https://dailyhistory.org/index.php?title=What_is_the_History_of_Public_Debt&feed=atom&action=historyWhat is the History of Public Debt - Revision history2024-03-28T16:45:10ZRevision history for this page on the wikiMediaWiki 1.30.0https://dailyhistory.org/index.php?title=What_is_the_History_of_Public_Debt&diff=23595&oldid=prevAdmin: Admin moved page What is the History of Public Debt? to What is the History of Public Debt2021-09-21T16:20:39Z<p>Admin moved page <a href="/What_is_the_History_of_Public_Debt%3F" class="mw-redirect" title="What is the History of Public Debt?">What is the History of Public Debt?</a> to <a href="/What_is_the_History_of_Public_Debt" title="What is the History of Public Debt">What is the History of Public Debt</a></p>
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<td colspan="1" style="background-color: white; color:black; text-align: center;">Revision as of 16:20, 21 September 2021</td>
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</td></tr></table>Adminhttps://dailyhistory.org/index.php?title=What_is_the_History_of_Public_Debt&diff=23594&oldid=prevAdmin at 16:20, 21 September 20212021-09-21T16:20:01Z<p></p>
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<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div><youtube>https://www.youtube.com/watch?v=SwaCg7Gwtzw</youtube></div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div><youtube>https://www.youtube.com/watch?v=SwaCg7Gwtzw</youtube></div></td></tr>
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<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div><del style="font-weight: bold; text-decoration: none;"></del></div></td><td colspan="2"> </td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>__NOTOC__</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>__NOTOC__</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>[[File: King William III 1-1-e1509187620207.jpg|thumb|left|Figure 1. William of Orange was given the idea to create the concept of public debt by creating the Bank of England. ]]</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>[[File: King William III 1-1-e1509187620207.jpg|thumb|left|Figure 1. William of Orange was given the idea to create the concept of public debt by creating the Bank of England. ]]</div></td></tr>
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<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>== Were ancient Empires such as Rome in debt? ==</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>== Were ancient Empires such as Rome in debt? ==</div></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>In ancient societies, such as Rome, Mesopotamia, and Egypt, governments were generally creditors and not in debt. They would finance institutions or individuals at given lending rates. At times of war or major state projects, funds would be raised through taxes and directly used if there was an immediate crisis where the state<del class="diffchange diffchange-inline">-</del>required financial support, the state would generally turn to its wealthy families.  </div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>In ancient societies, such as Rome, Mesopotamia, and Egypt, governments were generally creditors and not in debt. They would finance institutions or individuals at given lending rates. At times of war or major state projects, funds would be raised through taxes and directly used if there was an immediate crisis where the state required financial support, the state would generally turn to its wealthy families.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>Wealthy families had an incentive to give their money to the state if it meant the survival of the country, as the most affluent families were often the ones that ruled or had the most to lose. The state could even confiscate wealth to finance its enterprises. The general pattern in antiquity, particularly in the Old World, is that the country would allow creditors to loan individuals and debt.  </div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>Wealthy families had an incentive to give their money to the state if it meant the survival of the country, as the most affluent families were often the ones that ruled or had the most to lose. The state could even confiscate wealth to finance its enterprises. The general pattern in antiquity, particularly in the Old World, is that the country would allow creditors to loan individuals and debt.  </div></td></tr>
</table>Adminhttps://dailyhistory.org/index.php?title=What_is_the_History_of_Public_Debt&diff=21780&oldid=prevAdmin at 21:11, 12 December 20202020-12-12T21:11:59Z<p></p>
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<td colspan="2" style="background-color: white; color:black; text-align: center;">Revision as of 21:11, 12 December 2020</td>
</tr><tr><td colspan="2" class="diff-lineno" id="mw-diff-left-l6" >Line 6:</td>
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<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>Debt has a long history, particularly for individuals and businesses. On the other hand, public debt is more complex, as it seems not to have existed until Medieval or even early Modern European states emerged. Public debt developed and shaped modern financial institutions that have transformed economic ideas in the last few centuries.</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>Debt has a long history, particularly for individuals and businesses. On the other hand, public debt is more complex, as it seems not to have existed until Medieval or even early Modern European states emerged. Public debt developed and shaped modern financial institutions that have transformed economic ideas in the last few centuries.</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>==<del class="diffchange diffchange-inline">==Early History of Public Debt==</del>==</div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>== <ins class="diffchange diffchange-inline">Were ancient Empires such as Rome in debt? </ins>==</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>In ancient societies, such as Rome, Mesopotamia, and Egypt, governments were generally creditors and not in debt. They would finance institutions or individuals at given lending rates. At times of war or major state projects, funds would be raised through taxes and directly used if there was an immediate crisis where the state-required financial support, the state would generally turn to its wealthy families.  </div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>In ancient societies, such as Rome, Mesopotamia, and Egypt, governments were generally creditors and not in debt. They would finance institutions or individuals at given lending rates. At times of war or major state projects, funds would be raised through taxes and directly used if there was an immediate crisis where the state-required financial support, the state would generally turn to its wealthy families.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
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<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>This was a problem because creditors soon refused to lend to kings since they realized they might not be paid back. This created financial crises for monarchs, particularly when wars became long, and began to affect different monarchies throughout Europe.<ref>For more on how wars in Europe changed finances for states, see:  Glete, Jan. 2002. <i>War and the State in Early Modern Europe: Spain, the Dutch Republic, and Sweden as the Fiscal-Military States, 1500-1660</i>. Warfare and History. London ; New York: Routledge.</ref></div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>This was a problem because creditors soon refused to lend to kings since they realized they might not be paid back. This created financial crises for monarchs, particularly when wars became long, and began to affect different monarchies throughout Europe.<ref>For more on how wars in Europe changed finances for states, see:  Glete, Jan. 2002. <i>War and the State in Early Modern Europe: Spain, the Dutch Republic, and Sweden as the Fiscal-Military States, 1500-1660</i>. Warfare and History. London ; New York: Routledge.</ref></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>==<del class="diffchange diffchange-inline">==Developments in the Early Modern Period==</del>==</div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>== <ins class="diffchange diffchange-inline">Which countries first created public debt? </ins>==</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>[[File:Bank of North America.jpg|thumb|left|Figure 2. The Bank of North America was the first institution in the United States to finance public debt. ]]</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>[[File:Bank of North America.jpg|thumb|left|Figure 2. The Bank of North America was the first institution in the United States to finance public debt. ]]</div></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>In the 17th century, England and France increasingly <del class="diffchange diffchange-inline">spared </del>for influence in Europe and the emerging sea trade across the North Atlantic. Initially, both countries would finance their wars through taxes or creditors, but this became harder over the 17th century. During the reign of William the Orange in England in the 1680s-1690s, he was engaged in the Nine Years War. This war resulted in a fight between all of the major European powers. William could not quickly raise taxes or get loans from creditors, so the idea developed that England would have its government bank, creating the Bank of England (Figure 1).  </div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>In the 17th century, England and France increasingly <ins class="diffchange diffchange-inline">sparred </ins>for influence in Europe and the emerging sea trade across the North Atlantic. Initially, both countries would finance their wars through taxes or creditors, but this became harder over the 17th century. During the reign of William the Orange in England in the 1680s-1690s, he was engaged in the Nine Years War. This war resulted in a fight between all of the major European powers. William could not quickly raise taxes or get loans from creditors, so the idea developed that England would have its government bank, creating the Bank of England (Figure 1).  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>The Tonnage Act of 1694 was created to enable the Bank of England. The idea of a national bank was developed by Charles Montagu, 1st Earl of Halifax. He saw the Bank of England as a company that could benefit by being the sole Bank that could issue monetary notes and provide banking privileges to the wealthy and nobility.<ref>For more on the Tonnage Act and its effect, see:  Kynaston, David. 2017. <i>Till Time's Last Sand: A History of the Bank of England, 1694-2013</i>. London ; New York: Bloomsbury Publishing, an imprint of Bloomsbury Publishing Plc.</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>The Tonnage Act of 1694 was created to enable the Bank of England. The idea of a national bank was developed by Charles Montagu, 1st Earl of Halifax. He saw the Bank of England as a company that could benefit by being the sole Bank that could issue monetary notes and provide banking privileges to the wealthy and nobility.<ref>For more on the Tonnage Act and its effect, see:  Kynaston, David. 2017. <i>Till Time's Last Sand: A History of the Bank of England, 1694-2013</i>. London ; New York: Bloomsbury Publishing, an imprint of Bloomsbury Publishing Plc.</div></td></tr>
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<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>The Bank of North America was the first public bank in the United States, but it was soon replaced by the United States Bank (Figure 2). These institutions tried to copy the system in England and attempted to create a system of public debt financing.<ref>For more on how the Bank of England evolved and how that influenced public financing and debt, see: Slater, Martin. 2018. <i>The National Debt: A Short History</i>. London: Hurst & Company. </ref></div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>The Bank of North America was the first public bank in the United States, but it was soon replaced by the United States Bank (Figure 2). These institutions tried to copy the system in England and attempted to create a system of public debt financing.<ref>For more on how the Bank of England evolved and how that influenced public financing and debt, see: Slater, Martin. 2018. <i>The National Debt: A Short History</i>. London: Hurst & Company. </ref></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>==<del class="diffchange diffchange-inline">==</del>Modern <del class="diffchange diffchange-inline">Characteristics of </del>Public Debt<del class="diffchange diffchange-inline">==</del>==</div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>== <ins class="diffchange diffchange-inline">What does </ins>Modern Public Debt <ins class="diffchange diffchange-inline">look like? </ins>==</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>With the Bank of England's creation, the English government began to successfully pay its public debt even when it reached high levels. In the Napoleonic Wars of the first decade of the 19th century, debt reached 200% of GDP. In the early 19th century, governments began to make gold based on currency value, which initially helped currencies stabilize and gave some confidence in notes issued by governments. During the 19th century, the increasing wealth of the United Kingdom, and the government's success in paying its debt down, lowered debt in the United Kingdom.  </div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>With the Bank of England's creation, the English government began to successfully pay its public debt even when it reached high levels. In the Napoleonic Wars of the first decade of the 19th century, debt reached 200% of GDP. In the early 19th century, governments began to make gold based on currency value, which initially helped currencies stabilize and gave some confidence in notes issued by governments. During the 19th century, the increasing wealth of the United Kingdom, and the government's success in paying its debt down, lowered debt in the United Kingdom.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td colspan="2" class="diff-lineno" id="mw-diff-left-l45" >Line 45:</td>
