How did investors view the reforms and supervisory organisations of the late nineteenth century?

by Avni Önder Hanedar (Sakarya University)

In the last couple of decades, high debt burden in emerging economies created financial crises and the low growth rate during the 2008 financial crisis led to a default problem for Greece. Some reforms were proposed, such as institutional changes and the establishment of an entity under control of the other Eurozone members to supervise the repayment of debts. These events have some similarities with the default of the Ottoman Empire and the establishment of the Ottoman Public Debt Administration (OPDA) (Düyun-u Umumiye). To deal with the inefficiencies in the Ottoman economy and political system, reforms were implemented, as supervisory organizations were established during the nineteenth century. Important ones were the adoption of the gold standard in 1880, the Administration of Six Indirect Revenues (Rüsum-u Sitte) (ASIR) in 1879, and the OPDA in 1881. It seems that many of them were not seen by investors as promising, since a British weekly magazine, Punch or The London Charivari, illustrated these events as bubbles. A paper of  Elmas Yaldız Hanedar, Avni Önder Hanedar, and Ferdi Çelikay examined how such events were perceived at the İstanbul bourse, which could shed light on today’s realities.

Cartoon of Punch or The London Charivari on 6 January 1877 about the Ottoman reforms.a caption


The paper manually collected historical data on the price of the General Debt bond traded at the İstanbul bourse between 1873 and 1883 from volumes of daily Ottoman newspapers, i.e., Basiret, Ceride-i Havadis, and Vakit. This bond was the most actively traded one at the İstanbul bourse in 1881, during the foundation of the OPDA.

A column of Vakit pointing out the values of bonds, stocks, and foreign currencies at the İstanbul bourse on 6 October 1875 (Vakit. (6 October 1875). Sarafiye, Galata piyasası, 2)

The paper is the first to measure in econometrically sophisticated manner investors’ beliefs at the İstanbul bourse in reference to the reforms and financial control organizations. Historical research does not include detailed empirical information for the effects of reforms and financial control organizations on the İstanbul bourse during the default period. Using unique data on the most actively traded Ottoman government bond, the paper extends the historical literature on the İstanbul bourse (See Hanedar et al. (2017)) and reforms (See Mauro et al. (2006), Birdal (2010), Mitchener and Weidenmier (2010) looking at bond markets in multiple developing countries, with samples that include the Ottoman Empire).

The methodology in the paper was to analyse the variance of returns (derived from the price showed in above) as a proxy of financial instabilities and risks. To model volatility, the paper estimated a GARCH model with dummy variables for reforms and financial control organizations at and after the dates of the events (i.e., short- and long-run).







The General Debt bond price (Turkish Liras) and key events. The data are derived from Vakit, Ceride-i Havadis, and Basiret, 187383.

The empirical results indicated a permanent decrease in volatility after the establishment of the OPDA and the gold standard. The foundation of a locally controlled finance commission in 1874 was correlated with a lower volatility level at the date of the event, but increased volatility in the long term. The Ottoman case is instructive for the understanding of today’s economic situation in emerging markets such as Greece, while it could be argued that long-lived and comprehensive measures with foreign creditors’ supervision on fiscal and monetary systems matter more for investors’ perceptions. Lowering government interventions on economic system and transaction costs due to bimetallism were viewed as promising. Investor beliefs that the local and short-lived reforms and supervisory organizations were ineffective could be due to several factors such as lack of measures to limit public expenditures.


Volatility changes in the General Debt bond return, 1873–83. * and *** denote statistically significant coefficients at 10% and 1%.



Vakit. (6 October 1875). Sarafiye, Galata piyasası, 2.

Birdal, M. (2010). The Political economy of Ottoman public debt, insolvency and European control in the late nineteenth century. London: I. B. Tauris and Co Ltd.

Hanedar, A. Ö., Hanedar, E. Y., Torun, E., & Ertuğrul, H. M. (2017). Dissolution of an Empire: Insights from the İstanbul Bourse and the Ottoman War Bond. Defence and Peace Economics, (Forthcoming).

