History events at the IHR

The segmented English credit market: evidence from the Stop of Exchequer

14 March 2014, 17:15 - 19:15

Event Type: Seminar


Ling-Fan Li (IHR)



This paper intends to identify the connection between English domestic and international credit market in the late seventeenth century against the backdrop of the Stop of Exchequer in 1672. Due to the mounting military expenses of preparing the third Anglo-Dutch War, on 2 January 1672, the crown defaulted on his loans and the repayments and interest on registered Treasury orders were suspended. Consequently, the Stop of Exchequer might have caused the disruption of credit chain, an immediate liquidity crisis in London, and a high demand to withdraw deposits from goldsmiths. However, the Stop of the Exchequer in London had no impact at all on international exchange markets; in other words, the exchange rate of pound sterling did not fall ensuing credit contraction in London. The movement of exchange rates seems indicate that the late seventeenth-century English domestic and international credit markets were fragmentary when a high degree of market integration between England and the Continent has been achieved.

By examining the source of money on which the crown defaulted, we may solve the puzzle of fragmentary markets. A large part of the defaulted loans came from London goldsmiths, who were the main creditors in question. After the default, the government repaid the their depositors in the form of 6% annuity and thus assignment books record the names of six bankers’ (Robert Vyner, Backwell, Whitehall, Lindsay, Portman and Snell) customers together with their professions, location and the amounts of their individual deposits. Assignment books show that the money deposited with the London goldsmiths was mainly associated with agrarian wealth not with commerce. The goldsmiths’ banking business was constructed around the agricultural season. Country gentlemen needed money in London to pay off their expenditure on luxury goods or the time spent living in the city. However, their income was generated from agrarian but urban sources and therefore, funds had to be transferred from the countryside to London. Depositing money with the goldsmiths that could be withdrawn at short notice became a popular solution. Perhaps, because of the agrarian source of the money deposited with the goldsmiths, the Stop would never have caused much disturbance to the course of exchange rates, which was closely related to the mercantile credit associated with foreign trade.

Venue: Room 102 (Senate House, first floor)

Senate House
Malet Street 
London WC1E 7HU 

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Related Events: Economic and Social History of the Early Modern World, 1500-1800 History