| 1749-1751 |
Pelham reduces the burden of the British national debt |
| Henry Pelham, the British prime minister, takes advantage of low market rates of
interest to reduce interest payments on the national debt from 4% to 3½% in 1749 and 3%
in 1750, and replaces a whole series of annuities by a single 3% consolidated stock or consols
in 1751. |
| p 269-270 |
|
| c. 1750- |
The Industrial Revolution in Britain |
| In the mid-eighteenth century, at the start of the Industrial Revolution there are
barely a dozen banking houses in England and Wales outside the London area. |
| p 285 |
|
| 1752 |
Britain forbids New England colonies from issuing new bills of credit |
| In addition, Parliament insists that all outstanding issues be promptly redeemed at
maturity. |
| p 462 |
|
| 1759 |
General Wolfe captures Quebec |
| During his campaign he complains about being hampered by lack of funds. Similarly
inflation is blamed for the lack of funds which led to the defeat of General Braddock in
1755. Consequently the British government decides to increase taxation in America, thus
spurring the Revolution. |
| p 459-460 |
|
| 1760 |
Wampum factory opened in New Jersey |
| Demand for wampum as currency, and later ornament, remains strong. In the factory
steel drills are used to make the holes that are used for stringing the shells together.
This increases output of wampum enormously causing inflation. The factory remains in
production for 100 years. |
| p 39-40,458,640 |
|
| 1762 |
Barings Bank founded |
| When Barings goes bankrupt in 1995 it is Britain's oldest merchant bank. |
| p 346 |
|
| 1764 |
Britain forbids all its American colonies to issue paper money as legal
tender |
| This punishes the colonies that had been careful not to over-issue paper money as well
as those that had been irresponsible. The only exception is for strictly military
purposes. "No law ... could be more equitable", wrote Adam Smith, "than the
act of parliament so unjustly complained of in the colonies." (p 348 of the Wealth
of Nations). Adam Smith was in favour of paper money but against it having the status
of legal tender. |
| p 463 |
|
| 1765 |
Royal Giro and Loan Bank founded by Frederick the Great |
| This is Germany's first note issuing bank. It later becomes the Bank of Prussia and
later still, the Reichsbank. |
| p 566 |
|
| 1766 |
Benjamin Franklin fails to persuade British parliament to allow use of
paper money in America |
| While in London Franklin tries unsuccessfully to persuade Parliament of the case for a
general issue of colonial paper money. |
| p 461-462 |
|
| 1768 |
Russia's first two public banks established |
| They are created by Catherine the Great to finance Russia's war with Turkey. |
| p 553 |
|
| 1770 |
London Clearing House created |
| The clearing house is set up by private bankers. Joint stock banks, country banks, and
the Bank of England are not admitted until many years later. |
| p 321-322 |
|
| 1770 |
Rhode Island's paper money rendered worthless by hyperinflation |
| Many of the British colonies in North America have over-issued notes causing inflation
but Rhode Island is the worst. |
| p 461 |
|
| 1771 |
The first of the German Landschaften created in Silesia |
| The Landschaften are state cooperatives which grant mortgages, and other credit based
on land, for the improvement of agriculture. Other Landschaften are established in the
1770s and 1780s. |
| p 566 |
|
| 1772 |
Scotland has a nationwide banking network |
| By this time 31 banks are operating in Scotland with branches and agencies covering
most of the country. Thus Scotland is the first country in the world to establish an
almost nationwide system of branch banking. |
| p 276 |
|
| 1772 |
Scottish banking crisis |
| The Ayr Bank, which rashly issued large quantities of notes backed with the wealth,
based on land, of its owners, collapses along with 13 private bankers. This confirms the
more conservative practices of the older Scottish banks. |
| p 277-278 |
|
| 1775 |
First British building society formed |
| Richard Ketley, an inn proprietor in Birmingham, and a group of his customers and
friends form a society for saving money for building and purchasing houses for their own
occupation. |
| p 326 |
|
| 1775-1783 |
The American Revolution or War of Independence |
| The American Congress, and individual states. finance their war effort overwhelmingly
by printing money. This eventually leads to hyperinflation rendering the continentals
worthless - but the Revolution is successful. |
| p 464,465 |
|
| 1776 |
Adam Smith defends paper money |
| In his Wealth of Nations he draws attention to the benefits of paper money in
stimulating business both in Scotland and in the American colonies. |
| p 463 |
|
| 1776-1793 |
Caisse d'Escompte, France's second public note-issuing bank, founded |
| This is the first to be established in Paris since the failure of John Law's venture.
