The Currency School emerged from the beliefs of the Bullionist group, which was prevalent in the early 1800s. When the French landed on English soil in 1797, financial panic arose in Britain. Due to the 18th century banking system, there was high concern of banking panic
, a financial crisis that occurs when many bank runs
occur at the same time and people rush to withdraw paper money or transfer money to other assets. The British government intervened by allowing banks to suspend convertibility of the notes issued by the Bank of England. The Bullionist group, composed of mostly bankers and lawyers, formed after this potential crisis. They argued for convertibility, meaning paper money should be 100% backed by gold, in order to avoid inevitable inflation. Henry Thorton
and David Ricardo were two of the main figures which helped propel the Bullionist group. Ricardo published "The Price of Gold", and "The High Price of Bullion; a Proof of the Depreciation of Bank Notes", which made him well known as an economist.
He, in turn, helped develop the Labor theory of Value which states "any commodity's natural value is determined by cost of production". Thorton was known for his opposition to the real bills doctrine