British Public Debt Management Operations in the Early Nineteenth Century

Nesrine Bentemessek Kahia

A chapter in Research in the History of Economic Thought and Methodology: Including a Symposium on Public Finance in the History of Economic Thought, 2020, vol. 38A, pp 13-32 from Emerald Group Publishing Limited

Abstract: By the beginning of the nineteenth century, British public debt, accumulated over the eighteenth century and during the Revolutionary and Napoleonic Wars (1793–1815), had attained extremely high levels, at times even reaching 200% of the gross national product (GNP). This increase in debt paradoxically coexisted with the early progression of the industrial revolution. In this chapter, we explain this concomitance by the effective policies of sovereign debt management put in place by the State and the Bank of England (BoE). First, the State put in place measures to lower its risk of default by funding its debt with tax revenue that would allow it to honour due payments. Second, following the suspension in 1797 of cash payments for pounds sterling, the BoE, in addition to its role in financing the State, followed an active policy of sovereign debt management, promoting both bank liquidity and market liquidity.

Keywords: Public debt management; market liquidity; bank liquidity; Bank of England; solvency; default risk; fiscal policy; G21; G28; H56; H61; H63; N23 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eme:rhetzz:s0743-41542020000038a004

DOI: 10.1108/S0743-41542020000038A004

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