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The Parable of the Fiscal-Military State: the Napoleonic Bank of England

Author

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  • Chadha, J. S.

Abstract

Following Dickson (1967) I examine the role of the Bank of England in supporting the issuance of public debt during the Revolutionary and Napoleonic Wars. The Bank expanded its balance sheet with purchases of government liabilities. It was treated as an “Engine of the State†throughout the eighteenth century, allowing “Britannia to rule the waves on a sea of credit†. Although the Bank of England suspended the convertibility of pound sterling into gold in 1797, which may have allowed a monetary expansion, there is no strong evidence that this led to a permanent increase in the price level. Post-financial crisis central balance sheet expansions have rather been explained as a monetary rather than fiscal intervention, which over time looks questionable.

Suggested Citation

  • Chadha, J. S., 2025. "The Parable of the Fiscal-Military State: the Napoleonic Bank of England," Cambridge Working Papers in Economics 2522, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2522
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    More about this item

    Keywords

    Bank of England; War Finance; Central Bank Balance Sheet;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913

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