<td colspan="2" class="diff-lineno">Line 45:</td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>Generally, it became easier for major and developed countries to secure loans as they were more likely to pay off debts at regular intervals. Only in very recent times did this change, with Greece in 2015 becoming the first developed country to default on loans after the Banking Crisis of 2008-2009. The generally high debt ratings for developed countries has allowed them to more recently borrow at rates of 80% or more of their GDP, which some see as a potential future crisis as public debt now has been increasing.<ref>For more on the IMF and World Bank in an age of increasing public debt, see:  Esteves, Rui Pedro, ElGanainy, Asmaa A, Mitchener, Kris James, and Eichengreen, Barry. 2019. <i>Public Debt Through the Ages</i>. INTERNATIONAL MONETARY FUND.</ref></div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>Generally, it became easier for major and developed countries to secure loans as they were more likely to pay off debts at regular intervals. Only in very recent times did this change, with Greece in 2015 becoming the first developed country to default on loans after the Banking Crisis of 2008-2009. The generally high debt ratings for developed countries has allowed them to more recently borrow at rates of 80% or more of their GDP, which some see as a potential future crisis as public debt now has been increasing.<ref>For more on the IMF and World Bank in an age of increasing public debt, see:  Esteves, Rui Pedro, ElGanainy, Asmaa A, Mitchener, Kris James, and Eichengreen, Barry. 2019. <i>Public Debt Through the Ages</i>. INTERNATIONAL MONETARY FUND.</ref></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div><del class="diffchange diffchange-inline">==</del>==Summary<del class="diffchange diffchange-inline">==</del>==</div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>==Summary ==</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>Government debt, or public debt, was a new concept that did not originate until the late 17th century. Before simply spending what they had, governments only had limited options to raise funds for wars or other enterprises. This changed with the founding of the Bank of England that other countries later emulated. In the 20th century, international institutions began to fund public debt, with the World Bank and the IMF's founding near and after the end of World War II.</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>Government debt, or public debt, was a new concept that did not originate until the late 17th century. Before simply spending what they had, governments only had limited options to raise funds for wars or other enterprises. This changed with the founding of the Bank of England that other countries later emulated. In the 20th century, international institutions began to fund public debt, with the World Bank and the IMF's founding near and after the end of World War II.</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
</table>Adminhttps://dailyhistory.org/index.php?title=What_is_the_History_of_Public_Debt&diff=21779&oldid=prevAdmin at 21:05, 12 December 20202020-12-12T21:05:23Z<p></p>
<a href="https://dailyhistory.org/index.php?title=What_is_the_History_of_Public_Debt&diff=21779&oldid=20798">Show changes</a>Adminhttps://dailyhistory.org/index.php?title=What_is_the_History_of_Public_Debt&diff=20798&oldid=prevAdmin at 23:03, 31 July 20202020-07-31T23:03:01Z<p></p>
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<td colspan="2" style="background-color: white; color:black; text-align: center;">← Older revision</td>
<td colspan="2" style="background-color: white; color:black; text-align: center;">Revision as of 23:03, 31 July 2020</td>
</tr><tr><td colspan="2" class="diff-lineno" id="mw-diff-left-l1" >Line 1:</td>
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<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>__NOTOC__</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>__NOTOC__</div></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>[[File:King William III 1-1-e1509187620207.jpg|thumb|left|Figure 1. William of Orange was given the idea to create the <del class="diffchange diffchange-inline">idea </del>of public debt through the creation of the Bank of England. ]]</div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>[[File: King William III 1-1-e1509187620207.jpg|thumb|left|Figure 1. William of Orange was given the idea to create the <ins class="diffchange diffchange-inline">concept </ins>of public debt through the creation of the Bank of England. ]]</div></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>Debt has a long history, particularly for individuals and businesses. Public debt, on the other hand, is more complex, as it seems to <del class="diffchange diffchange-inline">not </del>have existed until Medieval or even early Modern European states emerged. <del class="diffchange diffchange-inline">How public </del>debt developed and <del class="diffchange diffchange-inline">its impacted helped shape </del>modern financial institutions that have transformed economic ideas in the last few centuries.</div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>Debt has a long history, particularly for individuals and businesses. Public debt, on the other hand, is more complex, as it seems <ins class="diffchange diffchange-inline">not </ins>to have existed until Medieval or even early Modern European states emerged. <ins class="diffchange diffchange-inline">Public </ins>debt developed and <ins class="diffchange diffchange-inline">shaped </ins>modern financial institutions that have transformed economic ideas in the last few centuries.</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>====Early History of Public Debt====</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>====Early History of Public Debt====</div></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>In ancient societies, such as Rome, Mesopotamia, and Egypt, governments were generally creditors and not in debt. They would finance <del class="diffchange diffchange-inline">to </del>institutions or individuals at given lending rates. At times of war or major state projects, funds would be raised through taxes and directly used. If there was an immediate crisis where the state-required financial support, then the state would generally turn to its wealthy families for <del class="diffchange diffchange-inline">support. Wealthy families had an incentive to simply give their money to the state if it meant the survival of the state, as the wealthiest families were often the ones that ruled or had the most to lose. The state could even simply confiscate wealth in order to finance its enterprises. The general pattern in antiquity, particularly in the Old World, is that the state would allow creditors to loan individuals and debt</del>.  </div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>In ancient societies, such as Rome, Mesopotamia, and Egypt, governments were generally creditors and not in debt. They would finance institutions or individuals at given lending rates. At times of war or major state projects, funds would be raised through taxes and directly used. If there was an immediate crisis where the state-required financial support, then the state would generally turn to its wealthy families for <ins class="diffchange diffchange-inline">help</ins>.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div><del class="diffchange diffchange-inline">The </del>state <del class="diffchange diffchange-inline">would periodically issue decrees to forgive debts</del>, <del class="diffchange diffchange-inline">particularly in periods where debt levels became high and could threaten </del>the <del class="diffchange diffchange-inline">overall economy. This also proved popular for rulers, particularly if forgiving debts did not hurt </del>the <del class="diffchange diffchange-inline">rulers but mainly affected debt collectors</del>. <del class="diffchange diffchange-inline">Even if debt forgiveness affected the </del>state<del class="diffchange diffchange-inline">'s finances, this forgiveness of debts </del>could <del class="diffchange diffchange-inline">be seen as less painful than allowing too many people </del>to <del class="diffchange diffchange-inline">default</del>.<del class="diffchange diffchange-inline"><ref>For more on early debt </del>in antiquity, <del class="diffchange diffchange-inline">see:  Hudson, Michael. 2018. ...<i>And Forgive Them Their Debts: Lending, Foreclosure</del>, and <del class="diffchange diffchange-inline">Redemption from Bronze Age Finance to the Jubilee Year</i>.  ISLET</del>.<del class="diffchange diffchange-inline"></ref>  </del></div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins class="diffchange diffchange-inline">Wealthy families had an incentive to give their money to the </ins>state <ins class="diffchange diffchange-inline">if it meant the survival of the country</ins>, <ins class="diffchange diffchange-inline">as the most affluent families were often </ins>the <ins class="diffchange diffchange-inline">ones that ruled or had </ins>the <ins class="diffchange diffchange-inline">most to lose</ins>. <ins class="diffchange diffchange-inline">The </ins>state could <ins class="diffchange diffchange-inline">even simply confiscate wealth </ins>to <ins class="diffchange diffchange-inline">finance its enterprises</ins>. <ins class="diffchange diffchange-inline">The general pattern </ins>in antiquity, <ins class="diffchange diffchange-inline">particularly in the Old World</ins>, <ins class="diffchange diffchange-inline">is that the country would allow creditors to loan individuals </ins>and <ins class="diffchange diffchange-inline">debt</ins>.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>In the contentious European wars of the late Medieval period and early Modern period, kings began to finance their wars using debt. Initially, kings could raise taxes and then directly finance their wars. However, it became increasingly hard for kings to keep order by raising taxes in times of war, particularly as wars became frequent. It was simply easier to borrow. Kings also believed they were put in place by God so they often had little to fear from creditors. This <del class="diffchange diffchange-inline">made it </del>a problem <del class="diffchange diffchange-inline">as </del>creditors soon began to refuse to lend to kings since they realized they <del class="diffchange diffchange-inline">may </del>not be paid back. This created financial crises for monarchs, particularly when wars became long, and began to affect different monarchies throughout Europe.<ref>For more on how wars in Europe changed finances for states, see:  Glete, Jan. 2002. <i>War and the State in Early Modern Europe: Spain, the Dutch Republic, and Sweden as Fiscal-Military States, 1500-1660</i>. Warfare and History. London ; New York: Routledge.</ref></div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins class="diffchange diffchange-inline">The state would periodically issue decrees to forgive debts, particularly in periods where debt levels became high and could threaten the overall economy. This approach also proved popular for rulers, particularly if forgiving debts did not hurt the rulers but mainly affected debt collectors. Even if debt forgiveness affected the state's finances, this forgiveness of debts could be seen as less painful than allowing too many people to default.<ref>For more on early debt in antiquity, see:  Hudson, Michael. 2018. ...<i>And Forgive Them Their Debts: Lending, Foreclosure, and Redemption from Bronze Age Finance to the Jubilee Year</i>.  ISLET.</ref>  </ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div> </div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>In the contentious European wars of the late Medieval period and early Modern period, kings began to finance their wars using debt. Initially, kings could raise taxes and then directly finance their wars. However, it became increasingly hard for kings to keep order by raising taxes in times of war, particularly as wars became frequent. It was simply easier to borrow. Kings also believed they were put in place by God<ins class="diffchange diffchange-inline">, </ins>so they often had little to fear from creditors.  </div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div> </div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>This <ins class="diffchange diffchange-inline">was </ins>a problem <ins class="diffchange diffchange-inline">because </ins>creditors soon began to refuse to lend to kings since they realized they <ins class="diffchange diffchange-inline">might </ins>not be paid back. This created financial crises for monarchs, particularly when wars became long, and began to affect different monarchies throughout Europe.<ref>For more on how wars in Europe changed finances for states, see:  Glete, Jan. 2002. <i>War and the State in Early Modern Europe: Spain, the Dutch Republic, and Sweden as Fiscal-Military States, 1500-1660</i>. Warfare and History. London ; New York: Routledge.</ref></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>====Developments in the Early Modern Period====</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>====Developments in the Early Modern Period====</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>[[File:Bank of North America.jpg|thumb|left|Figure 2. The Bank of North America was the first institution in the United States to finance public debt. ]]</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>[[File:Bank of North America.jpg|thumb|left|Figure 2. The Bank of North America was the first institution in the United States to finance public debt. ]]</div></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>In the 17th century, England and France increasingly spared for influence in Europe and the emerging sea trade across the North Atlantic. Initially, both countries would finance their wars through taxes or creditors, but this became harder over <del class="diffchange diffchange-inline">the course of </del>the 17th century. During the reign of William the Orange in England in the 1680s-1690s, <del class="diffchange diffchange-inline">William </del>was engaged in the Nine Years War <del class="diffchange diffchange-inline">that saw </del>all of the European powers <del class="diffchange diffchange-inline">fighting</del>. William could not <del class="diffchange diffchange-inline">easily </del>raise taxes or get loans from creditors, so the idea developed that England would have its <del class="diffchange diffchange-inline">own </del>government bank, creating what became the Bank of England (Figure 1).  </div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>In the 17th century, England and France increasingly spared for influence in Europe and the emerging sea trade across the North Atlantic. Initially, both countries would finance their wars through taxes or creditors, but this became harder over the 17th century. During the reign of William the Orange in England in the 1680s-1690s, <ins class="diffchange diffchange-inline">he </ins>was engaged in the Nine Years War<ins class="diffchange diffchange-inline">. This war resulted in a fight between </ins>all of the <ins class="diffchange diffchange-inline">major </ins>European powers. William could not <ins class="diffchange diffchange-inline">quickly </ins>raise taxes or get loans from creditors, so the idea developed that England would have its government bank, creating what became the Bank of England (Figure 1).  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>The Tonnage Act 1694 was created to enable the Bank of England<del class="diffchange diffchange-inline">, which was the </del>idea of Charles Montagu, 1st Earl of Halifax<del class="diffchange diffchange-inline">, who </del>saw the Bank of England as a company that could benefit by being the sole <del class="diffchange diffchange-inline">bank </del>that could issue monetary notes and provide banking privileges to the wealthy and nobility.<ref>For more on the Tonnage Act and its effect, see:  Kynaston, David. 