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British Public Debt Management Operations in the Early Nineteenth Century

In: Research in the History of Economic Thought and Methodology: Including a Symposium on Public Finance in the History of Economic Thought

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  • Nesrine Bentemessek Kahia

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.

Suggested Citation

  • Nesrine Bentemessek Kahia, 2020. "British Public Debt Management Operations in the Early Nineteenth Century," Research in the History of Economic Thought and Methodology, in: Research in the History of Economic Thought and Methodology: Including a Symposium on Public Finance in the History of Economic Thought, volume 38, pages 13-32, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:rhetzz:s0743-41542020000038a004
    DOI: 10.1108/S0743-41542020000038A004
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    More about this item

    Keywords

    Public debt management; market liquidity; bank liquidity; Bank of England; solvency; default risk; fiscal policy; G21; G28; H56; H61; H63; N23;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913

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