INTRODUCTION: THE BRITISH FINANCIAL SYSTEM IN 1873

Walter Bagehot, editor of The Economist, published Lombard Street in 1873. Bagehot rejected the title ‘Money Market’ because he wanted to convey to readers that he was dealing ‘with concrete realities’ (Bagehot 1873: 1), and reality in 1873 was that the bricks-and-mortar components of the London money market around Lombard Street were banks: the Bank of England, private banks, joint-stock banks and discount houses. In Bagehot’s words, these banks formed ‘the greatest combination of economical power and economical delicacy that the world has ever seen’ (Bagehot 1873: 2). However, the two centuries of financial development that produced Lombard Street also sheltered once-innovative, now-dated arrangements like England’s decentralised regional banking system (Cottrell 1980: 16). In 1873, Britain had 376 private and joint-stock banks, of which ten were Scottish and 296 – 80 per cent – of the remaining 366 banks were English and Welsh banks outside of London (see Table 6.1). Similarly, two-thirds of England’s £393 million of commercial bank deposits were outside of London, and most of Britain’s 481 Trustee Savings Banks were also outside London (Table 6.1; Horne 1947: 379–85).

Regional banks were mostly local concerns, and London acted as the hub that integrated the regions into a larger financial system. On an average day in 1873, provincial banks had £9 million on deposit with correspondent banks in London and £5 million in cheques and notes being cleared – mostly using the London Clearing House (Capie and Weber 1985: 280, 475). London was also where banks that needed cash sold bills of exchange.

INTRODUCTION

According to a well-worn myth, the British industrial revolution was a revolution that took place in the market, that was financed by private capital, and the agents of which were individual entrepreneurs. The government, which had no industrialisation policy, played no significant role in this revolution. Rather, it gradually adopted a laissez-faire policy. Taxation was very low by modern standards and had no substantial redistributive consequences. Government expenditure conformed to early modern patterns and mainly took the form of military and crown expenses. The state owned neither means of production nor infrastructure and even its landownership had been dramatically reduced over the two previous centuries. Though some remnants of Tudor and Stuart regulation existed, particularly in the labour market and in overseas trade, such regulation was not effectively enforced and was in the process of being abolished. The minimal role of the state was unique to Britain. Elsewhere, government played an important role in inhibiting industrialisation (as in France or China), in creating industrialisation engineered from above (as in Germany and Japan) or in encouraging and subsidising private sector industrialisation (as in the USA). The more exceptional that Britain was in terms of the role of government, the more attractive this minimal role became as a potential explanation of why Britain was the first to industrialise. If the first industrial revolution took place in a ‘night watchman’ state, should not economists, inspired by this interpretation of the roots of the industrial revolution, recommend free-market industrialisation as the prescription for industrialisation in eastern Europe and the Third World today? This view of the industrial revolution was most popular in the 1950s and 1960s.

INTRODUCTION

Transport has long been viewed as of central importance to modern British economic history. More than forty years ago, Rostow (1960: 302) viewed the railway as the ‘leading sector’ of the British economy of the mid-nineteenth century, driving broader economic modernisation through its strong intersectoral linkages. This early interest in the developmental role of transport has given way more recently to a closer understanding and recognition of its pioneering contribution to behavioural and structural elements of economic change, particularly in terms of government intervention and corporate innovation.

This chapter will describe the process of transport growth in the eighteenth and nineteenth centuries, and then focus more closely on its political, organisational and developmental impact. Transport systems (including communications) move people, goods and information. This chapter will look at each of these functions in order to reveal the pervasive role of the transport industry in modern British history. The tendencies for transport infrastructure to take the form of a public good, open to all users, and for some transport services to operate in a manner similar to a monopoly explain the interest shown in the industry by governments seeking to assess the private and public costs and benefits involved. The large size and capital-intensive nature of many operating units caused unprecedented organisational challenges for transport companies. The identification of transport as a form of social overhead capital, supporting production across the economy, helps account for its broad-ranging impact on economic development that has been the focus of much of the historiography.

INTRODUCTION

This chapter covers the two distinct areas of public policy that can be described as ‘fiscal’. It begins by looking at ‘tax and spend’, examining issues such as the proportion of the nation’s output controlled by government, the evolution of the tax system and public expenditure trends over the period. It then considers the macroeconomic issue of government borrowing.

