When governments restructured their debts after the Napoleonic Wars and returned to the market to raise fresh funds they often did so in London, and later in Paris as well. These were the principal markets specializing in international finance in the 19th century. However, they were not the centers for sovereign lending in the…
As leading commercial cities developed more active and sophisticated financial markets, some cities became centers for global finance. London and Paris became such cities in the 19th century, serving the financial needs not only of their own countries but even those of the continent and the world. Governments of other countries turned to these cities,…
Taxation is a complicated procedure and it takes a reasonably sophisticated government to tax a population by whatever means it pleases. Even modern governments, those of middle-income or wealthy countries included, often struggle to collect certain taxes effectively. In the case of an income tax, an income needs to be validated some way, and this…
State borrowing allows governments to pursue undertakings they would otherwise find impossible. Whether for large infrastructure projects or social reforms, public borrowing can create greater prosperity or expensive mistakes. When the latter are the result and the borrowing was done domestically, the public is hurt doubly, both as borrower and as investor. In the case…
In the early days of government borrowing, public borrowing went hand-in-hand with estates and inheritances. Bonds and annuities, both means by which states in early modern Europe borrowed, were also convenient ways of transferring wealth to widows and heirs. Perhaps nowhere was this association clearer than in London, especially in the 17th century. The City…
In the 1970s, many countries were hobbled by the energy crises of 1973-74 and 1979. Of course, some made out very well. Oil producing countries spurred along by ‘resource nationalism’, particularly those that did not themselves slash production to keep prices elevated, saw an oil windfall transform their economies. However, oil is a volatile basis…
Financial development comes in waves, often washing up in the same place, whether 17th century Holland or 18th century London. In the Late Middle Ages, the centers of European finance were largely in Italy. Many innovations in finance during this era, from bills of exchange to insurance and double-entry bookkeeping to public bonds, either originated…
During the First World War, governments were financially strained to an unprecedented degree by the costs of war. Across Europe, governments introduced new taxes, including income taxes, suspended the link between gold and paper money, and raised new loans by appealing directly to the patriotism of the public. While these drastic maneuvers in times of…
Throughout the 18th century, French public finances teetered on the brink. The state then found itself in deep financial ruin within a few years of the beginning of the French Revolution, culminating in a default on the debt in 1796-97. With this, the outlook for the next century would hardly seem promising. The 19th century…
In the 12th century, a senior official in the English treasury wrote a book describing the inner workings of his institution, likely for the benefit of decades of successors. It is also of great help to historians. The Dialogus de Scaccario, or ‘Dialogue of the Exchequer’, is a window into the English treasury in the…
The Second World War not only pulled American economic output closer to its potential capacity, but also transformed its composition. War-related industries were prioritized and the production and consumption of other goods was controlled by rationing. This is fairly well known. What is less well known are the ways credit was mobilized during the war,…
Lending money, even at a premium rate of interest, to a government facing existential crisis is hardly a safe proposition. Yet, it is often in these times of crisis, in these times of the greatest anxiety and disquiet that money is most desperately needed. During the American Civil War, the Union government’s Secretary of the…
