The financial revolution improved the British government s ability to borrow, and
thus its ability to wage war. North andWeingast argued that it also permitted private
parties to borrow more cheaply and widely.We test these inferences with evidence
from a London bank.We confirm that private bank credit was cheap in the early
eighteenth century, but we argue that it was not available widely. Importantly, the
government reduced the usury rate in 1714, sharply reducing the circle of private
clients ...
The financial revolution improved the British government s ability to borrow, and
thus its ability to wage war. North andWeingast argued that it also permitted private
parties to borrow more cheaply and widely.We test these inferences with evidence
from a London bank.We confirm that private bank credit was cheap in the early
eighteenth century, but we argue that it was not available widely. Importantly, the
government reduced the usury rate in 1714, sharply reducing the circle of private
clients that could be served profitably.
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