In spite of the apparent intellectual distinctiveness of these two aspects of policy, our chapter will reveal parallels in their histories. In particular, after the Second World War both ‘tax and spend’ and macroeconomic fiscal policies evolved fairly smoothly until the 1970s, when in both fields there was a significant change of direction. In the case of ‘tax and spend’, the trend in the first twenty-five years after the end of the Second World War was for growing government, and growing discretionary expenditure on the welfare state in particular. After the mid-1970s growth in state spending in the economy was checked, and ultimately partially reversed. Macroeconomic fiscal policy proceeded smoothly in the first half of the post-war period, being based on the view that discretion in setting the government’s borrowing was invaluable in regulating economic demand. But it, too, changed course in the mid-1970s, and discretion was jettisoned in favour of a rules-based approach. In the final sections of the chapter, therefore, we try and analyse why it was that these changes were in parallel, and argue that it was more than a coincidence.

INTRODUCTION

Since 1945, Britain’s financial services have been subject to considerable change, both in the scale of their contribution to the domestic economy, and in their character and operation. It is no surprise that the expansion of this sector and its success in relation to other key sectors has attracted the attention of economic historians. Dynamism within financial services seems to offer fertile ground for those seeking to explain the pattern and pace of recent economic development within the British economy, especially given its contrast with continued de-industrialisation in Britain during the last quarter of the twentieth century (see, for example, Clarke 1986: 186; Rybczynski 1988; Hutton 1995).

The most significant developments in this sector were concentrated in the 1980s and 1990s, these years seeing a wave of regulatory reform, increased fluidity of institutional functions, and a large growth in the scale of financial business undertaken. During the 1960s there had been increasing pessimism regarding the durability of Britain’s role as a dominant player in international financial markets, with financial services being seen as another casualty of Britain’s supposed relative economic decline. Yet, for much of the 1980s, London’s position as a financial centre seemed, once again, to be secure. Deregulation appears to have provided a strong positive impetus to the sector, augmenting expansion already evident within it. Business increased significantly, but economic recession during the late 1980s and early 1990s combined with various ‘financial scandals’ (including, for example, the Guinness, Barlow Clowes, and Maxwell pension fund crises) to deepen concern that liberalization of the regulations governing financial services might have gone too far, and was in fact creating new sources of instability.

INTRODUCTION

The argument that defects in the performance of the British economy can be best explained by lacklustre enterprise and management and a general weakness of the industrial spirit has a long history. Assertions of entrepreneurial failure remain both seductive and appealing, particularly for those who favour cultural explanations. However, in their celebrated 1971 essay on late Victorian business performance Donald McCloskey and Lars Sandberg countered this conventional wisdom. On the basis of the neoclassical conceptual and empirical literature, they found limited evidence for significant and economically relevant instances of failure.

Not all theoretical advances have favoured British entrepreneurs. Institutional approaches reinforce the perspective that entrepreneurs need to be judged against their operating environment. Entrepreneurs interact with institutions, which can both reduce transaction costs and facilitate benefits from exchange, or act as a brake on economic development if ‘institutional rigidities’ are present. Advocates of this approach claim that competing industrial nations displaced Britain from economic pre-eminence by performing better in respect of labour relations, education, industrial organisation, corporate finance and government policy towards enterprise. Thus, institutional writers have challenged the argument of entrepreneurial redemption deeply rooted in the neoclassical analysis of business behaviour.

Cultural approaches to entrepreneurship broadly agree with this challenge; they explain performance differences between countries by reference to a capacity for enterprise and initiative. In Britain, it is claimed, a rigid social structure and the persistence of gentlemanly capitalism eroded the industrial spirit. Advocates of conventional cultural approaches hail ‘the limits of economic explanation’ (Wiener 1981: 167). Scholars writing historically on culture have been reluctant to use formal methods or economic theory as analysis tools, preferring casual empiricism as a framework for explanation.

INTRODUCTION

The outbreak of the Second World War drew Britain into a new phase of its historic, geopolitical and economic relationships with the European continent. Nazi domination of the continent completed the economic cut-off that began with the proliferation of exchange controls in the 1930s. Reliance on the United States as the ‘arsenal of democracy’ inserted US economic policy into the framework of imperial preference that had worked well for Britain’s economic recovery in the 1930s. Mobilising the Empire’s world-wide resources while co-ordinating America’s military contributions throughout the Second World War, Britain’s policy makers laid the foundation for the country’s post-war relationships with its overseas Empire, the USA and Europe. Britain’s relationships in these three world regions varied over the period 1939–99 in response to a succession of external shocks: first and foremost came the shock of the Second World War, but that was followed in rapid sequence by shocks from the disastrous effects of the temporary resumption of convertibility of the pound sterling into gold or dollars in 1947, then the outbreak of the Korean War in 1950, the Suez Crisis of 1956, the successive oil shocks of 1973, 1979 and 1986, and the German reunification shock of 1990. Europe experienced the same shocks, to be sure, but in different ways, so the continental nations often responded with different strategies from those adopted by Britain.