After 10 successful years it starts to grant too many loans to the government, accompanied
by excessive note issues and is forced into liquidation. |
| p 555 |
|
| 1778 |
Savings bank established in Hamburg |
| This is one of the earliest in Europe and gives rise to a handful of similar banks in
north Germany by the end of the eighteenth century. |
| p 333,570 |
|
| c. 1780-1810 |
Rapid spread of country banking in England and Wales |
| By 1810 the total number of licensed and unlicensed banks is probably over 800. In
most cases their founders have strong ties with particular industries or trades and the
banks meet the need of small workshops, mines etc. for working capital. Without these
banks the Industrial Revolution would have been strangled in its infancy. |
| p 286-291 |
|
| 1780 |
Bank of Pennsylvania founded |
| This is the first American bank to be established since the declaration of
independence from Britain. It is basically a temporary means of raising funds for the
American army which is in a desperate financial situation. |
| p 469 |
|
| 1782 |
Bank of North America begins operations |
| It was granted a charter by Congress the previous year. It fulfils a wide range of
banking functions and is a great commercial success. |
| p 469 |
|
| 1783 |
Unpaid soldiers prevented from looting the Bank of North America |
| This stimulates opposition to the bank, as much of the public sympathises with the
soldiers, and the legality of the bank is later challenged by Pennsylvania's
representatives. |
| p 471 |
|
| 1783 |
Act for the abolition of the British Treasury Tallies |
| The act lays down that the wooden tallies are to be abolished on the death of the last
of the Exchequer Chamberlains operating the system. |
| p 663 |
|
| 1784 |
Bank of New York and Bank of Massachusetts both open |
| The Bank of New York is the oldest existing US bank (at the time of writing in 1996) |
| p 469 |
|
| 1785 |
Bank of America's Congressional charter is revoked |
| However the bank subsequently acquires a new charter from the state government of
Delaware. |
| p 471 |
|
| 1786-1787 |
Shay's Rebellion in Massachusetts |
| Captain Shay leads a rebel force of debtors, disaffected farmers and ex-soldiers to
try and secure debt relief, issues of paper money, and other reforms. The rebellion is put
down. |
| p 466 |
|
| 1786 |
US Confederation Congress passes the Mint Act |
| The intention is to meet a currency shortage - but only a few tons of copper coins are
minted. |
| p 467 |
|
| 1787-1817 |
Privately-issued tokens become common in Britain |
| By the end of the 18th century there is a severe shortage of copper and silver coins
in Britain so that many firms have difficulty in obtaining enough currency to pay wages.
This leads to a growth in payments in kind, use of foreign coins, and unofficial tokens.
