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Not an ordinary bank but a great engine of state: The Bank of England and the British economy, 1694–1844

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  • Patrick K. O'Brien
  • Nuno Palma

Abstract

From its foundation as a private corporation in 1694, the Bank of England extended large amounts of credit to support the British private economy and to support an increasingly centralised British state. The Bank helped the British state reach a position of geopolitical and economic hegemony in the international economic order. In this paper, we deploy recalibrated financial data to analyse an evolving trajectory of connections between the British economy, the state, and the Bank of England. We show how these connections contributed to form an effective and efficient fiscal–naval state and promote the development of a system of financial intermediation for the economy. This symbiotic relationship became stronger after 1793. The evidence that we consider here shows that although the Bank was nominally a private institution and profits were paid to its shareholders, it was playing a public role well before Bagehot's doctrine.

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  • Patrick K. O'Brien & Nuno Palma, 2023. "Not an ordinary bank but a great engine of state: The Bank of England and the British economy, 1694–1844," Economic History Review, Economic History Society, vol. 76(1), pages 305-329, February.
    • Handle: RePEc:bla:ehsrev:v:76:y:2023:i:1:p:305-329
    DOI: 10.1111/ehr.13191
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    Cited by:

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    3. Brzezinski, Adam & Palma, Nuno & Velde, François R., 2024. "Understanding money using historical evidence," CEPR Discussion Papers 18972, C.E.P.R. Discussion Papers.
    4. Palma, Nuno & Sissoko, Carolyn, 2022. "Crowding in during the Seven Years' War," CEPR Discussion Papers 17766, C.E.P.R. Discussion Papers.
    5. António Henriques & Nuno Palma, 2023. "Comparative European Institutions and the Little Divergence, 1385–1800," Journal of Economic Growth, Springer, vol. 28(2), pages 259-294, June.
    6. Adam Brzezinski & Roberto Bonfatti & K. KıvançKaraman & Nuno Palma, 2020. "Monetary Capacity," Economics Series Working Papers 926, University of Oxford, Department of Economics.
    7. Patrick K. O'Brien & Nuno Palma, 2023. "Not an ordinary bank but a great engine of state: The Bank of England and the British economy, 1694–1844," Economic History Review, Economic History Society, vol. 76(1), pages 305-329, February.
    8. Adam Brzezinski & Nuno Palma & François R. Velde, 2024. "Understanding Money Using Historical Evidence," Annual Review of Economics, Annual Reviews, vol. 16(1), pages 571-595, August.

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    More about this item

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • N43 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: Pre-1913

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