In medieval culture an accepted hierarchy of discourses set moral teaching above narrative yet established strong expectations that the two would be connected. Stories were necessary to illustrate general truths and make them memorable, while, in an age suspicious of the dangers of fiction, the claim to teach was necessary as justification for story-telling. The two most obvious forms the link could take are named in this essay's title. The exemplum has been defined as 'a short narrative used to illustrate or confirm a general statement'. Exempla or 'ensamples' usually purport to be stories that are or could be true and thus to offer evidence in support of doctrine, while 'A fable (fabula) is something which neither happened nor could happen'. Fables - invented fictions or pagan myths - were often seen as allegories, requiring interpretation to uncover a truth hidden beneath the surface. Boccaccio defines 'fabula' as 'a form of discourse, which, under guise of invention, illustrates or proves an idea; and, as its superficial aspect is removed, the meaning of the author is clear'. From early times, classical mythology had been so interpreted: Jupiter was taken to represent some aspect of the Christian God, or, as Boccaccio, following earlier commentators, explains, Mercury's visit to rebuke Aeneas means that Aeneas was roused by 'remorse, or the reproof of some outspoken friend'.

Any description of Chaucer's style is complicated by the two distinct and conflicting meanings the term 'style' now has. The first of these is a product of Romanticism and can be described as the belief that word forms and grammars are aspects of human character. Where 'the attunement of the soul' is thought to 'exer[t] a particular influence upon the language', as Wilhelm von Humboldt (1767-1835) believed, languages will seem to differ from one another in the very same ways, and in the very forms, as people differ. When developed as a method of literary analysis, as it was by philologists such as Leo Spitzer (1887-1960), this view can also discover the 'soul of the artist' in the smallest linguistic detail (the habitual use of a conjunction, for example). Although we do not understand ourselves to be thinking along these lines now, we still employ this theory every time we say that a line of poetry, or a particular turn of phrase, is 'Chaucerian'. For the subtle but sure consequence of assuming that language and 'the artist' are equivalent is the belief that a writer's work is as cohesive as personhood (its parts are so integral that they form an indivisible whole) and just as distinctive (entirely unlike the work of any other person). In the case of Chaucer, such 'style' is the 'peculiar complexity' which sets his writing apart as if it were itself an individual. It is 'the meanings and values that make him Chaucer'.

Chaucer and Malory are the only Middle English writers whose literary afterlife has been pretty well continuous from the fifteenth to the twenty-first centuries. Study of Chaucer in particular reveals the pressures and contours of Middle English studies with especial clarity. Many recent studies have focussed on aspects of Chaucer's reception, especially in the fifteenth and sixteenth centuries, and the present chapter is devoted to that same period. It will in part confirm the conclusions of previous work, in part challenge them. In particular, I challenge the notion that Chaucer's fifteenth-century followers were inertly unresponsive to the possibilities opened up by Chaucer's oeuvre. Indeed, it is precisely the need to isolate Chaucer's genius that produces a dismissive account of Chaucer's fifteenth-century followers; that need began in earnest in the sixteenth century.

A complete conspectus of the way in which Chaucer’s works were revised and remade would need to cover the following areas: the changing nature of the texts in which his works were presented; the way in which he was cited in broadly ‘literary’ texts; the way in which his name was deployed in political and religious controversy. I give examples of each of these areas, but a complete conspectus would occupy a large book. Instead, I propose an argument designed to account for the structure of Chaucer’s reception between 1400 and 1550 (the date of the third edition of William Thynne’s Workes of Geffray Chaucer).

At a crucial moment in Book ii of Troilus and Criseyde, Criseyde is left alone to reflect on Pandarus's astonishing revelation that Troilus is dying with love for her. And as chance would have it, at this very moment Troilus rides past her window.

Social structure

Ideas of medieval social organization have much to contribute to the study of Chaucer. Socially and politically inflected topics are manifest within his writings, and socially grounded issues of literary taste and reception are thematically important as well. But, looking beyond particular matters of content, generally held notions about the structure of society also exert a tacit but persistent influence on the structure of his literary works.

