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Prometheus ShackledGoldsmith Banks and England's Financial Revolution after 1700$
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Peter Temin and Hans-Joachim Voth

Print publication date: 2013

Print ISBN-13: 9780199944279

Published to Oxford Scholarship Online: January 2013

DOI: 10.1093/acprof:oso/9780199944279.001.0001

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Finance and Slow Growth during the Industrial Revolution

Finance and Slow Growth during the Industrial Revolution

(p.148) 7 Finance and Slow Growth during the Industrial Revolution
Prometheus Shackled

Peter Temin

Hans-Joachim Voth

Oxford University Press

This chapter reviews recent research on Britain's Industrial revolution, showing that the presumed rate of economic growth during this economic watershed has been reduced progressively by several authors working with different methods. How can the evidence of widespread technological progress around the start of the nineteenth century be reconciled with the slow rate of national growth? Data from several goldsmith banks let us examine one hypothesis: that the British government's demand for resources to fight Napoleon crowded out demand from the private economy for investment. Previous historians have proposed crowding out but have had trouble identifying its effects. The usury rate meant that scarcity of bank loans showed up in credit rationing rather than higher interest rates. We show that loans from Hoare's Bank and other lenders decreased when the British government borrowed, and the rate of growth of the economy slowed at these times.

Keywords:   Industrial Revolution, industrialization, technical change, crowding out, credit rationing, usury laws, slow growth, Napoleonic Wars

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