Prometheus Shackled: Goldsmith Banks and Englands Financial Revolution after 1700

Hardcover | January 16, 2013

byPeter Temin, Hans-Joachim Voth

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After 1688, Britain underwent a revolution in public finance, and the cost of borrowing declined sharply. Leading scholars have argued that easier credit for the government, made possible by better property-rights protection, lead to a rapid expansion of private credit, and see the IndustrialRevolution as a result of the preceding revolution in public finance. In Prometheus Shackled, prominent economic historians Peter Temin and Hans-Joachim Voth examine this hypothesis using new, detailed archival data from 18th century banks. They conclude the opposite: the financial revolution led to an explosion of public debt, but it stifled private credit. Thisresulted in markedly slower growth in the English economy. Temin and Voth collected detailed data from several goldsmith banks - Child's, Gosling's, Freame and Gould, Hoare's, and Duncome and Kent. The authors look closely at Hoare's, founded by Sir Richard Hoare in 1672, because of its excellent records. Numerous entrants tried their hand at the new business of deposit banking; few survived and fewer thrived. Hoare's and a small group of competitors did both. Temin and Voth chart their growthin the face frequent wars and heavy-handed regulations. This new data allows insights into the interaction between financial and economic development. Government regulations such as setting a maximum interest rate caused severe misallocation of credit; a misguided attempt to lighten the nation'sdebt burden led directly to the South Sea Bubble in 1720 - analyzed in detail here - and frequent wars caused banks to call in loans, leading to sharply slower economic growth rate. Wartime borrowing crowded out investment. Far from fostering economic development, England's financial revolutionafter 1688 did much to slow it down - the Hanoverian "warfare state" was a key reason for slow growth during Britain's Industrial Revolution. Prometheus Shackled is a revealing new take on one of the most important eras of financial development.

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After 1688, Britain underwent a revolution in public finance, and the cost of borrowing declined sharply. Leading scholars have argued that easier credit for the government, made possible by better property-rights protection, lead to a rapid expansion of private credit, and see the IndustrialRevolution as a result of the preceding revo...

Peter Temin is Gray Professor Emeritus of Economics at MIT, and author of many books, including, Engines of Enterprise: An Economic History of New England Press, Lessons from the Great Depression, and Did Monetary Forces Cause the Great Depression? Hans-Joachim Voth is ICREA Research Professor in the Economics Department at Universit...

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Format:HardcoverDimensions:224 pages, 9.25 × 6.12 × 0.98 inPublished:January 16, 2013Publisher:Oxford University PressLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:019994427X

ISBN - 13:9780199944279

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Table of Contents

AcknowledgmentsIntroduction1. Earning and Spending in Eighteenth-century London2. The Financial Revolution3. Goldsmith Banks4. Borrowers, Investors and Usury Laws5. The South Sea Bubble6. The Triumph of Boring Banking7. Finance and Slow Growth During the Industrial Revolution8. ConclusionsNotesReferencesIndex