Mauro, P., Sussman, N., & Yafeh, Y. (2006). Emerging markets and financial globalization: Sovereign bond spreads in 1870-1913 and today. Oxford: Oxford University press.

Mitchener, K. J. & Weidenmier, M. D. (2010). Super sanctions and sovereign debt repayment. Journal of International Money and Finance, 29(1), 19–36.

EHS 2018 special: Ownership and control of land by women in nineteenth-century England

by Janet Casson (independent scholar)


A 19th Century English countryside landscape, oil on canvas, anonymous.

The HS2 train route between London and Birmingham has been modified in response to outrage from people concerned about the impact on their property. This is nothing new. Over 150 years ago, railways cut through the English countryside to provide new infrastructure for an expanding economy. Railway surveyors laying out a route made detailed maps and carefully recorded the usage and ownership of every affected property in books of reference.

The complexity of the laws governing the rights of women has meant that women’s land ownership in the nineteenth century has rarely been investigated. Indeed, it was widely believed that the law deterred women’s ownership of land.

These railway books of reference provide a unique insight into this rarely investigated topic and provide an insight into women’s control of land. Statistical analysis of the information reveals that women owned, either singly or jointly, about 12% of that land.

Detailed profiles of 348 women and their property give an insight not only into the ownership but also the control of land. They reveal if a woman shared ownership and if so, with whom; a woman owning alone had a higher degree of control than a woman owing with others. They indicate the amount of land, the woman’s wealth and her potential influence over other people. If she had a multi-plot portfolio, its geographical dispersal indicates whether her influence was local, regional or even national.

Women who owned with men were regarded as having little control over land. Before the 1882 Married Women’s Property Act, wives were constrained by common law: they could own real property, but lost independent control of its management and the use of any rents or profits unless they had a settlement or trust. Women who owned with an institution had least control given that institutions had statutory powers and often protracted decision-making.

Many women held their property as sole owners (average 35.5%) and were confident to own and control large portfolios. Where women shared ownership, it was usually with men (average 42.0%) rather than exclusively with other women.

There was a trade-off between exercising strong control over a few properties that could be self-managed or weaker control over more properties where co-owners shared the administration. Similarly, a trade-off existed between owning many local properties or fewer widely dispersed properties where, to maximise the economic return on the plots, co-owners were needed for their local knowledge.

The size of property portfolios varied across regions. They were smallest in London, possibly reflecting the high property prices and the significant number of single women living in the suburbs; and largest in Durham where several women owned large national portfolios.

An average of 24% of plots was held by single-plot-owing women. But the typical portfolio comprised 2-5 plots (37.6%). Larger portfolios of 10 or more were also fairly common (24.1%). Large portfolios were often geographically dispersed – across a county, region or nationally.

The picture that emerges from this analysis is that many women as sole owners enjoyed considerable autonomy in the control of their portfolios. Where they relied on others, they typically relied on men.

But as the diversity of their portfolios increased, women did not increase their dependence on men but chose to retain their autonomy instead. Women it appears, valued their autonomy, and did their best to maintain and protect it

A Brief Monetary History of Ireland

by Seán Kenny (Lund University) and Jason Lennard (Lund University and National Institute of Economic and Social Research)


The Irish Famine of the 1840s is one of the great tragedies of history. Beginning with a bout of potato blight, the Irish population subsequently declined by 20 per cent between the censuses of 1841 and 1851 and has never recovered (O’Rourke, 1991). How did an agricultural shock have such devastating effects? Lynch and Vaizey (1960) argue that a lack of monetization facilitated self-dependence and barter, leaving the Irish economy vulnerable to exogenous shocks like the Famine.

In a forthcoming paper in the Economic History Review available here, we constructed new monthly estimates of the narrow money supply and annual estimates of the broad money supply between 1840 and 1921. The aggregates were constructed from a range of archival sources and contemporary publications. A major task was to reconstruct the Irish coin supply. We did this by tracking shipments of coin between the Royal Mint and Irish banks using records held at the National Archives. These flows were then added to stocks, which were either recalculated from contemporary estimates or based on recoinages.