2017. <i>Till <del class="diffchange diffchange-inline">Time’s </del>Last Sand: A History of the Bank of England, 1694-2013</i>. London ; New York: Bloomsbury Publishing, an imprint of Bloomsbury Publishing Plc.</div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>The Tonnage Act <ins class="diffchange diffchange-inline">of </ins>1694 was created to enable the Bank of England<ins class="diffchange diffchange-inline">. The </ins>idea of <ins class="diffchange diffchange-inline">a national bank was developed by </ins>Charles Montagu, 1st Earl of Halifax<ins class="diffchange diffchange-inline">. He </ins>saw the Bank of England as a company that could benefit by being the sole <ins class="diffchange diffchange-inline">Bank </ins>that could issue monetary notes and provide banking privileges to the wealthy and nobility.<ref>For more on the Tonnage Act and its effect, see:  Kynaston, David. 2017. <i>Till <ins class="diffchange diffchange-inline">Time's </ins>Last Sand: A History of the Bank of England, 1694-2013</i>. London ; New York: Bloomsbury Publishing, an imprint of Bloomsbury Publishing Plc.</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div></ref>  </div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div></ref>  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>Funds were raised from private investors and the Bank of England bought government stock and issued securities, equivalent to bonds while giving lending notes to the government. The securities acted as contracts and would <del class="diffchange diffchange-inline">give </del>individuals return on those investments, while the funds given by the individual could be used to finance debt. Businesses and individuals also were allowed to deposit money. This created a pool of funding for the government that it was able to use without directly going to Parliament to raise taxes or use other creditors. Now, William III could finance his wars. Initially, the Bank of England was not a government institution but a private company created through a charter. However, as the government saw it useful to its efforts, it began to depend on the Bank more and increasingly incorporate it as part of its policies. In 1708, the government let the Bank have sole rights to create currency notes. Notes did not have fixed values, as they do today, but could be changed by agreement.  </div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>Funds were raised from private investors<ins class="diffchange diffchange-inline">, </ins>and the Bank of England bought government stock and issued securities, equivalent to bonds<ins class="diffchange diffchange-inline">, </ins>while giving lending notes to the government. The securities acted as contracts and would <ins class="diffchange diffchange-inline">provide </ins>individuals <ins class="diffchange diffchange-inline">with </ins>return on those investments, while the funds given by the individual could be used to finance debt. Businesses and individuals also were allowed to deposit money. This created a pool of funding for the government that it was able to use without directly going to Parliament to raise taxes or use other creditors.  </div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div> </div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>Now, William III could finance his wars. Initially, the Bank of England was not a government institution but a private company created through a charter. However, as the government saw it useful to its efforts, it began to depend on the Bank more and increasingly incorporate it as part of its policies. In 1708, the government let the Bank have sole rights to create currency notes. Notes did not have fixed values, as they do today, but could be changed by agreement.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>Within a year, the government also made it a monopoly, as other large banks were not allowed and other banks could not issue notes.  By 1720, the '£' sign was created and by 1745 notes had fixed values of £20 to £1000. In the Seven Years war, another major conflict with France<del class="diffchange diffchange-inline">, </del>led to the creation of small notes, £10, as this allowed more borrowing for smaller denominations. <del class="diffchange diffchange-inline">Over the course of </del>the rest of the 18th century, the Bank had a <del class="diffchange diffchange-inline">greater </del>role in the economy not only for the government but also in financing more enterprises throughout the country, including increasing trade. The system proved a success for England and other countries in Europe began to copy the system by the end of the century. In 1782, the Bank of Spain was created and in 1800 the Bank of France was established.  </div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>Within a year, the government also made it a monopoly, as other large banks were not allowed<ins class="diffchange diffchange-inline">, </ins>and other banks could not issue notes.  By 1720, the '£' sign was created<ins class="diffchange diffchange-inline">, </ins>and by 1745 notes had fixed values of £20 to £1000. In the Seven Years war, another major conflict with France led to the creation of small notes, £10, as this allowed more borrowing for smaller denominations. <ins class="diffchange diffchange-inline">Throughout </ins>the rest of the 18th century, the Bank had a <ins class="diffchange diffchange-inline">more significant </ins>role in the economy not only for the government but also in financing more enterprises throughout the country, including increasing trade. The system proved a success for England<ins class="diffchange diffchange-inline">, </ins>and other countries in Europe began to copy the system by the end of the century. In 1782, the Bank of Spain was created<ins class="diffchange diffchange-inline">, </ins>and in 1800<ins class="diffchange diffchange-inline">, </ins>the Bank of France was established.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>The Bank of North America was the first public bank in the United States, but it soon was replaced by the Bank of the United States (Figure 2). All of these institutions tried to copy the system in England and attempted to create a system of public debt financing.<ref>For more on how the Bank of England evolved and how that influenced public financing and debt, see: Slater, Martin. 2018. <i>The National Debt: A Short History</i>. London: Hurst & Company. </ref></div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>The Bank of North America was the first public bank in the United States, but it soon was replaced by the Bank of the United States (Figure 2). All of these institutions tried to copy the system in England and attempted to create a system of public debt financing.<ref>For more on how the Bank of England evolved and how that influenced public financing and debt, see: Slater, Martin. 2018. <i>The National Debt: A Short History</i>. London: Hurst & Company. </ref></div></td></tr>
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<td colspan="2" class="diff-lineno">Line 32:</td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>With the creation of the Bank of England, the English government began to successfully pay its public debt even when it reached high levels. In the Napoleonic Wars of the first decade of the 19th century, debt reached 200% of GDP. In the early 19th century, governments began to make gold as the basis of currency value, which initially helped currencies to stabilize and gave some confidence in notes issued by governments. During the 19th century, the increasing wealth of the United Kingdom, and the government's success in paying its debt down, lowered debt in the United Kingdom.  </div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>With the creation of the Bank of England, the English government began to successfully pay its public debt even when it reached high levels. In the Napoleonic Wars of the first decade of the 19th century, debt reached 200% of GDP. In the early 19th century, governments began to make gold as the basis of currency value, which initially helped currencies to stabilize and gave some confidence in notes issued by governments. During the 19th century, the increasing wealth of the United Kingdom, and the government's success in paying its debt down, lowered debt in the United Kingdom.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>However, at times, the Bank struggled and was bailed out by wealthy private individuals, particularly the Rothschild family. The weakening of the Bank allowed others to push for the liberalization of banking, leading to the 1825-1826 Bank Charter Act that helped the spread of large banking. Other countries were not as lucky as the United Kingdom when it came to financing debt. The newly independent <del class="diffchange diffchange-inline">countries </del>of Latin American in the 1820s were able to get loans from the bond market in London, as the United Kingdom became the central country for government finance. Some of the countries defaulted; however, the Bank of England did have the power to forgive debts and, similar to <del class="diffchange diffchange-inline">early </del>government institutions in antiquity, would <del class="diffchange diffchange-inline">simply </del>allow indebted countries to walk free.  </div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>However, at times, the Bank struggled and was bailed out by wealthy private individuals, particularly the Rothschild family. The weakening of the Bank allowed others to push for the liberalization of banking, leading to the 1825-1826 Bank Charter Act that helped the spread of large banking. Other countries were not as lucky as the United Kingdom when it came to financing debt. The newly independent <ins class="diffchange diffchange-inline">states </ins>of Latin American in the 1820s were able to get loans from the bond market in London, as the United Kingdom became the central country for government finance. Some of the countries defaulted; however, the Bank of England did have the power to forgive debts and, similar to <ins class="diffchange diffchange-inline">new </ins>government institutions in antiquity, would allow indebted countries to walk free.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>Other times the terms were rewritten in regards to servicing the debts. The next set of global crises occurred during the two World Wars and the Great Depression. The Great Depression<del class="diffchange diffchange-inline">, in fact, </del>led to the last time a state within the United States, Arkansas, to default on its debt obligations. Countries from the 1920-1930s increasingly found it hard to pay their debts, leading to debt payments to be rescheduled and new payment agreements to be created. By this time, credit ratings began to emerge. John Knowles Fitch in 1913 had created the concept of credit ratings, which became the AAA through the D rating system. This rating system could be applied to countries as well as companies and was soon used to gauge country's ability to borrow.  </div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>Other times the terms were rewritten in regards to servicing the debts. The next set of global crises occurred during the two World Wars and the Great Depression. The Great Depression led to the last time a state within the United States, Arkansas, to default on its debt obligations. Countries from the 1920-1930s increasingly found it hard to pay their debts, leading to debt payments to be rescheduled and new payment agreements to be created. By this time, credit ratings began to emerge. John Knowles Fitch<ins class="diffchange diffchange-inline">, </ins>in 1913 had created the concept of credit ratings, which became the AAA through the D rating system. This rating system could be applied to countries as well as companies and was soon used to gauge country's ability to borrow.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>Initial rates for lending thus became affected by a country's rating. This system and tightening processes for issuing government debt led to few developed countries defaulting in by the late 20th century.<ref>For more on how 19th-century finances changed as public institutions developed, see:  Eichengreen, Barry, Robert Alan Feldman, Jeffrey B. Liebman, Jürgen von Hagen, and Charles Wyplosz, eds. 2011. <i>Public Debts: Nuts, Bolts and Worries</i>. Geneva Reports on the World Economy 13. Geneva: ICMB, Internat. Center for Monetary and Banking Studies.</ref></div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>Initial rates for lending thus became affected by a country's rating. This system and tightening processes for issuing government debt led to few developed countries defaulting in by the late 20th century.<ref>For more on how 19th-century finances changed as public institutions developed, see:  Eichengreen, Barry, Robert Alan Feldman, Jeffrey B. Liebman, Jürgen von Hagen, and Charles Wyplosz, eds. 2011. <i>Public Debts: Nuts, Bolts and Worries</i>. Geneva Reports on the World Economy 13. Geneva: ICMB, Internat. Center for Monetary and Banking Studies.</ref></div></td></tr>
</table>Adminhttps://dailyhistory.org/index.php?title=What_is_the_History_of_Public_Debt&diff=20797&oldid=prevAdmin at 22:37, 31 July 20202020-07-31T22:37:53Z<p></p>
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<td colspan="2" style="background-color: white; color:black; text-align: center;">Revision as of 22:37, 31 July 2020</td>
