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Carl Wennerlind
Copyright Date: 2011
Published by: Harvard University Press
Pages: 928
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  • Book Info
    Book Description:

    With a circulating credit currency, a modern national debt, and sophisticated financial markets, England developed a fiscal-military state that instilled fear and facilitated the first industrial revolution. Yet this new system of credit was precarious and prone to accidents, and it depended on trust, public opinion, and ultimately violence.

    eISBN: 978-0-674-06266-5
    Subjects: History, Economics, Political Science

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-xii)
  3. Introduction
    (pp. 1-14)

    Credit is undoubtedly one of mankind’s most enigmatic and powerful achievements. As the influential political economist Charles Davenant pointed out in 1698, during the aftermath of the first crisis of the English Financial Revolution, credit is simultaneously “fantastical and nice” and dangerously precarious. Based on cooperation, trust, and honesty, the new system of credit implemented during the Financial Revolution fundamentally transformed England. Comprised of a long-term funded national debt, an active securities market, and a widely circulating credit currency, the modern financial system enabled England to create a powerful fiscal-military state, to forge a dominant global empire, and to move...

  4. I. Alchemy and Credit

    • 1 The Scarcity of Money Problem and the Birth of English Political Economy
      (pp. 17-43)

      England emerged from the Elizabethan period with a sense of growing optimism and confidence about its future commercial and geopolitical prospects. The early Stuart monarchs ambitiously sought to modernize the state apparatus to more effectively administer domestic affairs and to play a more prominent role in the European power game. England’s rapidly expanding merchant corps were also poised to boost their power by capitalizing on commercial opportunities opening up at home and around the globe. Yet, at the same time, the nation was besieged by a threatening social instability rooted in rural dislocation, perennial unemployment, and widespread poverty.¹

      Tudor officials...

    • 2 The Alchemical Foundations of Credit
      (pp. 44-80)

      The scarcity of money problem continued to plague England throughout the Civil War and the interregnum. The failure of neo-Aristotelian political economy to provide a solution to England’s troubles motivated a number of suggestions for how to expand the money stock. Some of the most creative and influential proposals were articulated by members of the Hartlib Circle, the period’s premier scientific and social reform group. Taking advantage of the relative void in political and religious authority during the Civil War, the Hartlibians articulated a radically new political economy that embraced the period’s optimistic and progressive Zeitgeist. Contrary to the neo-Aristotelian...

  5. II. Death Penalty and Credit

    • 3 The Epistemology of Credit
      (pp. 83-122)

      The Hartlib Circle’s rethinking of money sparked a vibrant debate on how to design an English credit currency. In arguing for the feasibility of widely circulating credit notes and highlighting their importance to a modernizing society, the Hartlibians had carefully considered the potential of credit to contribute to the universal reformation of nature, society, and mankind. Yet, despite their systematic reassessment of money and credit, they left perhaps the most essential ingredient of credit—the concept of trust—relatively unexplored. Many subsequent seventeenth-century political economists, such as Sir William Petty, Nicholas Barbon (1637–1698), and Charles Davenant, emphasized the importance of...

    • 4 Capital Punishment in Defense of Credit
      (pp. 123-158)

      The successful launch of the Bank of England in 1694 opened a new chapter in the history of money. The Bank’s paper notes—secured by a fractional reserve of silver coin, profits from its banking operations, and a stream of interest payments from the government—constituted Europe’s first widely circulating credit currency. Although the Bank’s capital stock was subscribed instantaneously and its notes entered circulation smoothly, the Bank’s launch coincided with a severe monetary crisis. Counterfeiting, clipping, and coining had substantially eroded the amount of silver in the English coin to the point where it was no longer able to...

  6. III. Slavery and Credit

    • 5 Public Credit and the Public Sphere
      (pp. 161-196)

      A profound crisis disrupted the English Financial Revolution in 1710. Public credit was in a tailspin, with government bonds trading at a heavy discount, forcing the Treasury to borrow on increasingly unfavorable terms.¹ The rapidly deteriorating trust in public credit jeopardized the sustainability of the still developing Financial Revolution and thus the stability of the fiscal-military state. The crisis—called by contemporaries the “Loss of the City”—was particularly disturbing because it revealed the extent to which public credit was no longer an exclusive affair between the Crown and a small number of wealthy financiers. It was now subject to...

    • 6 The South Sea Company and the Restoration of Public Credit
      (pp. 197-234)

      Robert Harley launched the South Sea Company in 1711, hoping it would provide a comprehensive solution to the financial crisis. Whereas he had managed to keep public credit afloat by means of a series of financial palliatives, Harley’s new scheme was an ambitious attempt designed to restore stability to the nascent financial structure. The South Sea Company undertook a debt-for-equity and private-for-public swap, exchanging company stocks for a set of deeply discounted unsecured government bonds in hopes of reviving public credit and once again making it affordable for the Treasury to borrow. In order to make this transaction appealing to...

  7. Epilogue
    (pp. 235-246)

    Comparing the aftermath of the South Sea Bubble to the plague ravaging the south of France in 1720, the famous essayists John Trenchard (1668–1723) and Thomas Gordon (d. 1750) claimed in Cato’s Letters that England had a “contagion of another sort, more universal, and less merciful, than that of Marseilles: The Latter has destroy’d, we are told, about sixty thousands lives; ours has done worse, it has render’d a much greater number of lives miserable, who want but the sickness to finish their calamity.”¹ The author of another pamphlet signed A Lover of his Country complained that the post-bubble conditions...

  8. Notes
    (pp. 249-336)
  9. Acknowledgments
    (pp. 337-340)
  10. Index
    (pp. 341-348)