Hoare’s Bank and its Customers, Private Borrowing 原文.docx

Private Borrowing during the Financial Revolution: Hoare’s Bank and its Customers,1702-24PeterTeminandHans-JoachimVoth Thisversion:18.11.2004AbstractTheFinancialRevolutionimprovedtheBritishgovernment’sabilitytoborrow,and thusitsabilitytowagewar.NorthandWeingastarguedthatitalsopermittedprivate partiestoborrowmorecheaplyandwidely.Wetesttheseinferenceswithevidence from a London bank. We confirm that private bank credit was cheap in the early eighteenth century, but we argue it was not available widely. Importantly, the government reduced the usury rate in 1714, sharply reducing the circle of private clientsthatcouldbeservedprofitably.PrivateBorrowingduringtheFinancialRevolution: Hoare’sBankanditsCustomers,1702-1724IntroductionInaclassicstudy,DicksonagenerationagotermedthemomentouschangesinBritish government finances after 1688 a Financial Revolution. The changes undertaken in Britain’s fiscal position enabled the government to borrow far more extensively and cheaplythanbefore.TheresultwastoencourageWilliam’smilitaryadventuresonthe continentintheearlypartoftheeighteenthcenturyandmuchmoreextensivemilitary operationsattheendofit.NorthandWeingastmorerecentlyarguedthatthechanges inBritishgovernmentalfinanceshadaprofoundandbeneficialeffectonbusiness.Theyarguedthatthesameinstitutionalchangesthathelpedthegovernment–inthe main, an improvement in property rights –also helped private individuals. This inferencewasofferedasapartialexplanationtotheperennialquestionofwhythe IndustrialRevolutiontookplaceinEngland.1Wearguethattherewasadisjunctionbetweenthechangesingovernmentandprivate finances, between the macroeconomic and microeconomic changes taking place in eighteenth-centuryEngland.Privatefinancialmarketsandcreditintermediarieswere operating well at this time, aggregating savings and allocating capital. Yet the Hanoverian state’s intervention in private credit markets undermined the positive effects that could have flowed from this. Intermediaries operated within the constraintsi