A number of interesting results emerge from the data. First, we find that, by standard measures, Ireland was no backwater, but well monetized on the eve of the Famine. Not only was it more monetized than other European countries for which data is available, such as Norway and Sweden, it was decades ahead of others, such as Germany and the Netherlands. The new data is therefore at odds with the Lynch and Vaizey hypothesis.

A second major finding is the scale of the collapse in the money supply during the Great Famine. This monetary contraction was the largest during any event in the economic history of Ireland since 1840 and perhaps one of the deepest in economic history more generally. Currency in the hands of the public, the nation’s liquidity, collapsed by more than half, the monetary base (currency in the hands of the public plus reserves) by 48 per cent and the broad money supply (currency in the hands of the public plus net deposits) by 27 per cent.

Figure 1. The Great Famine versus the Great Contraction
Notes: Ireland indexed to 1846 = 100. US indexed to 1928 = 100. Year end.
Sources: Kenny and Lennard, ‘Monetary aggregates for Ireland’; Friedman and Schwartz, Monetary history.


Figure 1 plots the narrow (M0) and broad (M3) money supplies in Ireland during the Great Famine against equivalent measures for the United States during the Great Depression. As can be seen in this tale of two crises, the narrow money supply slumped much deeper during the Great Famine than in the Great Contraction. The broad money supply initially declined more steeply in Ireland than in the US. However, the Irish recovery was underway from 1849, while the American contraction continued until 1933.

This new data shines a light on Ireland’s statistical Dark Age, allowing us to revisit old hypotheses and others to develop new ones. On the monetary origins of the Great Famine, we found that Ireland was no less monetized than its European peer group. The Famine did, however, unleash the Great Irish Contraction, during which the money supply drastically slumped.


To contact the authors:



Friedman, M. and Schwartz, A. J., A monetary history of the United States, 1867–1960 (Princeton, NJ, 1963).

Kenny, S. and Lennard, J., ‘Monetary aggregates for Ireland, 1840–1921’, Economic History Review (2017).

Lynch, P. and Vaizey, J., Guinness’s brewery in the Irish economy, 1759–1876 (1960).

O’Rourke, K. H., ‘Did the Great Irish Famine matter?’, Journal of Economic History, 51 (1991), pp. 1–22.

EHS 2018 special: London’s mortality decline – lessons for modern water policy

Werner Troeksen (University of Pittsburgh)
Nicola Tynan (Dickinson College)
Yuanxiaoyue (Artemis) Yang (Harvard T.H. Chan School of Public Health)


The United Nations Sustainable Development Goals aim to ensure access to water and sanitation for all. This means not just treating water but supplying it reliably. Lives are at stake because epidemiological research shows that a reliable, constant supply of water reduces water-borne illness.

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Nineteenth century London faced the same challenge. Not until 1886 did more than half of London homes have water supplied 24 hours a day, 7 days a week. The move to a constant water supply reduced mortality. For every 5% increase in the number of households with a constant supply, deaths from water-borne illnesses fell 3%.

During Victoria’s reign, eight water companies supplied the metropolis with water: 50% from the river Thames, 25% from the river Lea and 25% from wells and springs. By the 1860s, the companies filtered all surface water and Bazalgette’s intercepting sewer was under construction. Still, more than 80% of people received water intermittently, storing it in cisterns often located outside the house, uncovered or beside the toilet.

Rapid population and housing growth required the expansion of the water network and companies found it easier to introduce constant service in new neighbourhoods. Retrofitting older neighbourhoods proved challenging and risked a substantial waste of scarce water. The Metropolis Water Act of 1871 finally gave water companies the power to require waste-limiting fixtures. After 1871, new housing estates received a constant supply of water immediately, while old neighbourhoods transitioned slowly.

