Did the Bank of England provide lender of last resort facilities to the private sector in the first 150 years of its existence?

Lead Research Organisation: University of Manchester
Department Name: Social Sciences


The research question being asked is to what extent the Bank of England developed its private lending business and in times of crisis provided lender of last resort facilities to the private sector in the first 150 years of its existence. Using the modern statistical and economical models in this brand new data will bring new insights about how to act in modern financial crisis situations, because we must look at the policy successes as well as failures. Lovell argued that the Bank operated as a lender of last resort in the second half of the 18th century. This was based on data on the Banks revenue from bill discounting business which Clapham collected for his two volume history of the Bank. But this general hypothesis has not really been looked at again in any detail for this period using material from the Bank of England archives, in contrast with the period after 1844.

The main questions is how did this business evolve and did the Bank develop techniques for monitoring its counterparties and providing emergency liquidity in a crisis. To what extent is this evident in the sophistication of the bookkeeping done by the Bank? This ranged from the use of Britannia as a 'symbol of virtue' to the use of open plan offices and banking halls where the ledgers were on display, something which enabled it to demonstrate publicly its assiduous bookkeeping.

The anticipated outcomes from the project, in terms of its contribution to knowledge and understanding, new methodologies and techniques would be a better understanding of how the Bank of England operated during financial crises before the Bank Charter Act of 1844 and how its discount policy worked and to what extent did this facilitate the financial revolution in England. Was it a vital element in supporting private credit and industry during the various wars with France as discussed in O'Brien and Palma (2018)? Answering these questions is of critical importance to understanding Britain's rise to a world power over the eighteenth and nineteenth centuries.

The time scale of this course would include year one being devoted to the NWSSDTP economics training programme. The summer will be spent at the Bank where the student can work on the archives under the supervision of Ryland Thomas. This will lead to a preliminary phase of data collection and to a proposal to be discussed at the upgrade/confirmation panel at the end of the academic year. During years two and three the student will spend no less than six months at the Banks archives, collecting data. The rest of the time will be spent writing the first research paper, which would also be presented at the Department of Economics of the University of Manchester. The results and progress would be closely monitored by the supervisors. The first four months of year four the student will visit the Bank's archive a final time. The student will then write up a final version of the dissertation, to be presented at the Bank of England, at the NWSSDTP conference, and at an international conference. The summer would be again spent at the Bank of England, to finalise details.


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Studentship Projects

Project Reference Relationship Related To Start End Student Name
ES/P000665/1 01/10/2017 30/09/2027
2302026 Studentship ES/P000665/1 01/10/2019 30/09/2023 Carlos Javier Charotti