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<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>__NOTOC__</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>__NOTOC__</div></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>[[File:King William III 1-1-e1509187620207.jpg|thumb|Figure 1. William of Orange was given the idea to create the idea of public debt through the creation of the Bank of England. ]]</div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>[[File:King William III 1-1-e1509187620207.jpg|thumb<ins class="diffchange diffchange-inline">|left</ins>|Figure 1. William of Orange was given the idea to create the idea of public debt through the creation of the Bank of England. ]]</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>Debt has a long history, particularly for individuals and businesses. Public debt, on the other hand, is more complex, as it seems to not have existed until Medieval or even early Modern European states emerged. How public debt developed and its impacted helped shape modern financial institutions that have transformed economic ideas in the last few centuries.</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>Debt has a long history, particularly for individuals and businesses. Public debt, on the other hand, is more complex, as it seems to not have existed until Medieval or even early Modern European states emerged. How public debt developed and its impacted helped shape modern financial institutions that have transformed economic ideas in the last few centuries.</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>====Early History of Public Debt====</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>====Early History of Public Debt====</div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins style="font-weight: bold; text-decoration: none;">In ancient societies, such as Rome, Mesopotamia, and Egypt, governments were generally creditors and not in debt. They would finance to institutions or individuals at given lending rates. At times of war or major state projects, funds would be raised through taxes and directly used. If there was an immediate crisis where the state-required financial support, then the state would generally turn to its wealthy families for support. Wealthy families had an incentive to simply give their money to the state if it meant the survival of the state, as the wealthiest families were often the ones that ruled or had the most to lose. The state could even simply confiscate wealth in order to finance its enterprises. The general pattern in antiquity, particularly in the Old World, is that the state would allow creditors to loan individuals and debt. </ins></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div><del class="diffchange diffchange-inline">In ancient societies, such as Rome, Mesopotamia, and Egypt, governments were generally creditors and not in debt. They would finance to institutions or individuals at given lending rates. At times of war or major state projects, funds would be raised through taxes and directly used. If there was an immediate crisis where the state required financial support, then the state would generally turn to its wealthy families for support. Wealthy families had incentive to simply give their money to the state if it meant the survival of the state, as the wealthiest families were often the ones that ruled or had the most to lose. The state could even simply confiscate wealth in order to finance its enterprises. The general pattern in antiquity, particularly in the Old World, is that the state would allow creditors to loan individuals and debt. </del></div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>The state would periodically issue decrees to forgive debts, particularly in periods where debt levels became high and could threaten the overall economy. This also proved popular for rulers, particularly if forgiving debts did not hurt the rulers but mainly affected debt collectors. Even if debt forgiveness affected the state's finances, this forgiveness of debts could be seen as less painful than allowing too many people to default.<ref>For more on early debt in antiquity, see:  Hudson, Michael. 2018. ...<i>And Forgive Them Their Debts: Lending, Foreclosure<ins class="diffchange diffchange-inline">, </ins>and Redemption from Bronze Age Finance to the Jubilee Year</i>.  ISLET.</ref>   </div></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div> </div></td><td colspan="2"> </td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>The state would periodically issue decrees to forgive debts, particularly in periods where debt levels became high and could threaten the overall economy. This also proved popular for rulers, particularly if forgiving debts did not hurt the rulers but mainly affected debt collectors. Even if debt forgiveness affected the state's finances, this forgiveness of debts could be seen as less painful than allowing too many people to default.<ref>For more on early debt in antiquity, see:  Hudson, Michael. 2018. ...<i>And Forgive Them Their Debts: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year</i>.  ISLET.</ref>   </div></td><td colspan="2"> </td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>In the contentious European wars of the late Medieval period and early Modern period, kings began to finance their wars using debt. Initially, kings could raise taxes and then directly finance their wars. However, it became increasingly hard for kings to keep order by raising taxes in times of war, particularly as wars became frequent. It was simply easier to borrow. Kings also believed they were put in place by God so they often had little to fear from creditors. This made it a problem as creditors soon began to refuse to lend to kings since they realized they may not be paid back. This created financial crises for monarchs, particularly when wars became long, and began to affect different monarchies throughout Europe.<ref>For more on how wars in Europe changed finances for states, see:  Glete, Jan. 2002. <i>War and the State in Early Modern Europe: Spain, the Dutch Republic, and Sweden as Fiscal-Military States, 1500-1660</i>. Warfare and History. London ; New York: Routledge.</ref></div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>In the contentious European wars of the late Medieval period and early Modern period, kings began to finance their wars using debt. Initially, kings could raise taxes and then directly finance their wars. However, it became increasingly hard for kings to keep order by raising taxes in times of war, particularly as wars became frequent. It was simply easier to borrow. Kings also believed they were put in place by God so they often had little to fear from creditors. This made it a problem as creditors soon began to refuse to lend to kings since they realized they may not be paid back. This created financial crises for monarchs, particularly when wars became long, and began to affect different monarchies throughout Europe.<ref>For more on how wars in Europe changed finances for states, see:  Glete, Jan. 2002. <i>War and the State in Early Modern Europe: Spain, the Dutch Republic, and Sweden as Fiscal-Military States, 1500-1660</i>. Warfare and History. London ; New York: Routledge.</ref></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>====Developments in the Early Modern Period====</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>====Developments in the Early Modern Period====</div></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>[[File:Bank of North America.jpg|thumb|Figure 2. The Bank of North America was the first institution in the United States to finance public debt. ]]</div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>[[File:Bank of North America.jpg|thumb<ins class="diffchange diffchange-inline">|left</ins>|Figure 2. The Bank of North America was the first institution in the United States to finance public debt. ]]</div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins class="diffchange diffchange-inline">In the 17th century, England and France increasingly spared for influence in Europe and the emerging sea trade across the North Atlantic. Initially, both countries would finance their wars through taxes or creditors, but this became harder over the course of the 17th century. During the reign of William the Orange in England in the 1680s-1690s, William was engaged in the Nine Years War that saw all of the European powers fighting. William could not easily raise taxes or get loans from creditors, so the idea developed that England would have its own government bank, creating what became the Bank of England (Figure 1). </ins></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div><del class="diffchange diffchange-inline">In the 17th century, England and France increasingly spared for influence in Europe and the emerging sea trade across the North Atlantic. Initially, both countries would finance their wars through taxes or creditors, but this became harder over the course of the 17th century. During the reign of William the Orange in England in 1680s-1690s, William was engaged in the Nine Years War that saw all of the European powers fighting. William could not easily raise taxes or get loans from creditors, so the idea developed that England would have its own government bank, creating what became the Bank of England (Figure 1). </del>The Tonnage Act 1694 was created to enable the Bank of England, which was the idea of Charles Montagu, 1st Earl of Halifax, who saw the Bank of England as a company that could benefit by being the sole bank that could issue monetary notes and provide banking privileges to the wealthy and nobility.<ref>For more on the Tonnage Act and its effect, see:  Kynaston, David. 2017. <i>Till Time’s Last Sand: A History of the Bank of England, 1694-2013</i>. London ; New York: Bloomsbury Publishing, an imprint of Bloomsbury Publishing Plc.</div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>The Tonnage Act 1694 was created to enable the Bank of England, which was the idea of Charles Montagu, 1st Earl of Halifax, who saw the Bank of England as a company that could benefit by being the sole bank that could issue monetary notes and provide banking privileges to the wealthy and nobility.<ref>For more on the Tonnage Act and its effect, see:  Kynaston, David. 2017. <i>Till Time’s Last Sand: A History of the Bank of England, 1694-2013</i>. London ; New York: Bloomsbury Publishing, an imprint of Bloomsbury Publishing Plc.</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div></ref>  </div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div></ref>  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>Funds were raised from private investors and the Bank of England bought government stock and issued securities, equivalent to bonds<del class="diffchange diffchange-inline">, </del>while giving lending notes to the government. The securities acted as contracts and would give individuals return on those investments, while the funds given by the individual could be used to finance debt. Businesses and individuals also were allowed to deposit money. This created a pool of funding for the government that it was able to use without directly going to Parliament to raise taxes or use other creditors. Now, William III could finance his wars. Initially, the Bank of England was not a government institution but a private company created through a charter. However, as the government saw it useful to its efforts, it began to depend on the Bank more and increasingly incorporate it as part of its policies. In 1708, the government let the Bank have sole rights to create currency notes. Notes did not have fixed values, as they do today, but could be changed by agreement.  </div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>Funds were raised from private investors and the Bank of England bought government stock and issued securities, equivalent to bonds while giving lending notes to the government. The securities acted as contracts and would give individuals return on those investments, while the funds given by the individual could be used to finance debt. Businesses and individuals also were allowed to deposit money. This created a pool of funding for the government that it was able to use without directly going to Parliament to raise taxes or use other creditors. Now, William III could finance his wars. Initially, the Bank of England was not a government institution but a private company created through a charter. However, as the government saw it useful to its efforts, it began to depend on the Bank more and increasingly incorporate it as part of its policies. In 1708, the government let the Bank have sole rights to create currency notes. Notes did not have fixed values, as they do today, but could be changed by agreement.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>Within a year, the government also made it a monopoly, as other large banks were not allowed and other banks could not issue notes.  By 1720, the '£' sign was created and by 1745 notes had fixed values of £20 to £1000. In the Seven Years war, another major conflict with France, led to the creation of small notes, £10, as this allowed more borrowing for smaller denominations. Over the course of the rest of the 18th century, the Bank had a greater role in the economy not only for the government but also in financing more <del class="diffchange diffchange-inline">enterprise </del>throughout the country, including increasing trade. The system proved a success for England and other countries in Europe began to copy the system by the end of the century. In 1782, the Bank of Spain was created and in 1800 the Bank of France was established.  </div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>Within a year, the government also made it a monopoly, as other large banks were not allowed and other banks could not issue notes.  By 1720, the '£' sign was created and by 1745 notes had fixed values of £20 to £1000. In the Seven Years war, another major conflict with France, led to the creation of small notes, £10, as this allowed more borrowing for smaller denominations. Over the course of the rest of the 18th century, the Bank had a greater role in the economy not only for the government but also in financing more <ins class="diffchange diffchange-inline">enterprises </ins>throughout the country, including increasing trade. The system proved a success for England and other countries in Europe began to copy the system by the end of the century. In 1782, the Bank of Spain was created and in 1800 the Bank of France was established.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>The Bank of North America was the first public bank in the United States, but it soon was replaced by the Bank of the United States (Figure 2). All of these institutions tried to copy the system in England and attempted to create a system of public debt financing.<ref>For more on how the Bank of England evolved and how that influenced public financing and debt, see: Slater, Martin. 2018. <i>The National Debt: A Short History</i>. London: Hurst & Company. </ref></div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>The Bank of North America was the first public bank in the United States, but it soon was replaced by the Bank of the United States (Figure 2). All of these institutions tried to copy the system in England and attempted to create a system of public debt financing.<ref>For more on how the Bank of England evolved and how that influenced public financing and debt, see: Slater, Martin. 2018. <i>The National Debt: A Short History</i>. London: Hurst & Company. </ref></div></td></tr>
<tr><td colspan="2" class="diff-lineno" id="mw-diff-left-l26" >Line 26:</td>
