August 13, 2009
Ok it has nothing to do with the theme of the week (the Glorious Revolution), but I’m sure you hadn’t remarked there was a theme of the week anyhow.
So here is a very compeling story that explains better than anything else the process of financial revolution; here is a table showing the interest rates in 16th and 17th century for private loans used by small and medium businessmen:
Source: Dehing, Pit and Marjolein ‘T hart (1997) “Linking the fortunes: currency and banking, 1550-1800” in Marjolein ‘T Hart, Joost Jonker and Jan Luiten van Zanden, eds., A financial history of the Netherlands, Cambridge: Cambridge University Press, p.44-45.
August 12, 2009
Quinn, Stephen (2001) “The Glorious Revolution’s Effect on English Private Finance: A Microhistory 1680-1705”, The Journal of Economic History, 61/3: 593-615.
Disclaimer: this summary is written by the contributors of the blog and not by the author of the article. Any mistake is Manuel’s fault (and he shall be punished).
According to North and Weingast’s famous thesis, the investiture of William III of England in 1688, the “Glorious Revolution”, triggered a quick modernization of the British financial system – prompting in turn a fall of the interest rates. But the arrival of the new king also led the realm into a new war against France which lasted nine years and increased public debt from £1 million to £19 million (⅓ of the national income; p.593). Read the rest of this entry »
April 28, 2009
Temin, Peter and Voth, Hans-Joachim (2008) “Private borrowing during the financial revolution: Hoare’s Bank and its customers, 1702-24”, Economic History Review, 61/3, 541-564.
The Financial Revolution is said to have allowed the British government to borrow widely and cheaply. Famously, North and Weingast added that it also had a profound and beneficial effect on private businesses (p.541). To assess the latter claim, the authors use data collected from the archives of a small London goldsmith bank, Hoare’s (p.542). It is likely that their sample is fairly representative since there were only a dozen such establishments around 1700s. The key event of the period is the lowering of the legal maximum interest rate from 6 to 5% in 1714 by the heavily indebted British government at the end of the War of Spanish Succession (p.543). Read the rest of this entry »