During the autumn of 1890, when speculation on the London Stock Exchange was running riot, principally in regard to securities of the Argentine Republic, including not only the national obligations, but municipal loans and investments in commercial enterprises, a cloud began to appear in the financial sky. The great banking house of Baring Bros, was on the edge of collapse. The failure of that great firm of bankers would undoubtedly take down with it many other moneyed institutions, and such a disaster in London's financial centre would carry untold misery to the rest of the financial world.
The forerunner of impending disaster was already beginning to be felt and the feeling that the world's finances were standing on the brink of disaster was apparent everywhere. The actual realization, however, was averted by a heroic effort on the part of the Governor of the Bank of England, who obtained a loan of gold from the Bank of France, and St. Petersburg, against which an issue of paper money was made by the Bank of England to temporarily accommodate the public.
He also persuaded many of the leading bankers of London to unite and subscribe a large guarantee fund, so the total assets of the Baring Bros, were taken over, and liquidated by the Bank of England, and a large surplus eventually returned to that firm. Therefore, by a wise and prompt action on the part of Mr. Lidderdale, then the Governor of the Bank of England, a world panic was prevented.