<td colspan="2" class="diff-lineno">Line 26:</td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>With the creation of the Bank of England, the English government began to successfully pay its public debt even when it reached high levels. In the Napoleonic Wars of the first decade of the 19th century, debt reached 200% of GDP. In the early 19th century, governments began to make gold as the basis of currency value, which initially helped currencies to stabilize and gave some confidence in notes issued by governments. During the 19th century, the increasing wealth of the United Kingdom, and the government's success in paying its debt down, lowered debt in the United Kingdom.  </div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>With the creation of the Bank of England, the English government began to successfully pay its public debt even when it reached high levels. In the Napoleonic Wars of the first decade of the 19th century, debt reached 200% of GDP. In the early 19th century, governments began to make gold as the basis of currency value, which initially helped currencies to stabilize and gave some confidence in notes issued by governments. During the 19th century, the increasing wealth of the United Kingdom, and the government's success in paying its debt down, lowered debt in the United Kingdom.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>However, at times, the Bank struggled and was bailed out by wealthy private individuals, particularly the Rothschild family. The weakening of the Bank allowed others to push for the liberalization of banking, leading to the 1825-1826 Bank Charter Act that helped the spread of large banking. Other countries were not as lucky as the United Kingdom when it came to financing debt. The <del class="diffchange diffchange-inline">new </del>independent countries of Latin American in the 1820s were able to get loans from the bond market in London, as the United Kingdom became the central country for government finance. Some of the countries defaulted; however, the Bank of England did have power to forgive debts and, similar to early government institutions in antiquity, would simply allow indebted countries to walk free.  </div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>However, at times, the Bank struggled and was bailed out by wealthy private individuals, particularly the Rothschild family. The weakening of the Bank allowed others to push for the liberalization of banking, leading to the 1825-1826 Bank Charter Act that helped the spread of large banking. Other countries were not as lucky as the United Kingdom when it came to financing debt. The <ins class="diffchange diffchange-inline">newly </ins>independent countries of Latin American in the 1820s were able to get loans from the bond market in London, as the United Kingdom became the central country for government finance. Some of the countries defaulted; however, the Bank of England did have <ins class="diffchange diffchange-inline">the </ins>power to forgive debts and, similar to early government institutions in antiquity, would simply allow indebted countries to walk free<ins class="diffchange diffchange-inline">. </ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div> </div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins class="diffchange diffchange-inline">Other times the terms were rewritten in regards to servicing the debts. The next set of global crises occurred during the two World Wars and the Great Depression. The Great Depression, in fact, led to the last time a state within the United States, Arkansas, to default on its debt obligations. Countries from the 1920-1930s increasingly found it hard to pay their debts, leading to debt payments to be rescheduled and new payment agreements to be created. By this time, credit ratings began to emerge. John Knowles Fitch in 1913 had created the concept of credit ratings, which became the AAA through the D rating system. This rating system could be applied to countries as well as companies and was soon used to gauge country's ability to borrow</ins>.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div><del class="diffchange diffchange-inline">Other times the terms were rewritten in regards to servicing the debts. The next set of global crises occurred during the two World Wars and the Great Depression. The Great Depression, in fact, led to the last time a state within the United States, Arkansas, to default on its debt obligations. Countries from the 1920-1930s increasingly found it hard to pay their debts, leading to debt payments to be rescheduled and new payment agreements to be created. By this time, credit ratings began to emerge. John Knowles Fitch in 1913 had created the concept of credit ratings, which became the AAA through D rating system. This rating system could be applied to countries as well as companies and was soon used to gauge countries ability to borrow. </del>Initial rates for lending thus became affected by a country's rating. This system and tightening processes for issuing government debt led to few developed countries defaulting in by the late 20th century.<ref>For more on how 19th century finances changed as public institutions developed, see:  Eichengreen, Barry, Robert Alan Feldman, Jeffrey B. Liebman, Jürgen von Hagen, and Charles Wyplosz, eds. 2011. <i>Public Debts: Nuts, Bolts and Worries</i>. Geneva Reports on the World Economy 13. Geneva: ICMB, Internat. Center for Monetary and Banking Studies.</ref></div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>Initial rates for lending thus became affected by a country's rating. This system and tightening processes for issuing government debt led to few developed countries defaulting in by the late 20th century.<ref>For more on how 19th<ins class="diffchange diffchange-inline">-</ins>century finances changed as public institutions developed, see:  Eichengreen, Barry, Robert Alan Feldman, Jeffrey B. Liebman, Jürgen von Hagen, and Charles Wyplosz, eds. 2011. <i>Public Debts: Nuts, Bolts and Worries</i>. Geneva Reports on the World Economy 13. Geneva: ICMB, Internat. Center for Monetary and Banking Studies.</ref></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>However, World War II, and its destruction of many advanced economies, created many problems for countries. Many countries found themselves bankrupt after the devastation of the war. The International Monetary Fund (IMF) as well as the World Bank were developed to help in such cases. Both institutions began to finance states and their enterprises; these institutions were seen as being comparable to the New Deal of the 1930s, where they would help stimulate financial growth in countries affected by devastation. With the linkage of politics with these international financial institutions, debt soon became a major political issue used in the Cold War.  </div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>However, World War II, and its destruction of many advanced economies, created many problems for countries. Many countries found themselves bankrupt after the devastation of the war. The International Monetary Fund (IMF)<ins class="diffchange diffchange-inline">, </ins>as well as the World Bank<ins class="diffchange diffchange-inline">, </ins>were developed to help in such cases. Both institutions began to finance states and their enterprises; these institutions were seen as being comparable to the New Deal of the 1930s, where they would help stimulate financial growth in countries affected by <ins class="diffchange diffchange-inline">the </ins>devastation. With the linkage of politics with these international financial institutions, debt soon became a major political issue used in the Cold War.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>Generally, it became easier for major and developed countries to secure loans as they were more likely to pay off debts at regular intervals. Only in very recent times did this change, with Greece in 2015 becoming the first developed country to default on loans after the Banking Crisis of 2008-2009. The generally high debt ratings for developed countries has allowed them to more recently borrow at rates of 80% or more of their GDP, which some see as a potential future crisis as public debt now has been increasing.<ref>For more on the IMF and World Bank in an age of increasing public debt, see:  Esteves, Rui Pedro, ElGanainy, Asmaa A, Mitchener, Kris James, and Eichengreen, Barry. 2019. <i>Public Debt Through the Ages</i>. INTERNATIONAL MONETARY FUND.</ref></div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>Generally, it became easier for major and developed countries to secure loans as they were more likely to pay off debts at regular intervals. Only in very recent times did this change, with Greece in 2015 becoming the first developed country to default on loans after the Banking Crisis of 2008-2009. The generally high debt ratings for developed countries has allowed them to more recently borrow at rates of 80% or more of their GDP, which some see as a potential future crisis as public debt now has been increasing.<ref>For more on the IMF and World Bank in an age of increasing public debt, see:  Esteves, Rui Pedro, ElGanainy, Asmaa A, Mitchener, Kris James, and Eichengreen, Barry. 2019. <i>Public Debt Through the Ages</i>. INTERNATIONAL MONETARY FUND.</ref></div></td></tr>
</table>Adminhttps://dailyhistory.org/index.php?title=What_is_the_History_of_Public_Debt&diff=20796&oldid=prevAdmin at 22:35, 31 July 20202020-07-31T22:35:58Z<p></p>
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<td colspan="2" style="background-color: white; color:black; text-align: center;">Revision as of 22:35, 31 July 2020</td>
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<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins style="font-weight: bold; text-decoration: none;">__NOTOC__</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins style="font-weight: bold; text-decoration: none;">[[File:King William III 1-1-e1509187620207.jpg|thumb|Figure 1. William of Orange was given the idea to create the idea of public debt through the creation of the Bank of England. ]]</ins></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>Debt has a long history, particularly for individuals and businesses. Public debt, on the other hand, is more complex, as it seems to not have existed until Medieval or even early Modern European states emerged. How public debt developed and its impacted helped shape modern financial institutions that have transformed economic ideas in the last few centuries.</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>Debt has a long history, particularly for individuals and businesses. Public debt, on the other hand, is more complex, as it seems to not have existed until Medieval or even early Modern European states emerged. How public debt developed and its impacted helped shape modern financial institutions that have transformed economic ideas in the last few centuries.</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>==Early History of Public Debt==</div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins class="diffchange diffchange-inline">==</ins>==Early History of Public Debt==<ins class="diffchange diffchange-inline">==</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div> </div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins class="diffchange diffchange-inline">In ancient societies, such as Rome, Mesopotamia, and Egypt, governments were generally creditors and not in debt. They would finance to institutions or individuals at given lending rates. At times of war or major state projects, funds would be raised through taxes and directly used. If there was an immediate crisis where the state required financial support, then the state would generally turn to its wealthy families for support. Wealthy families had incentive to simply give their money to the state if it meant the survival of the state, as the wealthiest families were often the ones that ruled or had the most to lose. The state could even simply confiscate wealth in order to finance its enterprises. The general pattern in antiquity, particularly in the Old World, is that the state would allow creditors to loan individuals and debt. </ins></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div><del class="diffchange diffchange-inline">In ancient societies, such as Rome, Mesopotamia, and Egypt, governments were generally creditors and not in debt. They would finance to institutions or individuals at given lending rates. At times of war or major state projects, funds would be raised through taxes and directly used. If there was an immediate crisis where the state required financial support, then the state would generally turn to its wealthy families for support. Wealthy families had incentive to simply give their money to the state if it meant the survival of the state, as the wealthiest families were often the ones that ruled or had the most to lose. The state could even simply confiscate wealth in order to finance its enterprises. The general pattern in antiquity, particularly in the Old World, is that the state would allow creditors to loan individuals and debt. </del>The state would periodically issue decrees to forgive debts, particularly in periods where debt levels became high and could threaten the overall economy. This also proved popular for rulers, particularly if forgiving debts did not hurt the rulers but mainly affected debt collectors. Even if debt forgiveness affected the state's finances, this forgiveness of debts could be seen as less painful than allowing too many people to default.<ref>For more on early debt in antiquity, see:  Hudson, Michael. 2018. ...<i>And Forgive Them Their Debts: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year</i>.  ISLET.</ref>   </div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>The state would periodically issue decrees to forgive debts, particularly in periods where debt levels became high and could threaten the overall economy. This also proved popular for rulers, particularly if forgiving debts did not hurt the rulers but mainly affected debt collectors. Even if debt forgiveness affected the state's finances, this forgiveness of debts could be seen as less painful than allowing too many people to default.<ref>For more on early debt in antiquity, see:  Hudson, Michael. 2018. ...<i>And Forgive Them Their Debts: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year</i>.  ISLET.</ref>   </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>In the contentious European wars of the late Medieval period and early Modern period, kings began to finance their wars using debt. Initially, kings could raise taxes and then directly finance their wars. However, it became increasingly hard for kings to keep order by raising taxes in times of war, particularly as wars became frequent. It was simply easier to borrow. Kings also believed they were put in place by God so they often had little to fear from creditors. This made it a problem as creditors soon began to refuse to lend to kings since they realized they may not be paid back. This created financial crises for monarchs, particularly when wars became long, and began to affect different monarchies throughout Europe.<ref>For more on how wars in Europe changed finances for states, see:  Glete, Jan. 2002. <i>War and the State in Early Modern Europe: Spain, the Dutch Republic, and Sweden as Fiscal-Military States, 1500-1660</i>. Warfare and History. London ; New York: Routledge.</ref></div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>In the contentious European wars of the late Medieval period and early Modern period, kings began to finance their wars using debt. Initially, kings could raise taxes and then directly finance their wars. However, it became increasingly hard for kings to keep order by raising taxes in times of war, particularly as wars became frequent. It was simply easier to borrow. Kings also believed they were put in place by God so they often had little to fear from creditors. This made it a problem as creditors soon began to refuse to lend to kings since they realized they may not be paid back. This created financial crises for monarchs, particularly when wars became long, and began to affect different monarchies throughout Europe.<ref>For more on how wars in Europe changed finances for states, see:  Glete, Jan. 2002. <i>War and the State in Early Modern Europe: Spain, the Dutch Republic, and Sweden as Fiscal-Military States, 1500-1660</i>. Warfare and History. London ; New York: Routledge.