Medieval social descriptions are very conscious of degree, and tend to emphasize the relatively small number of people at the top of the social hierarchy. The thirteenth-century legal commentator Bracton is representative when he divides society into those high in the ecclesiastical hierarchy (the pope, archbishops, bishops, and lesser prelates), those high in the civil hierarchy (emperors, kings, dukes, counts, barons, magnates, and knights), and those remaining (a general category of 'freepersons and bondpersons' or liberi et villani).

Like much of Chaucer's oeuvre, Chaucer's Legend of Good Women cannot be certainly dated and survives only in an incomplete form. Both factors bear on the larger issues of the poem's interpretation.

Certain references in the text provide evidence for the date of the poem's composition. The chief of these is in the F version of the Prologue to the Legend, where the narrator/poet is directed by the God of Love: 'whan this book ys maad, yive it the quene, / On my byhalf, at Eltham or at Sheene' (F 496-7). Since Eltham and Sheen were actual royal palaces, the 'quene' can only be Anne of Bohemia, wife of Richard II. Anne died in 1394 and the palace at Sheen was then destroyed. In the unique G version of the Prologue, these lines are omitted. The general scholarly assumption has been that g is the later of the two versions, and postdates Anne's death. The most obvious alternative to explain the omission of any mention of Anne in the G version is to assume it predates Richard's marriage to her in 1382. This is not impossible, but since the work involves an experiment with a related series of short narratives, it is tempting to suppose it is close in chronological sequence to the Canterbury Tales, which seems largely to date from the second half of the 1380s. The question, like so much else in Chaucerian chronology, remains unresolvable in any final way.

It is not easy for English speakers now to believe that their language can ever have been reduced to humble stammerings by another vernacular. A complacent assumption of linguistic superiority was never felt by the English in the Middle Ages: that privilege belonged to those who wrote and spoke in Latin and French. We can come nearer to imagining this linguistic climate if we compare the relation of modern French to English and American, or of modern Swiss-German to German and French, or of Marathi to Hindi and English. All of these are subtly different situations, but in each, certain languages are perceived as dominant, and this provides a cultural model that is at once a source of aspiration and of complex feelings of insecurity. I think something like this is part of what provokes the frequent comments in Chaucer's poetry about the inadequacy of his English. Here is one example, from the Book of the Duchess:

Bibliography

The first six items in section 1.1, listed in chronological order, are comprehensive surveys of Chaucer criticism up to 1996; for works published after that date, the annual bibliographies published in the journals listed in section 1.2 should be consulted. Studies in the Age of Chaucer and the Year's Work in English Studies are particularly useful because the items listed are annotated.

Selected bibliographies follow in alphabetical order. The annotated Chaucer Bibliography by Leyerle and Quick contains about 1,200 items, and that by Allen and Fisher contains 924 items. The other volumes in this section belong to the Chaucer Bibliographies series; they will facilitate access to the prodigious amount of Chaucer criticism produced in this century.

A Chaucer MetaPage designed to provide access to Chaucer studies on the worldwide web can be reached at http://www.unc.edu/depts/chaucer/.

Chaucer at Ground Zero

This essay was begun on the day that the last load of debris was removed from the site of the World Trade Center disaster of September 11, 2001. My desk at New York University is about a mile from Ground Zero, as the site became known. I easily could have attended the ceremony that day marking the end of recovery and clean-up, but I did not go to that vast literal and metaphorical pit. In fact I would not revisit it, lest I never return from all that loss. Instead, I wrote about the Middle Ages.

If I attempted - however unintentionally - to regain via the medieval a measure of wholeness, safety, and grounding lost in the trauma of September 11, it certainly wasn't the first time the past era has been invoked to perform such a recovery. Indeed, it has been recently argued that British historians in the 1950s undertook 'an obsessive search for the archival identity of Robin Hood' upon 'the loss of the raj'. Not long after that postcolonial grieving, a leading American Chaucerian hoped that 'the recognition of valid realities established by earlier generations' might provide protection against another gaping hole, what he called 'that rancid solipsistic pit' of modernity. In these scholarly instances the medieval, and particularly Chaucer, was used in a process of mourning, or rather, if we accept Freud's distinctions, in a melancholic refusal of loss, the putative modern-day loss of good love, revealed truth, and fullness of being.