The international financial distrust generated with the…
1891 CE
The Baring crisis had been precipitated by the near insolvency of Barings Bank in London.
Barings, led by Edward Baring, 1st Baron Revelstoke, had faced bankruptcy in November 1890 due mainly to excessive risk-taking on poor investments in Argentina.
Argentina itself had suffered severely in the recession of 1890, with its real GDP falling by eleven percent between 1890 and 1891.
An international consortium assembled by William Lidderdale, governor of the Bank of England, including Rothschilds and most of the other major London banks, had created a fund to guarantee Barings' debts, thereby averting a larger depression.
Nathan Rothschild remarks that if this had not happened, perhaps the entire private banking system of London would have collapsed, which would have caused an economic catastrophe.
