The Overdraft of War: Short-Term Debt and Military Finance

Guy Rowlands

in The Financial Decline of a Great Power

Published in print October 2012 | ISBN: 9780199585076
Published online January 2013 | e-ISBN: 9780191744600 | DOI:
The Overdraft of War: Short-Term Debt and Military Finance

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The Extraordinaire des Guerres military treasury raised short-term loans in the mid-1690s on a limited scale, and keeping this within bounds allowed the treasurers a margin of credit for military emergencies. But in the 1700s they were forced into colossal flotations because of general revenue shortages, appropriations failings, and generally inefficient channelling of loans elsewhere in the fiscal system. Chamillart wilfully used the Extraordinaire as a part of the credit-raising machinery, and the loans were increasingly extended, sometimes for years. After 1708 interest, held down at artificially low rates, was paid erratically, and there was a wider failure to allocate funds for repayment of capital, damaging confidence and discouraging further lending. Speculation became rampant and the trading values of Extraordinaire bearer bills plummeted. Moreover, the arbitrary and thoroughly incomplete manner in which the bills were withdrawn after 1710 almost destroyed credit at a time when the Allies invaded France.

Keywords: short-term debt; bearer bills; military debt; debt conversions; debt withdrawal

Chapter.  13202 words. 

Subjects: Modern History (1700 to 1945)

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