Long before it was responsible for monetary policy and financial stability, one of the Bank’s key roles was the provision of last resort lending to commercial banks facing liquidity pressures. It is hard to date precisely, but the Bank began undertaking such operations in earnest probably around the time the UK faced a steady sequence of banking panics in 1847, 1857 and 1866. The Bank responded to these panics by making liquidity available to support banks. Last resort lending, as Bagehot came 46  subsequently to call it, was born. Indeed, Bagehot later defined principles for such lending: it should occur  freely, at a penalty rate against good collateral. An interesting historical question, with relevance to the present day, is whether in fact the Bank abided by these principles in its last resort lending during the 1847, 1857 and 1866 panics. To assess that, we took data from the giant paper ledgers recording changes to the Bank’s balance sheet where these interventions 47  were recorded on a loan by loan, counterparty by counterparty, interest rate by interest rate basis. The transcription of these data benefitted from the fact that the hand-writing in the ledgers was from a small number of clerks across the three crises – one of the indirect benefits of job continuity. While the data was mostly transcribed manually, the project developed an image recognition system using a neural network st  algorithm which we will use in future to turn historic ledger activities into 21 century machine readable data.

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