small part to political opposition from the papacy, fearful of Italian unification under Lombard rule. Most of the northern and central portions of Italy became part of the Lombard kingdom, but the conquest never extended into the extreme southern part of Italy. Even in the northern and central sections the Lombards did not succeed in establishing a consolidated state. It was not until late in the mid-8th century that the Exarchate of ravenna fell to Lombard conquest; some of the land in the vicinity of Rome—under the political control of the pope—was never secured by the Lombards, although they did hold the duchies of Spoleto and Benevento immediately to the east and south.
The Lombard kingship was not a powerful institution, and shortly after the death of Alboin, who had led them into the peninsula, the Lombards failed to elect a king for some 12 years. During this interval effective leadership was in the hands of a series of dukes who furthered the conquest by carving out more or less independent duchies for themselves. The weakness of this decentralization soon became apparent, however, and after 584 the Lombards never allowed a regnal vacancy to be prolonged. It should be noted that the Lombard kingship remained elective to the end, although royal heirs were normally preferred.
The Kingdom. The story of the Lombard kingdom is told by the 8th-century Lombard historian, paul the deacon. Paul's history, together with a series of legal edicts and a number of land charters (dating primarily from the 8th century), provides considerable internal information about the Lombard kingdom; the liber pontificalis and the Frankish chroniclers are the chief external sources. The legal records are especially important: Rothair (636–656) attempted to codify the unwritten customs of the Lombard nation. Liutprand (712–744) issued a long series of supplements that, together with Rothair's Edict and a few additional laws issued by Grimwald, Rachis, and Aistulf, make up the body of laws usually known as the Leges Langobardorum. These leges reveal that the private law of the Lombards was still essentially Germanic, based on wergelds and compurgation, but property law (and to a lesser extent public law) had been considerably influenced by Roman law.
Liutprand was the most important of the Lombard kings. As a Catholic Liutprand favored certain Romanizing influences in the kingdom; as a military leader he reconsolidated the Lombard conquests in Italy and extended them; and as one of the major barbarian rulers of Western Europe he maintained peace and friendship with the Franks and cooperated against the Moors who threatened Provence. During his reign the centralization of the kingdom reached its greatest extent and royal officials successfully counterbalanced the dukes whose interests were primarily local.
When Liutprand died in 744, the Lombard kingdom appeared to have been built into a consolidated whole with a sufficiently centralized administration to ensure its continuing success. Not only had Liutprand subdued the duchies of Spoleto and Benevento, where he installed his own followers, but he had also conquered most of the Exarchate of Ravenna and added its territory to his own. He had expanded the Lombard territory at the expense of the Church lands in the vicinity of the Duchy of Rome and even remained on friendly terms with charles martel and his son pepin, the Frankish mayors of the palace, to whom successive popes had appealed in vain for aid against "the most wicked Lombards."
Yet despite the successes of Liutprand and the seeming strength of the kingdom, and despite the fact that his successors Rachis, Aistulf, and desiderius were fairly able although not very diplomatic rulers, the Lombard kingdom did not long survive. The last Lombard kings proved unable to hold the kingdom together, and upon their final defeat by the Franks in 774, the Frankish ruler, Charlemagne, assumed the Lombard iron crown.
Italy was not incorporated into Francia, however, but remained organized as a separate subkingdom with its own carolingian dynasty. Thus Lombard influence was preserved (through the continued use of Lombard custom supplemented by Carolingian capitularies), but the political vitality of the Lombards was gone, and with it any hope of bringing all of Italy under a single unified control.
Bibliography: paulus diaconus, History of the Langobards, tr. w. d. foulke (Philadelphia 1907). Leges Langobardorum, ed. f. bluhme, Monumenta Germaniae Historica Leges v.4. Codice diplomatico Longobardo, ed. l. schiaparelli, 2 v. (Rome 1929–33). f. beyerle, ed. and tr., Die Gesetze der Langobarden (Weimar 1947). t. hodgkin, Italy and Her Invaders, 8 v. in 9 (Oxford 1892–99) v.5–7. l. m. hartmann, Geschichte Italiens im Mittelalter, 4 v. (2d ed. Stuttgart 1923) v.2. n. f. Åberg, Die Goten und Langobarden in Italien (Uppsala 1923). g. romano et al., Le dominazioni barbariche in Italia, 395–888 (3d ed. Milan 1940). g. pepe, Il medio evo barbarico d'Italia (3d ed. Turin 1945). g. p. bognetti, Santa Maria di Castelseprio (Milan 1948); g. p. bognetti et al., Dall'invasione dei barbari al governo vescovile, 493–1002, v. 2 of Storia di Milano (Milan 1953). e. pontieri, Le invasioni barbariche e l'Italia del V e VI secolo (Naples 1960).
[k. f. drew]
In the Middle Ages, the term Lombard was used for bankers and money-lenders from Lombardy, and from this was applied generally to anyone engaged in banking and money-lending. Lombard Street in the City of London, containing many of the principal London banks, was so named because it was formerly occupied by bankers from Lombardy.
all Lombard Street to a China Orange very long odds against; the expression dates from the early 19th century, although a China orange taken as the type of something worthless is recorded earlier.