Economic vs. juristic thinking in Carl Menger’s principles of economics

Austrian Economic School is increasingly being treated as one of the most significant and ever more influential bodies of ideas affecting the contemporary economic science. It is well known that Carl Menger, the founder of the Austrian School, was a lawyer by education. The paper is devoted to the degree to which his legal education influenced his economic theorizing. After a close examination of the Menger’s conceptual apparatus and the epistemological ramifications of the key notions underlying his thinking, the paper concludes that the juristic background of the far-reaching theoretical contributions contained in Menger’s Principles was truly decisive. That holds true despite the fact that Menger only exceptionally utilized the juristic vocabulary. The key ingredients of his theoretical creation? such as the individual autonomy, the coincidence of the wills in concluding a contract the effective protection of property and making transactions based on the individual motivation to further one’s own interests to the utmost? are clearly inspired and in many ways influenced by private law, particularly the doctrines underlying the Roman Law and the Austrian Civil Code

Where it All Began: Lending of Last Resort and the Bank of England During the Overend, Gurney Panic of 1866

The National Monetary Commission was deeply concerned with importing best practice. One important focus was the connection between the money market and international trade. It was said that Britain's lead in the market for acceptances originating in international trade was the basis of its sterling predominance. In this article, we use a so-far unexplored source to document the portfolio of bills that was brought up to the Bank of England for discount and study the behavior of the Bank of England during the crisis of 1866 (the so-called Overend-Gurney panic) when the Bank began adopting lending of last resort policies (Bignon, Flandreau and Ugolini 2011). We compare 1865 (a normal year) to 1866. Important findings include: (a) the statistical predominance of foreign bills in the material brought to the Bank of England; (b) the correlation between the geography of bills and British trade patterns; (c) a marked contrast between normal times lending and crisis lending in that main financial intermediaries and the shadow banking system only showed up at the Bank's window during crises; (d) the importance of money market investors (bills brokers) as chief conduit of liquidity provision in crisis; (e) the importance of Bank of England's supervisory policies in ensuring lending-of-lastresort operations without enhancing moral hazard. An implication of our findings is that Bank of England's ability to control moral hazard for financial intermediaries involved in acceptances was another reason for the rise of sterling as an international currency