‘A new species of mony’: British Exchequer bills, 1701–1711

Kleer, Richard A.

doi:10.1017/s0968565015000220

Cited by 4 publications

(7 citation statements)

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“…At the end of 1706 some 180 million lt. worth of mint bills circulated in Paris, a sum equivalent to the costs of one military campaign. By contrast with England, where each issue of exchequer bills was fixed by Parliament (Dickson 1967; Kleer 2015), the number of French mint bills printed and distributed was unknown. Inevitably, lack of trustworthy information fuelled rumours and eroded confidence.…”

Section: IVmentioning

confidence: 99%

“…In England, the Glorious Revolution of 1688 and the ensuing Financial Revolution were the most visible responses to the challenges posed by Louis XIV's ambition, and several scholars (Dickson 1967; Wennerlind 2011; Desan 2014) have shown how these led to a new monetary constitution which successfully addressed what Bernholtz (2003) has called the ‘inflationary bias of monetary regime’ to fund wartime deficit. Yet not all problems were solved: for example, Kleer (2015) has identified limits to the capacity of the Treasury and the Bank of England to circulate credit instruments in the form of exchequer bills.…”

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‘The most difficult financial matter that has ever presented itself’: paper money and the financing of warfare under Louis XIV

Félix

2018

Financial History Review

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Based on an extensive survey of French primary sources and a discussion of the recent literature on fiscal policy in France and Europe during Louis XIV's wars, this article revisits the rationale behind the first experiment with paper money undertaken by finance minister Michel Chamillart, comparing it to other belligerents’ strategies, in particular England's, to adjust their monetary regime to the challenges of funding long wars of attrition. The article shows how concerns about economic activity, coinage and the need to finance the war deficit led to a series of debasements of the French currency, the establishment of a bank in the form of aCaisse des empruntsand the introduction of mint bills, which became legal tender and caused the first experience of fiat money inflation in history. Whereas Chamillart's personal shortcomings have been recently suggested as the cause of Louis XIV's humbling in the War of the Spanish Succession, I argue on the contrary that the introduction of paper money in 1704 was key to the capacity of France to sustain its military effort, but that a succession of military defeats against a more powerful coalition led to inflation. I also argue that the introduction of paper money saved theCaisse des empruntsand its bonds which helped sustain the war effort up until the peace. By situating the use of paper money within the broader question of the exercise of power in the absolute monarchy, this article examines the formation of fiscal policy, paying attention to the ways in which government sought advice from experts. It concludes by calling for further studies on policy- and decision-making under Louis XIV.

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Section: IVmentioning

confidence: 99%

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confidence: 99%

‘The most difficult financial matter that has ever presented itself’: paper money and the financing of warfare under Louis XIV

Félix

2018

Financial History Review

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“…In fact, most loans were to military and naval paymasters struggling to keep up with the Crown's lack of specie. Kleer's work demonstrates that monetary conditions and their relationship to the fiscal and macro economy and to wages and prices, in early modern England, remains an area of research with large potential.…”

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confidence: 99%

“…In the Financial History Review , Kleer uses the case of British exchequer bills 1701–11 to undermine Calomiris and Haber's ‘loans‐for‐rents’ interpretation of banking relationships. Kleer points out that Calomiris and Haber's recently published model assumes the Bank of England had a predominant private loan business from which it could glean monopoly profits, when, of course, not much of the Bank's business was private in the early eighteenth century. In fact, most loans were to military and naval paymasters struggling to keep up with the Crown's lack of specie.…”

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confidence: 99%