</ref></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>==Developments in the Early Modern Period==</div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins class="diffchange diffchange-inline">==</ins>==Developments in the Early Modern Period==<ins class="diffchange diffchange-inline">==</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins class="diffchange diffchange-inline">[[File:Bank of North America.jpg|thumb|Figure 2. The Bank of North America was the first institution in the United States to finance public debt. ]]</ins></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>In the 17th century, England and France increasingly spared for influence in Europe and the emerging sea trade across the North Atlantic. Initially, both countries would finance their wars through taxes or creditors, but this became harder over the course of the 17th century. During the reign of William the Orange in England in 1680s-1690s, William was engaged in the Nine Years War that saw all of the European powers fighting. William could not easily raise taxes or get loans from creditors, so the idea developed that England would have its own government bank, creating what became the Bank of England (Figure 1). The Tonnage Act 1694 was created to enable the Bank of England, which was the idea of Charles Montagu, 1st Earl of Halifax, who saw the Bank of England as a company that could benefit by being the sole bank that could issue monetary notes and provide banking privileges to the wealthy and nobility.<ref>For more on the Tonnage Act and its effect, see:  Kynaston, David. 2017. <i>Till Time’s Last Sand: A History of the Bank of England, 1694-2013</i>. London ; New York: Bloomsbury Publishing, an imprint of Bloomsbury Publishing Plc.</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>In the 17th century, England and France increasingly spared for influence in Europe and the emerging sea trade across the North Atlantic. Initially, both countries would finance their wars through taxes or creditors, but this became harder over the course of the 17th century. During the reign of William the Orange in England in 1680s-1690s, William was engaged in the Nine Years War that saw all of the European powers fighting. William could not easily raise taxes or get loans from creditors, so the idea developed that England would have its own government bank, creating what became the Bank of England (Figure 1). The Tonnage Act 1694 was created to enable the Bank of England, which was the idea of Charles Montagu, 1st Earl of Halifax, who saw the Bank of England as a company that could benefit by being the sole bank that could issue monetary notes and provide banking privileges to the wealthy and nobility.<ref>For more on the Tonnage Act and its effect, see:  Kynaston, David. 2017. <i>Till Time’s Last Sand: A History of the Bank of England, 1694-2013</i>. London ; New York: Bloomsbury Publishing, an imprint of Bloomsbury Publishing Plc.</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div></ref>  </div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div></ref>  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>Funds were raised from private investors and the Bank of England bought government stock and issued securities, equivalent to bonds, while giving lending notes to the government. The securities acted as contracts and would give individuals return on those investments, while the funds given by the individual could be used to finance debt. Businesses and individuals also were allowed to deposit money. This created a pool of funding for the government that it was able to use without directly going to Parliament to raise taxes or use other creditors. Now, William III could finance his wars. Initially, the Bank of England was not a government institution but a private company created through a charter. However, as the government saw it useful to its efforts, it began to depend on the Bank more and increasingly incorporate it as part of its policies. In 1708, the government let the Bank have sole rights to create currency notes. Notes did not have fixed values, as they do today, but could be changed by agreement. <del class="diffchange diffchange-inline">Within a year, the government also made it a monopoly, as other large banks were not allowed and other banks could not issue notes.  By 1720, the '£' sign was created and by 1745 notes had fixed values of £20 to £1000. In the Seven Years war, another major conflict with France, led to the creation of small notes, £10, as this allowed more borrowing for smaller denominations. Over the course of the rest of the 18th century, the Bank had a greater role in the economy not only for the government but also in financing more enterprise throughout the country, including increasing trade. The system proved a success for England and other countries in Europe began to copy the system by the end of the century. In 1782, the Bank of Spain was created and in 1800 the Bank of France was established. The Bank of North America was the first public bank in the United States, but it soon was replaced by the Bank of the United States (Figure 2). All of these institutions tried to copy the system in England and attempted to create a system of public debt financing.<ref>For more on how the Bank of England evolved and how that influenced public financing and debt, see: Slater, Martin. 2018. <i>The National Debt: A Short History</i>. London: Hurst & Company. </ref></del></div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>Funds were raised from private investors and the Bank of England bought government stock and issued securities, equivalent to bonds, while giving lending notes to the government. The securities acted as contracts and would give individuals return on those investments, while the funds given by the individual could be used to finance debt. Businesses and individuals also were allowed to deposit money. This created a pool of funding for the government that it was able to use without directly going to Parliament to raise taxes or use other creditors. Now, William III could finance his wars. Initially, the Bank of England was not a government institution but a private company created through a charter. However, as the government saw it useful to its efforts, it began to depend on the Bank more and increasingly incorporate it as part of its policies. In 1708, the government let the Bank have sole rights to create currency notes. Notes did not have fixed values, as they do today, but could be changed by agreement.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div><del class="diffchange diffchange-inline">[[File:King William III 1-1-e1509187620207</del>.<del class="diffchange diffchange-inline">jpg|thumb|</del>Figure <del class="diffchange diffchange-inline">1</del>. <del class="diffchange diffchange-inline">William </del>of <del class="diffchange diffchange-inline">Orange was given </del>the <del class="diffchange diffchange-inline">idea </del>to create <del class="diffchange diffchange-inline">the idea </del>of public debt <del class="diffchange diffchange-inline">through the creation of </del>the Bank of England. <del class="diffchange diffchange-inline">]]</del></div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins class="diffchange diffchange-inline">Within a year, the government also made it a monopoly, as other large banks were not allowed and other banks could not issue notes.  By 1720, the '£' sign was created and by 1745 notes had fixed values of £20 to £1000. In the Seven Years war, another major conflict with France, led to the creation of small notes, £10, as this allowed more borrowing for smaller denominations. Over the course of the rest of the 18th century, the Bank had a greater role in the economy not only for the government but also in financing more enterprise throughout the country, including increasing trade. The system proved a success for England and other countries in Europe began to copy the system by the end of the century. In 1782, the Bank of Spain was created and in 1800 the Bank of France was established</ins>.  </div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div> </div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins class="diffchange diffchange-inline">The Bank of North America was the first public bank in the United States, but it soon was replaced by the Bank of the United States (</ins>Figure <ins class="diffchange diffchange-inline">2)</ins>. <ins class="diffchange diffchange-inline">All </ins>of <ins class="diffchange diffchange-inline">these institutions tried to copy </ins>the <ins class="diffchange diffchange-inline">system in England and attempted </ins>to create <ins class="diffchange diffchange-inline">a system </ins>of public debt <ins class="diffchange diffchange-inline">financing.<ref>For more on how </ins>the Bank of England <ins class="diffchange diffchange-inline">evolved and how that influenced public financing and debt, see: Slater, Martin. 2018. <i>The National Debt: A Short History</i>. London: Hurst & Company</ins>. <ins class="diffchange diffchange-inline"></ref></ins></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div><del class="diffchange diffchange-inline">[[File:</del>Bank of <del class="diffchange diffchange-inline">North America</del>.<del class="diffchange diffchange-inline">jpg|thumb|Figure 2. The Bank </del>of <del class="diffchange diffchange-inline">North America was </del>the first <del class="diffchange diffchange-inline">institution </del>in the United <del class="diffchange diffchange-inline">States to finance public </del>debt. <del class="diffchange diffchange-inline">]]</del></div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins class="diffchange diffchange-inline">====Modern Characteristics of Public Debt====</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins class="diffchange diffchange-inline">With the creation of the </ins>Bank of <ins class="diffchange diffchange-inline">England, the English government began to successfully pay its public debt even when it reached high levels</ins>. <ins class="diffchange diffchange-inline">In the Napoleonic Wars </ins>of the first <ins class="diffchange diffchange-inline">decade of the 19th century, debt reached 200% of GDP. In the early 19th century, governments began to make gold as the basis of currency value, which initially helped currencies to stabilize and gave some confidence </ins>in <ins class="diffchange diffchange-inline">notes issued by governments. During the 19th century, the increasing wealth of </ins>the United <ins class="diffchange diffchange-inline">Kingdom, and the government's success in paying its debt down, lowered </ins>debt <ins class="diffchange diffchange-inline">in the United Kingdom</ins>.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div><del class="diffchange diffchange-inline">==Modern Characteristics </del>of <del class="diffchange diffchange-inline">Public Debt==</del></div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins class="diffchange diffchange-inline">However, at times, the Bank struggled and was bailed out by wealthy private individuals, particularly the Rothschild family. The weakening </ins>of <ins class="diffchange diffchange-inline">the Bank allowed others to push for the liberalization of banking, leading to the 1825-1826 Bank Charter Act that helped the spread of large banking. Other countries were not as lucky as the United Kingdom when it came to financing debt. The new independent countries of Latin American in the 1820s were able to get loans from the bond market in London, as the United Kingdom became the central country for government finance. Some of the countries defaulted; however, the Bank of England did have power to forgive debts and, similar to early government institutions in antiquity, would simply allow indebted countries to walk free. </ins></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div><del class="diffchange diffchange-inline">With the creation of the Bank of England, the English government began to successfully pay its public debt even when it reached high levels. In the Napoleonic Wars of the first decade of the 19th century, debt reached 200% of GDP. In the early 19th century, governments began to make gold as the basis of currency value, which initially helped currencies to stabilize and gave some confidence in notes issued by governments. During the 19th century, the increasing wealth of the United Kingdom, and the government's success in paying its debt down, lowered debt in the United Kingdom. However, at times, the Bank struggled and was bailed out by wealthy private individuals, particularly the Rothschild family. The weakening of the Bank allowed others to push for the liberalization of banking, leading to the 1825-1826 Bank Charter Act that helped the spread of large banking. Other countries were not as lucky as the United Kingdom when it came to financing debt. The new independent countries of Latin American in the 1820s were able to get loans from the bond market in London, as the United Kingdom became the central country for government finance. Some of the countries defaulted; however, the Bank of England did have power to forgive debts and, similar to early government institutions in antiquity, would simply allow indebted countries to walk free. </del>Other times the terms were rewritten in regards to servicing the debts. The next set of global crises occurred during the two World Wars and the Great Depression. The Great Depression, in fact, led to the last time a state within the United States, Arkansas, to default on its debt obligations. Countries from the 1920-1930s increasingly found it hard to pay their debts, leading to debt payments to be rescheduled and new payment agreements to be created. By this time, credit ratings began to emerge. John Knowles Fitch in 1913 had created the concept of credit ratings, which became the AAA through D rating system. This rating system could be applied to countries as well as companies and was soon used to gauge countries ability to borrow. Initial rates for lending thus became affected by a country's rating. This system and tightening processes for issuing government debt led to few developed countries defaulting in by the late 20th century.<ref>For more on how 19th century finances changed as public institutions developed, see:  Eichengreen, Barry, Robert Alan Feldman, Jeffrey B. Liebman, Jürgen von Hagen, and Charles Wyplosz, eds. 2011. <i>Public Debts: Nuts, Bolts and Worries</i>. Geneva Reports on the World Economy 13. Geneva: ICMB, Internat. Center for Monetary and Banking Studies.</ref></div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>Other times the terms were rewritten in regards to servicing the debts. The next set of global crises occurred during the two World Wars and the Great Depression. The Great Depression, in fact, led to the last time a state within the United States, Arkansas, to default on its debt obligations. Countries from the 1920-1930s increasingly found it hard to pay their debts, leading to debt payments to be rescheduled and new payment agreements to be created. By this time, credit ratings began to emerge. John Knowles Fitch in 1913 had created the concept of credit ratings, which became the AAA through D rating system. This rating system could be applied to countries as well as companies and was soon used to gauge countries ability to borrow. Initial rates for lending thus became affected by a country's rating. This system and tightening processes for issuing government debt led to few developed countries defaulting in by the late 20th century.