As constant water supply reached more people, mortality from diarrhoea, dysentery, typhoid and cholera combined fell. With 24-hour supply, water was regularly available for everyone without risk of contamination. Unsurprisingly, poorer, crowded districts had higher mortality from water-borne diseases.

Even though treated, piped water was available to all by the mid-nineteenth century, everyone benefitted from the move to constant service. By the time the Metropolitan Water Board acquired London’s water infrastructure, 95% of houses in the city received their water directly from the mains.

According to Sergio Campus, water and sanitation head at the Inter-American Development Bank, the current challenge in many places is providing a sustainable and constant supply of water. In line with this, the World Bank’s new Water Supply, Sanitation, and Hygiene (WASH) poverty diagnostic has added frequency of delivery as a measure of water quality, in addition to access, water source and treatment.

Regularity of supply varies substantially across locations. London’s experience during the late Victorian years suggest that increased frequency of water supply has the potential to deliver further reductions in mortality in developing countries beyond the initial gains from improved water sources and treatment.

EHS 2018 special: Long-term effects of financial crises

by Chenzi Xu (Harvard University)


The global financial crisis of 2008 was not unique. It had a precedent in the London banking crisis of 1866. Just as in 2008, the crisis began in the core financial market and spread to the periphery, the same happened in 1866.

The 1866 crisis has only been studied as a purely British event, but my research presents new evidence that it was a global financial crisis on the scale of 2008’s. The cities around the world that depended on British banks that happened to fail in London suffered immediate losses in exports activity. These losses took decades to recover, with the hysteresis persisting until the twentieth century.

In May 1866, Overend and Gurney, a bank’s bank and one of the most prestigious financial entities in London, declared bankruptcy. A panic erupted and almost 20% of banks headquartered in London failed. Crucially, these banks had been established in the mid-nineteenth century to globalise financial markets and trade, and they operated in cities around the world.

Figure 1. Map of British credits and failures around the world


Figure 1 shows the concentration of British banking, and the degree to which the banking crisis in London affected them. Red denotes greater losses in British financing, and the size of the circles denotes the amount of lending before the crisis.

I study the impacts of the failures of British banks in London on trade activity around the world, outside of the UK, at hundreds of ports. At the extreme, losing access to all British credit caused exports to drop 80% in the year following the crisis. The aggregate global loss in trade was 17%, which is comparable to the levels seen in the latest crisis. Given that the mid-late 19th century was otherwise a period of great expansion and growth, the counterfactual without this crisis would have been even more spectacular.

The historical context also makes it possible to study the long-run effects, and I find that countries suffering the largest drops in the supply of British credit did not recover their exports to previous partners for several decades. These persistent effects suggest that losing access to financial markets can cause substantial hysteresis.

These long-term consequences of financial market instability have yet to be established for recent crises simply because not enough time has passed. But early evidence suggests that international trade has not rebounded, even ten years after the financial crisis.

Are businessmen from Mars and businesswomen from Venus? An analysis of female business success and failure in Victorian and Edwardian England

by Jennifer Aston (Oxford University)  and Paulo di Martino (University of Birmingham)

The full paper was published on the Economic History Review, accessible here


Fashion in Edwardian England

Do women and men trade in different ways? If so, why? And are men more or less successful than women? These are very important questions not just, or not only, for the academic debate, but also for the policy implications that might emerge, especially in countries such as the UK where, rightly or wrongly, we believe in personal entrepreneurship as one of the main antidotes to unemployment and to the crisis of big business.

In economic history, it has traditionally been argued that women and men traded in similar ways up to the industrial revolution but, since then, women have ben progressively relegated to a “separate sphere” allowed, at most, some engagement with naturally “female” occupations such as textiles or food provision. Although more recent literature has strongly undermined this view, a lot of ground has still to be covered, especially about the period post 1850s.