The token manufactures greatly expand the amount of currency available. |
| p 292-296 |
|
| 1789 |
The French Revolution |
| The revolutionary government seizes church lands and using them as security issues assignats,
bonds carry 5% interest. However the interest is soon abandoned and the assignats become
simply inconvertible, state-issued paper money notes. |
| p 555 |
|
| 1789 |
US Constitution gives Congress power over money creation |
| The States are not allowed to coin money, issue bills of credit or make anything
except gold and silver legal tender. |
| p 466 |
|
| 1790 |
Schaaffenhausen founded in Cologne |
| Later this private bank becomes Germany's first joint-stock bank in 1848. |
| p 566 |
|
| 1791 |
Bank of the United States receives a 21 year charter |
| Because of opposition to the bank and fears that it would contravene the Constitution,
Washington is going to use his veto but is persuaded not to by Alexander Hamilton. |
| p 472 |
|
| 1792-1815 |
French Revolutionary and Napoleonic Wars |
| The pressures of war cause many changes in the financial systems of both France and
Britain. |
| p 297-298,556 |
|
| 1792 |
US Coinage Act |
| The Dollar is adopted as the unit of account, based on a bimetallic standard,
subdivided into 100 cents. Foreign coins are supposed to lose their status as legal tender
within 3 years of the US coins coming into circulation. |
| p 467-468 |
|
| 1793-1801 |
Britain sends more than £15 million to its allies |
| This is to support them in the war against France. |
| p 297 |
|
| 1793 |
The Bank Indemnity Act |
| This act gives the directors of the Bank of England legal immunity for loans to the
government. This enables the British government to borrow much larger sums for the war
against France. |
| p 297-298 |
|
| 1793 |
Friendly Societies Act |
| Societies for encouraging saving by the poor are made exempt from the provisions of
the Bubble Act. The importance of the protection given by the Friendly Societies Act
increases after the passage of the Anti-Combination Acts of 1799 and 1800 which are
intended to prevent the development of subversive movements in Britain inspired by the
French Revolution. |
| p 322-323 |
|
| 1795 |
Hyperinflation in France |
| The total nominal value of the assignats in circulation reaches 20 billion livres.
Riots in Paris pave the way for the rise of Napoleon. |
| p 556 |
|
| 1796 |
Caisse des Comptes Courants founded |
| This short-lived bank is absorbed by the Bank of France in 1800. |
| p 555 |
|
| 1796 |
France replaces the assignats by a gold-based currency |
| This has the effect of drawing bullion back from Britain. |
| p 298 |
|
| 1797 |
Matthew Boulton given contract for minting copper coins |
| Because tokens had become common the British government decides that the free market
could probably supply copper currency better than the Royal Mint. The initial contract is
for 50 tons of two-penny and one-penny pieces. Boulton's partnership with James Watt
results in the use of steam-powered machinery for producing 4,200 tons of copper coins
eventually. |
| p 293-294 |
|
| 1797 |
Bank of England notes are made inconvertible |
| The provisions of the Bank Restriction Act are initially expected to be of very short
duration but it is 24 years before convertibility is restored. |
| p 298 |
|
| 1797 |
Spanish dollars are overstamped for circulation in Britain |
| As a result of a desperate shortage of silver coins the Bank of England issues altered
foreign coins from its reserves. Half a million pounds worth of Spanish dollars issued by
King Charles IV are overstamped with a small engraving of George III. However the issue
fails because overstamping is also applied unofficially to the plentiful supplies of light
or base Spanish dollars. |
| p 294 |
|
| 1797 |
US extends legal tender status to Spanish dollars indefinitely |
| Because of a slight over-valuation of silver little gold is brought to the Mint. Also
users hold on to the new silver coins preferring to pass on the older, duller Spanish
ones. Consequently there is a shortage of both US gold and silver coins. |
| p 468 |
|
| 1797 |
Caisse d'Escompte founded |
| This bank is absorbed by the Bank of France in 1803. |
| p 555 |
|
| 1798 |
The Rothschilds expand into Britain |
| The Rothschilds banking house originated in medieval Frankfurt on Main. In 1798 Nathan
Rothschild is sent to Manchester to deal in the cotton industry. His banking operations
grow rapidly during the Napoleonic Wars, making full use of his family's international
network of couriers. |
| p 347 |
|
| 1799 |
William Pitt introduces income tax |
| This new tax raises considerable sums. During the war the British prime minister also
increases revenue by broadening the range of indirect taxes as much as possible. |
| p 298 |
|
| c. 1799 |
Use of tokens, foreign coins etc. in Britain probably exceeds that of
official coins |
| By the turn of the century the total supply and velocity of circulation of tokens,
foreign coins, and other substitutes probably exceeds that of official coins of the realm.
Some of the chief engravers at the Royal Mint make a good profit from selling new designs
(not the official ones) to the token manufacturers. |
| p 293 |
|