<ref>For more on how 19th century finances changed as public institutions developed, see:  Eichengreen, Barry, Robert Alan Feldman, Jeffrey B. Liebman, Jürgen von Hagen, and Charles Wyplosz, eds. 2011. <i>Public Debts: Nuts, Bolts and Worries</i>. Geneva Reports on the World Economy 13. Geneva: ICMB, Internat. Center for Monetary and Banking Studies.</ref></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>However, World War II, and its destruction of many advanced economies, created many problems for countries. Many countries found themselves bankrupt after the devastation of the war. The International Monetary Fund (IMF) as well as the World Bank were developed to help in such cases. Both institutions began to finance states and their enterprises; these institutions were seen as being comparable to the New Deal of the 1930s, where they would help stimulate financial growth in countries affected by devastation. With the linkage of politics with these international financial institutions, debt soon became a major political issue used in the Cold War. <del class="diffchange diffchange-inline">Generally, it became easier for major and developed countries to secure loans as they were more likely to pay off debts at regular intervals. Only in very recent times did this change, with Greece in 2015 becoming the first developed country to default on loans after the Banking Crisis of 2008-2009. The generally high debt ratings for developed countries has allowed them to more recently borrow at rates of 80% or more of their GDP, which some see as a potential future crisis as public debt now has been increasing.<ref>For more on the IMF and World Bank in an age of increasing public debt, see:  Esteves, Rui Pedro, ElGanainy, Asmaa A, Mitchener, Kris James, and Eichengreen, Barry. 2019. <i>Public Debt Through the Ages</i>. INTERNATIONAL MONETARY FUND.</ref></del></div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>However, World War II, and its destruction of many advanced economies, created many problems for countries. Many countries found themselves bankrupt after the devastation of the war. The International Monetary Fund (IMF) as well as the World Bank were developed to help in such cases. Both institutions began to finance states and their enterprises; these institutions were seen as being comparable to the New Deal of the 1930s, where they would help stimulate financial growth in countries affected by devastation. With the linkage of politics with these international financial institutions, debt soon became a major political issue used in the Cold War.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div><del class="diffchange diffchange-inline">==Summary==</del></div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins class="diffchange diffchange-inline">Generally, it became easier for major and developed countries to secure loans as they were more likely to pay off debts at regular intervals. Only in very recent times did this change, with Greece in 2015 becoming the first developed country to default on loans after the Banking Crisis of 2008-2009. The generally high debt ratings for developed countries has allowed them to more recently borrow at rates of 80% or more of their GDP, which some see as a potential future crisis as public debt now has been increasing.<ref>For more on the IMF and World Bank in an age of increasing public debt, see:  Esteves, Rui Pedro, ElGanainy, Asmaa A, Mitchener, Kris James, and Eichengreen, Barry. 2019. <i>Public Debt Through the Ages</i>. INTERNATIONAL MONETARY FUND.</ref></ins></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins style="font-weight: bold; text-decoration: none;">====Summary====</ins></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>Government debt, or public debt, was a new concept that did not originate until the late 17th century. Governments before simply spent what they had and they only had limited options to raise funds for wars or other enterprises. This changed with the founding of the Bank of England that other countries later emulated. In the 20th century, international institutions began to fund public debt, with the founding of the World Bank and IMF near and after the end of World War II.</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>Government debt, or public debt, was a new concept that did not originate until the late 17th century. Governments before simply spent what they had and they only had limited options to raise funds for wars or other enterprises. This changed with the founding of the Bank of England that other countries later emulated. In the 20th century, international institutions began to fund public debt, with the founding of the World Bank and IMF near and after the end of World War II.</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>==References==</div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins class="diffchange diffchange-inline">==</ins>==References==<ins class="diffchange diffchange-inline">==</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins class="diffchange diffchange-inline"><references/></ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div> </div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div><ins class="diffchange diffchange-inline">[[Category:Wikis]] [[Category:Economic History]] [[Category:United States History]] [[Category:European History]]</ins></div></td></tr>
</table>Adminhttps://dailyhistory.org/index.php?title=What_is_the_History_of_Public_Debt&diff=20554&oldid=prevMaltaweel: /* Modern Characteristics of Public Debt */2020-05-05T09:34:40Z<p><span dir="auto"><span class="autocomment">Modern Characteristics of Public Debt</span></span></p>
<table class="diff diff-contentalign-left" data-mw="interface">
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<tr style="vertical-align: top;" lang="en">
<td colspan="2" style="background-color: white; color:black; text-align: center;">← Older revision</td>
<td colspan="2" style="background-color: white; color:black; text-align: center;">Revision as of 09:34, 5 May 2020</td>
</tr><tr><td colspan="2" class="diff-lineno" id="mw-diff-left-l20" >Line 20:</td>
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<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>==Modern Characteristics of Public Debt==</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>==Modern Characteristics of Public Debt==</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>With the creation of the Bank of England, the English government began to successfully pay its public debt even when it reached high levels. In the Napoleonic Wars of the first decade of the 19th century, debt reached 200% of GDP. In the early 19th century, governments began to make gold as the basis of currency value, which initially helped currencies to stabilize and gave some confidence in notes issued by governments. During the 19th century, the increasing wealth of the United Kingdom, and the government's success in paying its debt down, lowered debt in the United Kingdom. However, at times, the Bank struggled and was bailed out by <del class="diffchange diffchange-inline">wealth </del>private individuals, particularly the Rothschild family. The weakening of the Bank allowed <del class="diffchange diffchange-inline">other </del>to push for the liberalization of banking, leading to the 1825-1826 Bank Charter Act that helped the spread of large banking. Other countries were not as lucky as the United Kingdom when it came to financing debt. The new independent countries of Latin American in the 1820s were able to get loans from the bond market in London, as the United Kingdom became the central country for government finance. Some of the countries defaulted; however, the Bank of England did have power to forgive debts and, similar to early government institutions in antiquity, would simply allow indebted countries to walk free. Other times the terms were rewritten in regards to servicing the debts. The next set of crises occurred during the two <del class="diffchange diffchange-inline">world wars </del>and the Great Depression. The Great Depression, in fact, led to the last time a state within the United States, Arkansas, to default on its debt obligations. Countries from the 1920-1930s increasingly found it hard to pay their debts, leading to debt payments to be rescheduled and new payment agreements to be created. By this time, credit ratings began to emerge. John Knowles Fitch in 1913 created the concept of credit ratings, which became the AAA through D rating system. This rating system could be applied to countries as well as companies. Initial rates for lending thus became affected by a country's rating. This system and tightening processes for issuing government debt led to few developed countries defaulting in the late 20th century.<ref>For more on how 19th century finances changed as public institutions developed, see:  Eichengreen, Barry, Robert Alan Feldman, Jeffrey B. Liebman, Jürgen von Hagen, and Charles Wyplosz, eds. 2011. <i>Public Debts: Nuts, Bolts and Worries</i>. Geneva Reports on the World Economy 13. Geneva: ICMB, Internat. Center for Monetary and Banking Studies.</ref></div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>With the creation of the Bank of England, the English government began to successfully pay its public debt even when it reached high levels. In the Napoleonic Wars of the first decade of the 19th century, debt reached 200% of GDP. In the early 19th century, governments began to make gold as the basis of currency value, which initially helped currencies to stabilize and gave some confidence in notes issued by governments. During the 19th century, the increasing wealth of the United Kingdom, and the government's success in paying its debt down, lowered debt in the United Kingdom. However, at times, the Bank struggled and was bailed out by <ins class="diffchange diffchange-inline">wealthy </ins>private individuals, particularly the Rothschild family. The weakening of the Bank allowed <ins class="diffchange diffchange-inline">others </ins>to push for the liberalization of banking, leading to the 1825-1826 Bank Charter Act that helped the spread of large banking. Other countries were not as lucky as the United Kingdom when it came to financing debt. The new independent countries of Latin American in the 1820s were able to get loans from the bond market in London, as the United Kingdom became the central country for government finance. Some of the countries defaulted; however, the Bank of England did have power to forgive debts and, similar to early government institutions in antiquity, would simply allow indebted countries to walk free. Other times the terms were rewritten in regards to servicing the debts. The next set of <ins class="diffchange diffchange-inline">global </ins>crises occurred during the two <ins class="diffchange diffchange-inline">World Wars </ins>and the Great Depression. The Great Depression, in fact, led to the last time a state within the United States, Arkansas, to default on its debt obligations. Countries from the 1920-1930s increasingly found it hard to pay their debts, leading to debt payments to be rescheduled and new payment agreements to be created. By this time, credit ratings began to emerge. John Knowles Fitch in 1913 <ins class="diffchange diffchange-inline">had </ins>created the concept of credit ratings, which became the AAA through D rating system. This rating system could be applied to countries as well as companies <ins class="diffchange diffchange-inline">and was soon used to gauge countries ability to borrow</ins>. Initial rates for lending thus became affected by a country's rating. This system and tightening processes for issuing government debt led to few developed countries defaulting in <ins class="diffchange diffchange-inline">by </ins>the late 20th century.<ref>For more on how 19th century finances changed as public institutions developed, see:  Eichengreen, Barry, Robert Alan Feldman, Jeffrey B. Liebman, Jürgen von Hagen, and Charles Wyplosz, eds. 2011. <i>Public Debts: Nuts, Bolts and Worries</i>. Geneva Reports on the World Economy 13. Geneva: ICMB, Internat. Center for Monetary and Banking Studies.</ref></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>However, <del class="diffchange diffchange-inline">it was </del>World War II <del class="diffchange diffchange-inline">that </del>created many problems for countries<del class="diffchange diffchange-inline">, including developed states</del>. Many countries found themselves bankrupt after the devastation of the war. The International Monetary Fund (IMF) as well as the World Bank were developed to help in such cases. Both institutions began to finance states and their enterprises; these institutions were seen as being comparable to the New Deal of the 1930s, where they would help stimulate financial growth in countries affected by devastation. With the linkage of politics with these international financial institutions, debt soon became a major political issue used in the Cold War. Generally, it became easier for major and developed countries to secure loans as they were more likely to pay off debts at regular intervals. Only in very recent times did this change, with Greece in 2015 becoming the first developed country to default on loans after the Banking Crisis of 2008-2009. The generally high debt ratings for developed countries has allowed them to more recently borrow at rates of 80% or more of their GDP.<ref>For more on the IMF and World Bank in an age of increasing public debt, see:  Esteves, Rui Pedro, ElGanainy, Asmaa A, Mitchener, Kris James, and Eichengreen, Barry. 2019. <i>Public Debt Through the Ages</i>. INTERNATIONAL MONETARY FUND.</ref></div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>However, World War II<ins class="diffchange diffchange-inline">, and its destruction of many advanced economies, </ins>created many problems for countries. Many countries found themselves bankrupt after the devastation of the war. The International Monetary Fund (IMF) as well as the World Bank were developed to help in such cases. Both institutions began to finance states and their enterprises; these institutions were seen as being comparable to the New Deal of the 1930s, where they would help stimulate financial growth in countries affected by devastation. With the linkage of politics with these international financial institutions, debt soon became a major political issue used in the Cold War. Generally, it became easier for major and developed countries to secure loans as they were more likely to pay off debts at regular intervals. Only in very recent times did this change, with Greece in 2015 becoming the first developed country to default on loans after the Banking Crisis of 2008-2009. The generally high debt ratings for developed countries has allowed them to more recently borrow at rates of 80% or more of their GDP<ins class="diffchange diffchange-inline">, which some see as a potential future crisis as public debt now has been increasing</ins>.<ref>For more on the IMF and World Bank in an age of increasing public debt, see:  Esteves, Rui Pedro, ElGanainy, Asmaa A, Mitchener, Kris James, and Eichengreen, Barry. 2019. <i>Public Debt Through the Ages</i>. INTERNATIONAL MONETARY FUND.</ref></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>==Summary==</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>==Summary==</div></td></tr>
