London's seventeenth-century goldsmiths are routinely said to have pioneered fractional-reserve banking in England by clandestinely lending coin they were supposed to store – that is, by embezzling their clients. I draw upon both contemporary testimony and contemporary English law to show that the goldsmiths were almost certainly innocent of the crime for which they are so often accused. I then go on to speculate that the myth of the embezzling goldsmith may have its roots in confusion of that crime with (1) crimes other than embezzlement of which goldsmiths were accused by their contemporaries and (2) embezzlement of stored coin not by goldsmiths but by the British crown and by some merchants' servants.

This article examines the potential conflict of interest of underwriters in London's foreign sovereign debt markets prior to the Baring crisis of 1890. We describe the main sources of information for investors concerning Argentina, whose government debt default contributed to Baring's collapse, and compare them with those of the underwriters, particularly Baring's. We then present some empirical evidence using data on bond prices and underwriting fees that demonstrate that Baring did not exploit its information lead to the detriment of investors. Finally, we present historical evidence that shows that Baring foresaw default before markets did and consequently planned a bailout loan that could not be issued due to political instability in Buenos Aires.

In the era before state regulation of insurance rates, the American fire insurance industry succeeded in regulating itself. The final quarter of the nineteenth century witnessed a sustained movement towards organisation in the fire insurance industry. Through the establishment of local rate-setting boards fire insurers were able to manage the risks that had plagued their industry since its inception. The local insurance ‘cartels’ of the late nineteenth century differed from their mid-century predecessors in their longevity. As the organisations became stronger, they were able to stabilise prices throughout the industry and enhance diversification. As a result, economic downturns no longer routinely resulted in destructive competition, and major fires no longer led to waves of bankruptcies.

As reflected in the April 2006 issue of the Financial History Review, monetary historians remain divided over the central features of the US monetary union and their contribution to US economic development. In that issue – which focused on the monetary union formed by the Constitution and early federal monetary legislation – Ronald Michener and Robert E. Wright focused on the creation of a uniform unit of account defined in terms of specie. The establishment of a uniform unit of account ‘simplified domestic and international transactions’ compared with the colonial period when ‘[e]conomic calculations across regions were complicated by the fact that people had to reckon with different units of account, without the aid of electronic calculators’. By contrast, Richard Sylla emphasised the role the Bank of the United States played in reducing the costs and risks of clearing and settling interregional payments. An institution, like the Bank, that operated on a national scale was particularly important in the United States because of the limited geographical scope of state bank operations. The Bank's notes and deposits became a truly national monetary standard, and the Bank helped to maintain the value of state bank notes, the principal means of cash payment in the antebellum economy, by enforcing par redemption.

In 1720 Britain embarked on a project to convert a large part of the public debt into shares in the South Sea Company. Most narratives assume the Company stood to profit from an anticipated increase in the market price of its shares. Though some have noted that this assumption is incorrect, no one has yet tried to find an alternative explanation for the Company's motivation for entering into the project. In this article I argue that the Company had no need to profit directly from the conversion operation and instead saw it as an opportunity to establish dominance in the British banking industry.

In 1922, British colonial Gambia demonetized the French 5-franc coin, which had been legal tender at a fixed rate in the colony since 1843. Until World War I, this rate was close to the international rate under the gold standard. When the franc began to depreciate in 1918, however, a gap emerged between the Gambian rate and the international rate, prompting a rapid influx of the coins. The demonetization cost the colonial administration over a year's revenue, affecting the later development of the colony. The 1920s have long been a fruitful period for the study of monetary history owing to the instability of exchange rates during and after the war. This article extends the study of this period to examine the impact of these changes on dependent colonies in West Africa, highlighting the importance of local compromises and particularities in colonial monetary systems.

Land reform and its financial arrangements are central elements of modern Irish history. Yet to date, the financial mechanisms underpinning Irish land reform have been overlooked. The article outlines the mechanisms of land reform in Ireland and the importance of land bonds to the process. Advances worth over £127 million were made to tenant farmers to purchase their holdings. These schemes enabled the transfer of over three-quarters of land on the island of Ireland. The article introduces a new database on Irish land bonds listed on the Dublin Stock Exchange from 1891 to 1938. It illustrates the nature of these bonds and presents data on their size, liquidity and market returns. The article finds a high level of state banking in Ireland: large issues of land bonds were held by state-owned savings banks.

