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British BankingContinuity and Change from 1694 to the Present$
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Ranald C. Michie

Print publication date: 2016

Print ISBN-13: 9780198727361

Published to Oxford Scholarship Online: December 2016

DOI: 10.1093/acprof:oso/9780198727361.001.0001

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Crises and Crescendo, 1694–1825

Crises and Crescendo, 1694–1825

(p.46) 2 Crises and Crescendo, 1694–1825
British Banking

Ranald C. Michie

Oxford University Press

The Bank of England was formed in 1694 and until 1825 possessed a monopoly of joint-stock banking in England and Wales though not in Scotland and Ireland. That influenced the pattern of banking development in England and Wales as it prevented the formation of large banking companies to rival the Bank of England. The Bank of England also had a more direct influence as it dominated note issue in London and was a major purchaser of the bills of exchange that banks accepted from their customers when making loans. At a time when all banks lacked both capital and branches, they conducted their business using the Originate and Distribute model. This led to a cycle of over-lending followed by rapid contraction generating numerous crises. The Bank of England contributed to this instability by issuing large numbers of notes, especially after 1797 when their convertibility into gold was suspended.

Keywords:   Bank of England, bank notes, bills of exchange, National Debt, Originate and Distribute, discount market, bank clearing, suspension of convertibility, French Wars, Gold Standard

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