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Making the market: Trading debt at the Eighteenth-Century Bank of England

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  • Murphy, Anne L.

Abstract

As the market for the trading of the British state's debt developed during the eighteenth century, the Bank of England found itself in a difficult position. It was the self-styled guardian of public credit, an institution which stood aloof as mediator between the state and its creditors, and, at the same time, the location of a market that was often criticized for its supposed attempts to undermine the stability of the state. The Bank dealt with this seeming contradiction by attempting to create both physical and commercial separation between the business of managing the public credit and the business of trading the government's debt. This paper will show that these attempts were largely unsuccessful but that the implications of those failures for the credibility of Britain's public finances were not entirely negative.

Suggested Citation

  • Murphy, Anne L., 2014. "Making the market: Trading debt at the Eighteenth-Century Bank of England," eabh Papers 14-05, The European Association for Banking and Financial History (EABH).
  • Handle: RePEc:zbw:eabhps:1405
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    References listed on IDEAS

    as
    1. Dempster, Greg & Wells, John M & Wills, Douglas T, 2000. "A Common-Features Analysis of Amsterdam and London Financial Markets during the Eighteenth Century," Economic Inquiry, Western Economic Association International, vol. 38(1), pages 19-33, January.
    2. repec:cup:cbooks:9781107039018 is not listed on IDEAS
    3. Murphy,Anne L., 2009. "The Origins of English Financial Markets," Cambridge Books, Cambridge University Press, number 9780521519946, September.
    4. North, Douglass C. & Weingast, Barry R., 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," The Journal of Economic History, Cambridge University Press, vol. 49(4), pages 803-832, December.
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    6. Marco, Pilar Nogués & Malle-Sabouret, Camila Vam, 2007. "East India bonds, 1718–1763: early exotic derivatives and London market efficiency," European Review of Economic History, Cambridge University Press, vol. 11(3), pages 367-394, December.
    7. Anne L. Murphy, 2009. "Trading options before Black‐Scholes: a study of the market in late seventeenth‐century London1," Economic History Review, Economic History Society, vol. 62(s1), pages 8-30, August.
    8. Anne L. Murphy, 2013. "Demanding ‘credible commitment’: public reactions to the failures of the early financial revolution," Economic History Review, Economic History Society, vol. 66(1), pages 178-197, February.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Bank of England; credible commitment; financial markets; sovereign debt;
    All these keywords.

    JEL classification:

    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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