A Tale of Two Currencies: British and French Finance During the Napoleonic Wars

Abstract

The record of British and French finance during the Napoleonic wars presents the striking picture of a financially strong nation abandoning the gold standard, borrowing heavily, and generating inflation, while a financially weaker country followed more “orthodox” policies. This paradoxical behavior is explained by Britain's strong credibility that allowed more flexible policies, while France's poor reputation forced reliance on taxation.

The Spinning Jenny and the Industrial Revolution: A Reappraisal

“…As for what concerns the value of i, Allen uses a value of i U K = 5% for England ( [2], Figure 8.1, p.188), but he never explicits the value of the French interest rate, i F R . To make the present result particularly robust, Figure 1 was drawn taking from the literature the estimate of i F R that was most favorable to Allen's argument and most unfavorable to ours: that is i F R = 15%, which is the highest estimate found in the literature ( [5], p.306-09; [7], p.302; [8], p.169-73). Notice also that, more generally, the essential message of Figure 1 is extremely robust to variations of ρ F R : holding other things constant, J would fall in Region I only if ρ F R ≥ 0.66.…”

Debt Sustainability in Historical Perspective: The Role of Fiscal Repression

“…And what can we learn from the emergence of fiscally successful states in early modern Europe? Many accounts of how Britain defeated France and Spain on the financial battlefield, and succeeded in its bid for European hegemony, emphasize fiscal discipline and the willingness to increase taxes after each war (Brewer 1990;Bordo and White 1991;Ferguson 2002).…”

The Bank of England as Lender of Last Resort: New Historical Evidence from Daily Transactional Data

“…Although it was re-established in 1821, a structural break seemed to have occurred from 1797, with the Bank responding to financial crises by lending more freely thereafter. The rationale for the suspension was debated at that time and has been debated since by scholars (Bordo and White 1991;Chadha and Newby 2013;O'Brien and Palma 2016). 49 The note issue of the Bank increased in the immediate aftermath of the restriction.…”