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. The Industrial Revolution, according to this view, is the 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. This led to 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 Duncombe and Kent. The excellent records from Hoare's, founded by Sir Richard Hoare in 1672, offer particular insight. Numerous entrants into the banking business tried their hand at deposit-taking and lending in the early 17th century; few survived and fewer thrived. Hoare's and a small group of competitors did both. Temin and Voth chart the growth of the successful banks in the face of frequent wars and heavy-handed regulations. Their new data allows insights into the interaction between financial and economic development. Government regulations such as (a sharply lower) maximum interest rate caused severe misallocation of credit, and a misguided attempt to lighten the nation's debt burden led directly to the South Sea Bubble in 1720. Frequent wars caused banks to call in loans, resulting in a sharply slower economic growth rate. Based on detailed micro-data, the authors present conclusive evidence that wartime borrowing crowded out investment. Far from fostering economic development, England's financial revolution after 1688 did much to stifle it -- 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 periods of economic and financial development.

Prometheus Shackled: Goldsmith Banks and England's Financial Revolution after 1700

Business & Money

Voth, Hans-Joachim

TEMIN, Peter

Economics

Oxford University Press

The authors present a comprehensive set of performance measures for financial centers, and compares the competitive positions of Frankfurt, London, and Paris. London appears to be ahead in most product areas. Interestingly, its strength appears to be growing rapidly in the highly commoditized, low margin areas of business such as forex trading. The authors conclude that London 's source of strength is beginning to be undermined, but that it is unlikely that either Frankfurt or Paris will "overtake" London anytime soon. The city's strength is unlikely to be undermined by decisions to opt in or out of EMU.

European Capital Markets

Achleitner, Ann-Kristin

Mattern, Frank

Seifert, Werner G.

Streit, Clara C.

PALGRAVE~MACMILLAN

What the loans and defaults of a sixteenth-century Spanish king can tell us about sovereign debt today
Why do lenders time and again loan money to sovereign borrowers who promptly go bankrupt? When can this type of lending work? As the United States and many European nations struggle with mountains of debt, historical precedents can offer valuable insights. Lending to the Borrower from Hell looks at one famous case―the debts and defaults of Philip II of Spain. Ruling over one of the largest and most powerful empires in history, King Philip defaulted four times. Yet he never lost access to capital markets and could borrow again within a year or two of each default. Exploring the shrewd reasoning of the lenders who continued to offer money, Mauricio Drelichman and Hans-Joachim Voth analyze the lessons from this important historical example.
Using detailed new evidence collected from sixteenth-century archives, Drelichman and Voth examine the incentives and returns of lenders. They provide powerful evidence that in the right situations, lenders not only survive despite defaults―they thrive. Drelichman and Voth also demonstrate that debt markets cope well, despite massive fluctuations in expenditure and revenue, when lending functions like insurance. The authors unearth unique sixteenth-century loan contracts that offered highly effective risk sharing between the king and his lenders, with payment obligations reduced in bad times.
A fascinating story of finance and empire, Lending to the Borrower from Hell offers an intelligent model for keeping economies safe in times of sovereign debt crises and defaults.

Lending to the Borrower from Hell: Debt, Taxes, and Default in the Age of Philip II (The Princeton Economic History of the Western World)

Drelichman, Mauricio

Princeton University Press

Time and Work in England During the Industrial Revolution

This book reconstructs patterns of time use in England after 1750 It exploits previously unused court records to reconstruct the working lives of Englishmen and women at the dawn of the Industrial Age Working hours became much longer Within 80 years the length of the working year increased by approximately 20 percent

Time and Work in England during the Industrial Revolution

History

Europe

Xlibris, Corp.

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Books by Voth, Hans-Joachim