This article reinterprets the origin and evolution of the Basel Accords. We argue that the Basel I paradigm was very different from the regulatory approaches that had been applied successfully in most European countries since the Second World War. Banking systems relied on a multitude of tools including entry restrictions, liquidity rules, reserve requirements, deposit rate ceilings, lending and investment restrictions, combined with hands-on supervision and discretional interventions. By focusing exclusively on capital adequacy and credit risk, Basel I shifted attention in a very different and somewhat unexpected direction. The Basel regulations are often understood as a reaction to the bank failures of the 1970s and 1980s, but in fact their capital adequacy rules would not have prevented these failures. Indeed, even today, several of these risks are still not addressed by Basel updates, suggesting that the original and current proposals have a rather different raison d’être, placating political constituencies and banking interests.

Taxation is accepted as a fact of modern life, despite recurring political conflict over the nature and direction of fiscal policies. Most financiers regard obligations issued by the state as a safe investment option. Neither taxation nor state obligations were taken for granted during much of the history of public finance, however, at least not before the early 1800s. The ‘tax state’ developed in fits and starts, driven by the exigencies of warfare, which provided the main rationale for raising state income. Although wartime fiscal innovations eventually facilitated the rise of an efficient military state, the options available for implementing such improvements and preferences for specific fiscal or financial instruments varied greatly across early modern states. Focusing on the ‘long’ eighteenth century, this introduction presents a framework for assessing these differences and introduces the other articles in this special issue.

This article studies the relationship between Bank and Treasury during the War of the Spanish Succession. It examines two new series of Exchequer bills implemented in 1707 and 1709. Far from being loans-for-rents contracts, the principal aim was to accommodate war-related pressures on the nation's monetary system by manufacturing a substitute for scarce specie. The article also shows there was a covert struggle within the financial community for access to the specie flows associated with the nation's system of public finance.

This article examines the Nazi government's external debt policy, with particular regard to the service of the Dawes and Young Loans, the two most important international loans Germany concluded during the interwar period. The goal of this policy was to end once and for all the obligations resulting from the First World War reparations settlement, and at the same time to economise drastically on Germany's scarce foreign exchange reserves. These aims were achieved by imposing a partial default on external debts and by bilateralising trade and financial negotiations, thus dismantling the 1930 Young Plan. In many respects, the Nazi government continued policies in place since 1931, except that it went further and was more ruthless in their execution. However, the negative long-term effects of this policy were beginning to take their toll as Germany's economy was cut off from the international financial markets and increasingly burdened by complex foreign exchange regulations. It was left to the German Federal Republic to deal with the financial legacy of this policy after the war.

Sovereign debts differ from other financial instruments because repayment ultimately depends on the issuers' willingness to pay. In turn, willingness to pay may be influenced by political, diplomatic or economic considerations. Based on an original database of Romanian bonds traded in Paris, this article shows that international diplomacy played an important role in the Romanian debt valuation.

This paper analyses the organisational make-up and financial techniques of Greek diaspora banking during its golden era in Constantinople, c. 1840–81. It is argued that this small group of bankers had a flexible style of business organisation, which included informal operations. Well embedded into the network of international high finance, these bankers facilitated the integration of Constantinople into Western European capital markets — during the early days of Western financial presence in the Ottoman Empire — by developing a cunningly ingenious, for the standards of the time and place, method for the internationalisation of the financial instruments of the internal Ottoman public debt.

This article examines how corporate financing has been adjusted during the high growth period after World War II. First, it discusses how the Ministry of Finance tried on the one hand to liberalise the system after the 1950s, but on the other hand, did not want to undermine the ‘Treasury circuit’ that allowed its administration to control the economic situation. Secondly, during 1960s, the relationships between state and banking industry became so tight that they strengthened the banking cartel and increased the banking system's contribution to the financial system. The high costs of issuing capital in France contrast with the low interest rates during the period. The French choice of financial system for economic development clearly did not favour markets, but focused on deposit and investment banks, and settled on both a ‘state-based’ and ‘bank-based’ system.