One of the advantages with which Britain entered upon the first industrial revolution was a developed system of money and banking. It was quite highly developed in relation to the monetary systems which many twentieth-century underdeveloped countries enjoy, and indeed in relation to most of its contemporaries in Europe: though it still had a long way to go before it measured up to the standards of a modern state exercising direct and deliberate control over its own money supply. How effectively did the banking system of the later eighteenth century fulfil its task of providing the industrializing economy with the mobile financial resources required by economic change and growth?

There had already taken place in England, mainly in the first half of the eighteenth century, a series of developments in the money market, an expansion in the number, range and efficiency of English financial institutions and facilities which amounted in all to a financial revolution. The centrepiece in this reconstruction of the English financial system was the Bank of England and the new system of public borrowing which the Bank made possible. Around it developed all the other major financial institutions which grew up during the eighteenth century—e.g. the insurance offices, the partnership banks, the great chartered trading companies and the London Stock Exchange.

The Bank of England had been founded in 1694 in the course of the company-promoting boom of the 1690's, with a capital of £ 1·2 million, its main objective being to raise money for the government.