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May 11, 2005

Crowding Out During the Industrial Revolution

Peter Temin and Hans-Joachim Voth (2005), "Credit Rationing and Crowding Out during the Industrial Revolution: Evidence from Hoare's Bank, 1702-1862":

Qualitative evidence reinforces the view that quantity rationing was frequent. Hoare's bank told one of its clients who sought to take out a loan that... it could not extend credit:

At present we do not advance Money to anyone on any security.... The uncommon supply of millions and millions granted and now raised [to pay for the Seven Years' War] obliges all of our Profession to be prepared for the Payments [to customers moving their money from the bank into government stock] coming on, so that instead of lending out money, we have called it in on this occasion...

Posted by DeLong at May 11, 2005 11:07 AM