A Run on the Bank Can Enhance a Tax Resistance Campaign

Tax resistance campaigns have sometimes tried to amplify their impact by encouraging bank runs — that is, asking people to withdraw all of their savings from banks, preferably in hard currency. Sometimes this is meant to directly reduce the assets available to the government, other times it is more of an attempt to harm the economic system and thereby hurt the government more indirectly.

If the government forbids people from withdrawing their own money, or is unable to meet the sudden demands for currency, the credibility of the banking system is called into question, which can make it difficult for the regime to continue in business. If the government allows people to withdraw their money, and if enough of them do so, this reduces the capital available to the banks, reduces their ability to confidently loan money (for instance, to the government), and can have similar effects. The government may respond to such a crisis by further degrading the currency, but the long-term effects of this can also serve to undermine the government.

  • In the final days of the agitation in the United Kingdom that led up to the Reform Act of , the movement in favor of the act augmented its tax resistance campaign with a run on the Bank of England. London awoke one morning to find its walls plastered with posters reading “To stop the Duke: Go for Gold!” (“the Duke” being the Duke of Wellington, who opposed the Reform Act and who was beginning to form a new government). About £1.8 million in gold was withdrawn from the Bank of England in the first days of the campaign (out of roughly £7 million in the Bank’s possession). Some commentators believe this to have been the turning point in the campaign. The King turned his back on the Duke, and invited Earl Grey to form a government with the authority to pass the Reform Act into law.
  • In , Russian socialists issued a manifesto in which they called on the proletariat to withdraw all of their savings from the banks in gold. They billed this as an act of self-defense, saying that the government had squandered its reserves on speculation, leaving it no money to pay its bills. The manifesto said that the wealthy had already sent their wealth abroad to avoid the coming collapse.
  • Some modern war tax resisters avoid depositing money in banks as more of a boycott than a bank run — because banks operate as war financiers, because bank deposits are particularly vulnerable to government seizure, and because the profits of banks are taxable. There was an interesting thread about banking on a war tax resistance email list a couple of years back.
  • The “Move Our Money” project claims that it has convinced Americans to shift more than half a billion dollars from banks to credit unions. “We stand against the bankers, CEOs and lobbyists who have hijacked our democracy to serve themselves at the expense of everyone else.”
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