We approach this debate by starting with a simple question about business “success” across gender: did women happen to fail more likely than men? Thanks to the reconstruction of original data on personal bankruptcy derived from contemporary official publications by the Board of Trade, this research suggests that this was not the case. In fact, depending on how prudently data on the number of female entrepreneurs are looked at, women appear more successful in, at least, keeping their businesses alive.

This finding, however, only paved the way for more questions. In particular, had the narrative of women only dealing with traditional and safe industries and operating in semi-informal businesses been true, what we observe via the lens of official statistics would be just a distorted view. This researched focussed on other primary sources: the reports of about 100 women whose businesses failed around the turn of the century. The findings support the initial hypothesis: although smaller than male counterparts (hence, in fact, riskier), female businesses were not hidden away from the public sphere, the official trading places, or the rules of the formal credit market. So, boarding house keeper Eleanor Bosito and the hotelier Esther Brandon were declared bankrupt and subject to formal proceedings despite having very few creditors who all lived within five miles from the businesses of the two women.  with unsecured debts of about £160 faced bankruptcy as a result of the petition filed by Jane Davis, a widow who lived less than half a mile from Agnes’s home and had lent her the sum of £5. This was the same destiny faced by Elizabeth Goodchild a businesswoman who, contrary to the other cases, operated on a large scale with suppliers and clients from all around Britain and Europe. This evidence reveals that, first of all, small scale trade was thus not necessarily the rule for women and, even when it was the case, it did not coincide with informality or sheltering from the “rules of the game”.

Businesswomen then did not come from, nor traded on, a different planet and certainly did not need the patronising protection of a male-dominated institutional environment. Instead the legal system forged ad hoc rules for married woman, via specific provisions in Bankruptcy Laws which lifted them from any responsibility. These level of defence, similar only to the one available to lunatics and children, proved ineffective. Or, in fact, the perfect background for frauds: in 1899 a spinster who was due to be declared bankrupt got married before the actual beginning of the procedure, thus avoiding any legal consequence (and, hopefully, having found love too).

In conclusion, this research indicates that Victorian and Edwardian businesswomen were perfectly able to trade in a fashion similar to the one of their male counterpart and, if anything, they were more successful. This leads to a basic and probably intuitive policy implication: if we want more women to successfully engage in business, all we have to do is to remove the economic, social, and cultural barriers that limit their access to opportunities.

Engineering the industrial revolution (1770-1850)

by Gillian Cookson (University of Leeds)

The Age of Machinery: Engineering the Industrial Revolution, 1770-1850, is published in February by Boydell Press for the Economic History Society’s series ‘People, Markets, Goods’.

SAVE 25% when you order direct from the publisher. Discount applies to print and eBook editions. Click the link, add to basket and enter offer code BB500 in the box at the checkout. Alternatively call Boydell’s distributor, Wiley, on 01243 843 291 and quote the same code. Offer ends on the 19th of March. Any queries please email

9781783272761_4Early machine-makers have always seemed tantalisingly out of reach. This was a localised, workshop-based trade whose products, methods, markets, skill-sets and industrial structure remained ill-defined. Yet out of it, somehow, was created the machinery – especially textile machines and steam engines – fundamental to industrial change in the eighteenth century. There are questions of great significance still unanswered: How could a high-tech mechanical engineering industry emerged from the rudimentary resources of a few localities in northern England? What can be known of the backgrounds and careers of these pioneering mechanical engineers? How did they develop skills, knowledge and system to achieve their ends?

As a research topic this was clearly a winner. But what is the historian to do when faced with such a dearth of substantial sources? Here is the explanation of why the subject has not hitherto been addressed. Evidence of early engineering was seriously lacking, business records almost entirely absent. It turned out, though, that the industry was hiding in plain sight. We’d been looking in the wrong places.

An early breakthrough came in the Hattersley of Keighley papers. Enough of Richard Hattersley’s early accounts and day books have survived, the first from 1793, to demonstrate a thriving pre-factory industry with Hattersley at its hub. He engaged a wider community in specialist component manufacture, using sub-contracting and various other flexible working practices as circumstances demanded. Hattersley’s company did not itself build machinery at that time, but he fed those who did with precision components, vital in making workable machines. The earliest production systems rested on networking, and can be most neatly described as a dispersed factory[1].

