Abstract

As the market for the trading of the British state’s debt developed and expanded, the Bank of England found itself in a difficult position. It was the manager of much of the state’s debt and, as such, regarded itself as the guardian of public credit. But at the same time, within its walls was housed a lively market in the national debt. That market and its participants were, at the very least, accused of making profits from the exigencies of war and, at worst, were believed to be undermining the stability of the state by manipulating the price of its debt. The Bank dealt with this seeming contradiction within its role by attempting to create both physical and commercial separation between the business of managing the public credit and the business of trading the government’s debt. This paper will argue that these attempts were largely unsuccessful and will go on to consider the implications of the Bank’s failure to remain aloof from the market for the credibility of the national debt.