</table>Maltaweelhttps://dailyhistory.org/index.php?title=What_is_the_History_of_Public_Debt&diff=20553&oldid=prevMaltaweel: /* Developments in the Early Modern Period */2020-05-05T09:29:55Z<p><span dir="auto"><span class="autocomment">Developments in the Early Modern Period</span></span></p>
<table class="diff diff-contentalign-left" data-mw="interface">
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<tr style="vertical-align: top;" lang="en">
<td colspan="2" style="background-color: white; color:black; text-align: center;">← Older revision</td>
<td colspan="2" style="background-color: white; color:black; text-align: center;">Revision as of 09:29, 5 May 2020</td>
</tr><tr><td colspan="2" class="diff-lineno" id="mw-diff-left-l12" >Line 12:</td>
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<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div></ref>  </div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div></ref>  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>Funds were raised from private investors and the <del class="diffchange diffchange-inline">bank </del>bought government stock and issued securities, equivalent to bonds, while giving lending notes to the government. The securities acted as contracts and would give individuals return on those investments, while the funds given by the individual could be used to finance debt. Businesses and individuals also were allowed to deposit money. This created a pool of funding for the government that it was able to use without directly going to Parliament to raise taxes or use other creditors. Now, William III could finance his wars. Initially, the Bank of England was not a government institution but a private company created through a charter. However, as the government saw it useful to its efforts, it began to depend on the Bank more. In 1708, the government let the Bank have sole rights to create currency notes. Notes did not have fixed values, as they do today, but could be changed by agreement. Within a year, the government also made it a monopoly, as other large banks were not allowed and other banks could not issue notes.  By 1720, the '£' sign was created and by 1745 notes had fixed values of £20 to £1000. In the Seven Years war, another major conflict with France, led to the creation of small notes, £10, as this allowed more borrowing for smaller denominations. Over the course of the rest of the 18th century, the Bank had a greater role in the economy not only for the government but also in financing more enterprise throughout the country, including increasing trade. The system proved a success for England and other countries in Europe began to copy the system by the end of the century. In 1782, the Bank of Spain was created and in 1800 the Bank of France was established. The Bank of North America was the first public bank in the United States, but it soon was replaced by the Bank of the United States (Figure 2).<ref>For more on how the Bank of England evolved and how that influenced public financing and debt, see: Slater, Martin. 2018. <i>The National Debt: A Short History</i>. London: Hurst & Company. </ref></div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>Funds were raised from private investors and the <ins class="diffchange diffchange-inline">Bank of England </ins>bought government stock and issued securities, equivalent to bonds, while giving lending notes to the government. The securities acted as contracts and would give individuals return on those investments, while the funds given by the individual could be used to finance debt. Businesses and individuals also were allowed to deposit money. This created a pool of funding for the government that it was able to use without directly going to Parliament to raise taxes or use other creditors. Now, William III could finance his wars. Initially, the Bank of England was not a government institution but a private company created through a charter. However, as the government saw it useful to its efforts, it began to depend on the Bank more <ins class="diffchange diffchange-inline">and increasingly incorporate it as part of its policies</ins>. In 1708, the government let the Bank have sole rights to create currency notes. Notes did not have fixed values, as they do today, but could be changed by agreement. Within a year, the government also made it a monopoly, as other large banks were not allowed and other banks could not issue notes.  By 1720, the '£' sign was created and by 1745 notes had fixed values of £20 to £1000. In the Seven Years war, another major conflict with France, led to the creation of small notes, £10, as this allowed more borrowing for smaller denominations. Over the course of the rest of the 18th century, the Bank had a greater role in the economy not only for the government but also in financing more enterprise throughout the country, including increasing trade. The system proved a success for England and other countries in Europe began to copy the system by the end of the century. In 1782, the Bank of Spain was created and in 1800 the Bank of France was established. The Bank of North America was the first public bank in the United States, but it soon was replaced by the Bank of the United States (Figure 2)<ins class="diffchange diffchange-inline">. All of these institutions tried to copy the system in England and attempted to create a system of public debt financing</ins>.<ref>For more on how the Bank of England evolved and how that influenced public financing and debt, see: Slater, Martin. 2018. <i>The National Debt: A Short History</i>. London: Hurst & Company. </ref></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>[[File:King William III 1-1-e1509187620207.jpg|thumb|Figure 1. William of Orange was given the idea to create the idea of public debt through the creation of the Bank of England. ]]</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>[[File:King William III 1-1-e1509187620207.jpg|thumb|Figure 1. William of Orange was given the idea to create the idea of public debt through the creation of the Bank of England. ]]</div></td></tr>
</table>Maltaweelhttps://dailyhistory.org/index.php?title=What_is_the_History_of_Public_Debt&diff=20552&oldid=prevMaltaweel: /* Modern Characteristics of Public Debt */2020-05-05T09:24:44Z<p><span dir="auto"><span class="autocomment">Modern Characteristics of Public Debt</span></span></p>
<table class="diff diff-contentalign-left" data-mw="interface">
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<td colspan="2" style="background-color: white; color:black; text-align: center;">Revision as of 09:24, 5 May 2020</td>
</tr><tr><td colspan="2" class="diff-lineno" id="mw-diff-left-l20" >Line 20:</td>
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<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>==Modern Characteristics of Public Debt==</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>==Modern Characteristics of Public Debt==</div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>With the creation of the Bank of England, the English government began to successfully pay its public debt even when it reached high levels. In the Napoleonic Wars of the first decade of the 19th century, debt reached 200% of GDP. In the early 19th century, governments began to make gold as the basis of currency value, which initially helped currencies to stabilize and gave some confidence in notes issued by governments. During the 19th century, the increasing wealth of the United Kingdom, and the government's success in paying its debt down, lowered debt in the United Kingdom. However, at times, the Bank struggled and was bailed out by wealth private individuals, particularly the Rothschild family. The weakening of the Bank allowed other to push for the liberalization of banking, leading to the 1825-1826 Bank Charter Act that helped the spread of large banking. Other countries were not as lucky as the United Kingdom when it came to financing debt. The new independent countries of Latin American in the 1820s were able to get loans from the bond market in London, as the United Kingdom became the central country for government finance. Some of the countries defaulted; however, the Bank of England did have power to forgive debts and, similar to early government institutions in antiquity, would simply allow indebted countries to walk free. Other times the terms were rewritten in regards to servicing the debts. The next set of crises occurred during the two world wars and the Great Depression. The Great Depression, in fact, led to the last time a state within the United States, Arkansas, to default on its debt obligations. Countries from the 1920-1930s increasingly found it hard to pay their debts, leading to debt payments to be rescheduled and new payment agreements to be created. By this time, credit ratings began to emerge. John Knowles Fitch in 1913 created the concept of credit ratings, which became the AAA through D rating system. This rating system could be applied to countries as well as companies. Initial rates for lending thus became affected by a country's rating. This system and tightening processes for issuing government debt led to few developed countries defaulting in the late 20th century.  </div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>With the creation of the Bank of England, the English government began to successfully pay its public debt even when it reached high levels. In the Napoleonic Wars of the first decade of the 19th century, debt reached 200% of GDP. In the early 19th century, governments began to make gold as the basis of currency value, which initially helped currencies to stabilize and gave some confidence in notes issued by governments. During the 19th century, the increasing wealth of the United Kingdom, and the government's success in paying its debt down, lowered debt in the United Kingdom. However, at times, the Bank struggled and was bailed out by wealth private individuals, particularly the Rothschild family. The weakening of the Bank allowed other to push for the liberalization of banking, leading to the 1825-1826 Bank Charter Act that helped the spread of large banking. Other countries were not as lucky as the United Kingdom when it came to financing debt. The new independent countries of Latin American in the 1820s were able to get loans from the bond market in London, as the United Kingdom became the central country for government finance. Some of the countries defaulted; however, the Bank of England did have power to forgive debts and, similar to early government institutions in antiquity, would simply allow indebted countries to walk free. Other times the terms were rewritten in regards to servicing the debts. The next set of crises occurred during the two world wars and the Great Depression. The Great Depression, in fact, led to the last time a state within the United States, Arkansas, to default on its debt obligations. Countries from the 1920-1930s increasingly found it hard to pay their debts, leading to debt payments to be rescheduled and new payment agreements to be created. By this time, credit ratings began to emerge. John Knowles Fitch in 1913 created the concept of credit ratings, which became the AAA through D rating system. This rating system could be applied to countries as well as companies. Initial rates for lending thus became affected by a country's rating. This system and tightening processes for issuing government debt led to few developed countries defaulting in the late 20th century.<ins class="diffchange diffchange-inline"><ref>For more on how 19th century finances changed as public institutions developed, see:  Eichengreen, Barry, Robert Alan Feldman, Jeffrey B. Liebman, Jürgen von Hagen, and Charles Wyplosz, eds. 2011. <i>Public Debts: Nuts, Bolts and Worries</i>. Geneva Reports on the World Economy 13. Geneva: ICMB, Internat. Center for Monetary and Banking Studies.</ref></ins></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'>−</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #ffe49c; vertical-align: top; white-space: pre-wrap;"><div>However, it was World War II that created many problems for countries, including developed states. Many countries found themselves bankrupt after the devastation of the war. The International Monetary Fund (IMF) as well as the World Bank were developed to help in such cases. Both institutions began to finance states and their enterprises; these institutions were seen as being comparable to the New Deal of the 1930s, where they would help stimulate financial growth in countries affected by devastation. With the linkage of politics with these international financial institutions, debt soon became a major political issue used in the Cold War. Generally, it became easier for major and developed countries to secure loans as they were more likely to pay off debts at regular intervals. Only in very recent times did this change, with Greece in 2015 becoming the first developed country to default on loans after the Banking Crisis of 2008-2009. The generally high debt ratings for developed countries has allowed them to more recently borrow at rates of 80% or more of their GDP.</div></td><td class='diff-marker'>+</td><td style="color:black; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #a3d3ff; vertical-align: top; white-space: pre-wrap;"><div>However, it was World War II that created many problems for countries, including developed states. Many countries found themselves bankrupt after the devastation of the war. The International Monetary Fund (IMF) as well as the World Bank were developed to help in such cases. Both institutions began to finance states and their enterprises; these institutions were seen as being comparable to the New Deal of the 1930s, where they would help stimulate financial growth in countries affected by devastation. With the linkage of politics with these international financial institutions, debt soon became a major political issue used in the Cold War. Generally, it became easier for major and developed countries to secure loans as they were more likely to pay off debts at regular intervals. Only in very recent times did this change, with Greece in 2015 becoming the first developed country to default on loans after the Banking Crisis of 2008-2009. The generally high debt ratings for developed countries has allowed them to more recently borrow at rates of 80% or more of their GDP.<ins class="diffchange diffchange-inline"><ref>For more on the IMF and World Bank in an age of increasing public debt, see:  Esteves, Rui Pedro, ElGanainy, Asmaa A, Mitchener, Kris James, and Eichengreen, Barry. 2019. <i>Public Debt Through the Ages</i>. INTERNATIONAL MONETARY FUND.</ref></ins></div></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"></td></tr>
<tr><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>==Summary==</div></td><td class='diff-marker'> </td><td style="background-color: #f9f9f9; color: #333333; font-size: 88%; border-style: solid; border-width: 1px 1px 1px 4px; border-radius: 0.33em; border-color: #e6e6e6; vertical-align: top; white-space: pre-wrap;"><div>==Summary==</div></td></tr>
</table>Maltaweel