The price of money in a crisis

January 21, 2021 | Blog
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This blog is based on a research made possible by the Carnevali Small Research Grant offered by the Economic History Society.

By D’Maris Coffman and  Judy Z. Stephenson (University College London)

A Bill of Mortality for the plague in 1665. Available at Wikimedia Commons

The coronavirus pandemic generated a wave of new econometric and historic research on epidemic diseases and their economic effects, and it has highlighted something that was under researched before: are economic crises associated with high costs of finance?

Interest rates are of considerable importance, but since formal central and retail banking is a modern phenomenon in most states, they are difficult to research.   For many years it was held that interest rates in constitutionally unstable Stuart England were so high as to prevent commercial investment, and that it was only after the ‘Glorious Revolution’, that lower interest rates encouraged investment and fostered modern economic growth.  However, recent literature (Chilosi, Volckart, Schulze 2018) has shown that the pattern and development of interest rates through the early modern period was more stable than previously thought; this  has  revived interest in municipal debt markets and their role in facilitating development of  financial markets and their associated  institutions.

Sussman’s (2019) recent work on English interest rates exposed a lack of appreciation of the scale of non-goldsmith bank credit and the depth of ‘capital markets’ in the early modern period. Our forthcoming work examining the financing of the rebuilding London after the Great Fire of London (Coffman, Stephenson and Sussman 2020)  showed that interest rates paid by the city of London to lenders throughout the seventeenth century were much lower than rates paid by the crown, despite the fact during that this period  political and commercial institutions were in constant crisis, with the razing of the city to the ground, and several constitutional crises of rebellion and competition between the crown and the city, culminating in the Quo Warranto? battle over the city’s charter in the 1680s, and, of course, the outbreak of plague nearly two decades earlier, which killed almost a quarter of the city’s population in 1665 (Cummins, Kelly O’Grada 2016).

There is a notable gap in current knowledge of the institutions of finance beyond the Crown and the Exchequer in London before 1672 (Coffman 2013). The traditional literature suggests that a market for commercial, municipal and government debt did not develop until the Financial Revolution of the early eighteenth century (Dickson, 1968).  Our planned research has two principal aims. First, we will examine the archival evidence of assignability of debt instruments and deposits beyond the abstracts and chamberlain account books between the Restoration and 1700, determine the extent to which there was a secondary market.

Second, we will look at the financial relationships between guilds, trade credit and the Corporation. In 2018 we sampled records for many companies and found that those subject to excise regulations, or with significant property holdings, (the Brewers, Ironmongers, Carpenters), were more likely to have details of financial dealings with freemen.  Further, the grant  enables the  extension of  this  sample to determine the relationship between the guilds, interest rates, and financial transactions  in the city of London.

We envisage that our research will provide more information on the interest rates confronting   private investors and the city when recovering from the catastrophic pandemic of 1665.  Consequently, we can provide a novel analysis of the relationship between crisis and the cost of money. Of particular value, we hope to provide a clearer picture of the relationship between trade credit, trade income, city borrowing, and the relationship between municipal bond markets and the wider London economy.


We gratefully  acknowledge  the invaluable  research assistance provided by Tim Wales and Alison Daniell. If you know of any ephemera related to our blog please let us know – we are keen to learn.


To contact the authors:

D’Maris Coffman:, @ddcoffman

Judy Z. Stephenson:, @judyzara



Chilosi, D., Schulze, M., & Volckart, O. (2018). Benefits of Empire? Capital Market Integration North and South of the Alps, 1350–1800. Journal of Economic History, 78(3), 637-672.

Sussman, N., The Financial Development of London in the 17th Century Revisited: A View from the Accounts of the Corporation of London (August 2019). CEPR Discussion Paper No. DP13920, Available at SSRN:

Coffman, D. D. (2013). Excise Taxation and the Origins of Public Debt. Studies in the History of Finance. Basingstoke: Palgrave Macmillan. doi:10.1057/9781137371553

Coffman, D. Stephenson, J.Z. and Sussman, N. (2020) Financing the rebuilding of London after the Great Fire, Forthcoming Working Paper.

Cummins, N., Kelly, M., & Ó Gráda, C. (2016). Living standards and plague in London, 1560–1665. Economic History Review, 69(1), 3-34.

Dickson, P., & Huguenot Library, owner. (1967). The financial revolution in England: A study in the development of public credit, 1688-1756, New York: Melbourne [etc.] : Macmillan ; St. Martin’s P.