Money, Politics and Power: Banking and Public Finance in Wartime England, 1694–96

255 Pages·2017·3.072 MB·English

by  Richard A. Kleer

Money, Politics and Power
The Nine Years’ War with France was a period of great institutional innova-
tion in public finance and of severe monetary turmoil for England. It saw the
creation of the Bank of England; a sudden sharp fall in the external value
of the pound; a massive undertaking to melt down and recoin most of the
nation’s silver currency; a failed attempt to create a National Land Bank as
a competitor to the Bank of England; and the ensuing outbreak of a sharp
monetary and financial crisis.
Histories of this period usually divide these events into two main topics,
treated in isolation from one another: the recoinage debate and ensuing
monetary crisis and a ‘battle of the banks’. The first is often interpreted
as the pyrrhic victory of a creditor-dominated parliament over the n ation’s
debtors, one that led very predictably to the ensuing monetary crisis.
The second has been construed as a contest between whig-merchant and
tory-gentry visions of the proper place of banking in England’s future.
This book binds the two strands into a single narrative, resulting in a very
different interpretation of both. Parliamentary debate over the recoinage
was superficial and misleading; beneath the surface, it was just another front
for the battle of the banks. And the latter had little to do with competing
philosophies of economic development; it was rather a pragmatic struggle
for profit and power, involving interlocking contests between two groups of
financiers and two sets of politicians within the royal administration. The
monetary crisis of summer 1696 was not the result of poor planning by the
Treasury; rather it was a continuation of the battle of the banks, fought on
new ground but with the same ultimate intent – to establish dominance in
the lucrative business of private lending to the crown.
Richard A. Kleer is an Associate Professor in the Department of Economics,
and Dean of the Faculty of Arts, at the University of Regina, Canada.
Financial History
Series editors: Farley Grubb and Anne L. Murphy
For a full list of titles in this series, please visit www.routledge.com/series/
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27 Money, Politics and Power
Banking and Public Finance in Wartime England, 1694–96
Richard A. Kleer
Money, Politics and Power
Banking and Public Finance in Wartime
England, 1694–96
Richard A. Kleer
First published 2017
by Routledge
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and by Routledge
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© 2017 Richard A. Kleer
The right of Richard A. Kleer to be identified as author of this work
has been asserted by him in accordance with sections 77 and 78 of
the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or
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or registered trademarks, and are used only for identification and
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British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Kleer, Richard A., author.
Title: Money, politics and power: banking and public finance
in wartime England, 1694–96 / Richard A. Kleer.
Description: Abingdon, Oxon; New York, NY: Routledge, 2017. |
Includes index.
Identifiers: LCCN 2016057297 | ISBN 9781138036666 (hardback) |
ISBN 9781315178431 (ebook)
Subjects: LCSH: Finance, Public—Great Britain—History—
17th century. | Banks and banking, British—History—17th century. |
Monetary policy—Great Britain—History—17th century. |
Financial crises—Great Britain—History—17th century. |
Great Britain—Politics and government—1689–1702.
Classification: LCC HJ1012 .K54 2017 | DDC 336.4109/032—
dc23LC record available at https://lccn.loc.gov/2016057297
ISBN: 978-1-138-03666-6 (hbk)
ISBN: 978-1-315-17843-1 (ebk)
Typeset in Times New Roman
by codeMantra
To Ben Vandezande, a gifted teacher who inspired in me a love
of history
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Contents
List of illustrations xi
Preface xiii
Acknowledgements xv
List of abbreviations xvii
1 Introduction 1
Overview 1
A short history of histories of the recoinage 4
A short sketch of English parliamentary politics 6
Terminology and conventions 8
PART I
The institutional and economic context 13
2 England’s wartime system of public finance 15
Military spending, taxes and government borrowing
(short- and long-term) 15
Short-term government borrowing 16
The wide range of taxes and tallies 18
The central role of specie 19
Funding an English army in Flanders 23
3 The inception of the Bank of England 29
Paterson’s ‘Transferable Fund of Interest’ 29
A comparison with Godfrey’s ‘Bank of England’ 31
The Bank in operation 33
The importance of specie to the Bank’s operations 44
viii Contents
4 Parliamentary measures against clipping and bullion exports, 1689–95 54
The want of money, 1690–94 54
The problem of clipping, 1694–95 59
5 The growing problem of war remittances 68
The Bank’s first remittance contract, 1694–95 68
A new remittance contract and a new exchange-rate shock,
March–April 1695 73
Alternative measures: permission money and the Antwerp Agency 77
A summer of disappointments 80
Summary 88
6 Land-bank projects, 1694–95 95
The initial land-bank projects of Chamberlen and Briscoe 96
The Lincoln’s-Inn Bank of Asgill and Barbon 101
Duelling projects 104
Summary 108
PART II
The political and policy narrative 115
7 The administrative debate on the state of the currency,
September–November 1695 117
8 The act for remedying the ill state of the coin,
November 1695–January 1696 126
9 Banking projects and public finance, early 1696 135
Introduction 135
The newcomers 137
Chamberlen’s Office of Land Credit 138
The National Land Bank 139
Proposals from inside the Treasury 141
The Lincoln’s-Inn Bank and the Land Bank United 143
The Bank of England 145
10 Guineas and the National Land Bank, February–April 1696 150
The Commons opts for a National Land Bank 150
The debate over the high price of guineas 152
The bill for the National Land Bank, April–May 161
Contents ix
11 Connecting the dots: monetary policies as means to political ends 171
The administrative debate 173
The recoinage bill 174
The plate bill and the guineas clauses 177
12 Monetary and financial crisis in England and the plight of the
English army in Flanders, spring–summer 1696 186
Monetary difficulties before 4 May 186
A genuine monetary crisis breaks out, summer 1696 193
Negotiations with the National Land Bank 197
The experiment with Exchequer bills 203
The Bank of England returns 213
13 Concluding remarks 229
Index 233