In the late 17th century, King William III of England was facing a problem. He was in the

middle of a prolonged war with France, was in desperate need of money, and had exhausted most of the

traditional sources for funding a war. A proposal came forward for a new bank that could lend the

crown money at favorable interest rates and also solve several problems for the merchants in

England. Learn more about the Bank of England, one of the most important banks in world history

on this episode of Everything Everywhere Daily. Big news.

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Something that most leaders quickly realize is that wars are not really fought with weapons and men.

They're ultimately fought with money. In the early 1690s, King William III's government was facing spiraling war costs in his

conflict with Louis XIV of France during the nine years' war.

Traditional methods of fundraising such as short-term loans from goldsmith bankers,

taxes, and customs revenues were insufficient and unreliable.

England's creditworthiness was weak and lenders demanded high interest rates due to repeated

defaults from earlier in the century.

At the same time, London's financial world was evolving.

Goldsmith bankers had pioneered deposit taking and lending, but there was no institution

able to mobilize large amounts of capital

on a long-term basis for the state, nor to issue widely trusted standard paper currency.

The solution to both of these problems was proposed by William Patterson, a Scottish merchant

...