How the Slave Trade Fostered Last Resort Lending

Abstract

It is a little known fact that the first beneficiaries of extraordinary term lending facilities from the Bank of England were the slave traders. By tracing the history of the Bank’s extraordinary term loans, this paper demonstrates that the first regulation governing extraordinary term lending was modelled on loans made to slave traders a few years earlier. The Bank’s first repo loans and the Bank’s first effort to lend against goods were made for slave traders. The paper also notes that by 1816 the Bank was providing emergency loans to support employment in local economies at risk of depression. These facts should shift the burden of proof in the debate over the role of slavery in the Industrial Revolution: those who doubt that income drawn from the slave trade fostered the financial development that made the Industrial Revolution possible should bear the burden of showing that in fact it did not.