Japan’s tragedy is a testament to the power of nature and the frailty of man. But one human creation will emerge from this mess looking stronger than before: Japan’s central bank. In the days since the earthquake, the Bank of Japan has printed trillions of new yen. If you doubt this activism was warranted, consider what followed earthquakes in the era before central banks.

The April 1906 earthquake in San Francisco is a case in point. The damage amounted to about 1.5 per cent of US gross domestic product; to meet the flood of claims, insurers shipped gold from New York to San Francisco and Wall Street was emptied of liquidity. By March 1907, American stocks had declined by about a fifth from their peak, even though the stimulus of reconstruction might have been expected to support them.

Borrowers could no longer get credit. New York City failed to find takers for a bond issue and nearly defaulted, while bank runs threatened several large trust companies, the forerunners of today’s investment banks. The trusts scrambled to raise money by dumping stock portfolios, and by late 1907 US equities were down by half from their peak. Meanwhile, unemployment jumped from under 3 per cent to more than 8 per cent.