It wasn’t that archives had gone missing (though one or two are known to have been lost); but that businesses were so small scale that by and large they never generated any great weight of documentation. It was community-based sources – directories, muster rolls, parish registers, rate books, the West Riding deeds registry, and a painstaking assemblage of all kinds of stray references – that came to the rescue. While this may not exactly be a novel approach to industrial history, it turned out to be the only realistic way into exploring these small, workshop-based ventures in close-knit communities. Remarkably, too, it shone a light on aspects of the industry which business records alone could not have achieved. Community sources bring forward more than an account of business itself, for they set the actors upon their stage, placing engineers within their own environment. In particular, parish register searches, intended as no more than a confirmation of identities and movements, ultimately exposed remarkable connections. As short biographies were constructed, intermarriages and relationships were revealed which seem to explain career changes and migration (often from south to west Yorkshire, or Scotland to Lancashire) which otherwise had seemed random. So this context, which proved so influential, was not confined to engineering itself, but embraced surrounding cultures that were social and familial as much as industrial and technical. Through this information, we can infer some of the motives and concerns which impacted upon business decision-making.

All this, then, is central to The Age of Machinery. For a fully rounded account, other contexts needed unpacking: Which were the seminal machines, in terms of using new materials and parts that demanded different kinds of skills? Where did technological concepts originate, and how did technology move around? Why did engineering lag a generation behind its customer industry, textiles, in moving into factories? How did bans on machinery exportation and artisan emigration impact upon textile engineering, and why were they abandoned? And in an environment generally very welcoming of innovation, how to explain Luddism?

To contact the author:


[1] See Gillian Cookson (1997) ‘Family Firms and Business Networks: Textile Engineering in Yorkshire, 1780–1830’, Business History, 39:1, 1-20

Late Marriage as a Contributor to the Industrial Revolution in England

by James Foreman-Peck and Peng Zhou (Cardiff University)

A Wedding at St George’s Church in London. Source:

A central question of economics is why some nations experienced economic growth and are now rich, when others have not and are poor. We go some way to answering this core question by estimating and testing a model of the English economy beginning four or five centuries before the first Industrial Revolution. Western Europe experienced the earliest modern economic growth and also showed a uniquely high female age at first marriage – around 25 – from at the latest the 15th century. Whereas real wages actually began a sustained rise during the first Industrial Revolution, without the contribution of late marriage, average living standards in England would not have risen by 1870.

We utilise long time series evidence, some dating back to 1300, and test the hypothesis that this West European Marriage Pattern was an essential reason for England’s precocious economic development. Persistent high mortality in the 14th and 15th centuries and massive mortality shocks such as the Black Death lowered life expectations. Subsequently as survival chances improved, especially for children, a given completed family size could be achieved with a smaller number of births. In an environment without artificial birth control, a rise in the age at first marriage of females ensured this reduction in fertility.

Later marriage not only constrained the number of births but also provided greater opportunities for female informal learning, especially through ‘service’. A high proportion of unmarried females between the ages of 15 and 25 left home and worked elsewhere, instead of bearing children, as in other societies. This widened female horizons compared with a passage from the parental household directly into demanding motherhood and housekeeping. Throughout this period the family was the principal institution for educating and training future workers. Schooling was not compulsory until 1880 in England. In the early nineteenth century few children attended any school regularly and few remained at school for more than one and a half years. Such skills and work discipline as were learned were passed on and built up over the generations primarily by the family. Our paper shows how, over the centuries, the gradual rise of this human capital raised productivity and eventually brought about the Industrial Revolution.

Over past centuries marriage and the family were an important engine of economic growth. Whether they still have any comparable contribution in an economy where the state has assumed so much responsibility for education and training remains an open question.        .


