ABSTRACT
In this chapter I explore the Bank’s role in financing the English army in Flanders. (This is the line of business summarized in the ‘exchanges’ account in Figures 3.1 and 3.2.) 1 I show that the Bank repeatedly encountered unforeseen difficulties that turned contracts it had hoped would be profitable into money-losing operations. I explore the several means by which the Bank adjusted to these unhappy developments, especially an intriguing decision to try to reproduce on the continent the loan-intermediary strategy that had proved so successful for it in London. The chapter also affords an opportunity to examine the inner workings of foreign-exchange markets and the impact of changing domestic monetary conditions on the Bank’s bottom line and the Treasury’s fiscal operations. The developments of these months would prove crucial in shaping the government’s thinking about when and how to repair the silver coin.
