THE GLORIOUS REVOLUTION'S EFFECT ON ENGLISH PRIVATE FINANCE: A MICROHISTORY, 1680–1705

The lending portfolio of a London banker is analyzed to better understand the relationship between public and private finance during England's Financial Revolution. The Glorious Revolution's political settlement appears to have reduced the risk premium on sovereign debt; but it seems to have raised, not lowered, rates on private debt. Two explanations for these higher private rates are suggested. During the war years 1690–1697, the government's improved capacity to borrow seems to have “crowded out” private borrowing. After peace was restored and the government's borrowing retrenched, the new political regime seems to have stimulated demand for loanable funds.