To contact the authors:

James Foreman-Peck,  Cardiff Business School, Cardiff University, CF10 3EU (  Tel:07947 031945)

Peng Zhou,  Cardiff  Business School, Cardiff University CF10 3EU.  (


by Nuno Palma (University of Manchester)

This paper provides the first annual time series of coin and money supply estimates for about six hundred years of English history.

It presents a baseline set of estimates, but also considers a variety of alternative plausible scenarios and provide several robustness checks. It concentrates on carefully setting out the details for the data construction, rather than on analysis, but the hope is that these new estimates – the longest such series ever assembled, for any country – will open new vistas to help us understand the complex interaction between the real and the monetary sides of the English economy, at both business-cycle and long-run frequencies. Many applications are possible; for instance, O’Brien and Palma (2016) use it in their analysis of the Restriction period (1797-1821). Furthermore, the new methodology set out here may serve as a blueprint for a similar reconstruction of coin and money supply series for other economies for which the analogous required data is available.

The paper proposes two new estimation methods. The first, referred to as the “direct method”, is used to measure the value of government-provided, legal-tender coin supply only. This method does not consider broader forms of money such as banknotes, deposits, inland bills of exchange, government tallies, exchequer paper or private tokens, which became increasingly important from the seventeenth century onwards. The second method is an “indirect method,” which relies on a combination of information about nominal GDP with the value of coin supply or M2 known at certain benchmark periods. This permits estimating the volume of a broader measure of money supply over time. Figure 1 shows the main results.

Figure 1. English nominal coin supply, 1270-1870 (log scale of base 2). The periods when direct method A cannot be seen means it coincides with the baseline method (aka direct method B). Source: my calculation based on a series of sources; see text for details.

This paper is forthcoming in The Economic History Review (currently available in early view), and the underlying data has now been included by the Bank of England in their historical database

To contact the author:

The Public Works Loan Board and the growth of the state in nineteenth century England

by Ian Webster

The Public Works Loan Board was formed in 1817, when the government was faced with a stagnant economy and rising unemployment after the Napoleonic wars. It was established to lend money to finance public works like road, bridge and canal building. Later in the nineteenth century, the PWLB became a major lender to local government to finance the building of workhouses, schools, sewers and water supply facilities. The PWLB still exists in the twenty first century, and is the major provider of loans to local government.

During the nineteenth century, the PWLB survived two attempts by chancellors of the exchequer to abolish it. Sometimes its decisions were overruled by Parliament which directed the PWLB to make loans which were unlikely to be repaid. The Treasury preferred to see the PWLB as a high-cost ‘last resort’ lender when the private sector wouldn’t lend. But the prevailing view of the PWLB was as a low-cost lender to reduce the cost of national public health and education policies to local ratepayers.

These debates continue today. A recent chancellor of the exchequer sought to increase the PWLB’s interest rates closer to market rates, in order to encourage more private sector lending. He also proposed the abolition of the PWLB as a body of commissioners. There is still a debate about the merits of government borrowing to improve public infrastructure.

PWLB profits and losses 1817-76
Sums lent Profits(losses)
£M £M %
Lending decisions made independently of Parliament 37.9 3.4 9%
Lending decisions made by Parliament 4.2 (2.3) (55%)
Totals 42.1 1.1 3%


The research reached three main conclusions. First, 90 per cent of the PWLB’s lending was profitable, in spite of the fact that most loans were made at below market rates of interest. The critical factor is that lending decisions were made independently and with a prime concern about the security of the loan. The remaining 10 per cent of loans were made at the direction of Parliament. In these cases, social or economic reasons overcame the PWLB’s concern about repayment, and large losses resulted. Second, seeing the PWLB as a low-cost loan provider was a victory for local interests and national spending departments, over the Treasury desire to minimise the national debt. Third, the story of the PWLB highlights five key decisions between 1859 and 1876 that contributed to the substantial growth in government activities in the late nineteenth century. Without the PWLB’s cheap loans, it would have taken longer for elementary education and constant clean water supplies to become universal services.

To contact the author: