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A Tale of Two Currencies: British and French Finance During the Napoleonic Wars

Published online by Cambridge University Press:  03 March 2009

Michael D. Bordo  and
Eugene N. White
Michael D. Bordo
Affiliation:
The authors are Professors of Economics, Rutgers University, New Brunswick, NJ 08903
Eugene N. White
Affiliation:
The authors are Professors of Economics, Rutgers University, New Brunswick, NJ 08903
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Abstract

The record of British and French finance during the Napoleonic wars presents the striking picture of a financially strong nation abandoning the gold standard, borrowing heavily, and generating inflation, while a financially weaker country followed more “orthodox” policies. This paradoxical behavior is explained by Britain's strong credibility that allowed more flexible policies, while France's poor reputation forced reliance on taxation.

Type
Papers Presented at the Fiftieth Annual Meeting of the Economic History Association
Information
The Journal of Economic History , Volume 51 , Issue 2 , June 1991 , pp. 303 - 316
Copyright
Copyright © The Economic History Association 1991

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References

For helpful comments and suggestions we thank Levis Kochin, Hugh Rockoff, Mark Rush, Forrest Capie, Stanley Engerman, Angela Redish, Anna J. Schwartz, and Warren Weber, and seminar participants at Northwestern University, the University of Illinois, and Brown University. Howard Bodenhorn provided valuable research assistance.Google Scholar

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7 During the suspension period, the inflation rate displayed no evidence of persistence. See Barsky, Robert B., “The Fisher Hypothesis and the Forecastability and Persistence of Inflations,” Journal of Monetary Economics, 19 (01 1987), pp. 3–24:CrossRefGoogle Scholarand Bordo, Michael D. and White, Eugene N., “British and French Finance during the Napoleonic War” (NBER Working Paper No. 3517, 1990).Google ScholarFor other evidence that nominal interest-rate movements largely reflected movements in the real rate, see Black, Robert A. and Gilmore, Claire G., “Crowding Out during Britain's Industrial Revolution,” this Journal, 50 (03 1990), pp. 109–31.Google Scholar

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