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When the Bank of England was founded in July 1694 it was designed to deal with a lack of cash during a pressing national crisis. The government, operating under a relatively new constitutional settlement, needed to rebuild its navy and be ready to combat threats to security. They lacked funds. A privately owned national bank, backed by the Crown, was established to facilitate the borrowing required. The certificates had gilded edges, as if to emphasise the robustness of the guarantee. Investors knew British gilts, government bonds, were generally safe and reliable places to lodge their money. In return they got a return, that is yield.

In this way the national debt was born, and with it the modern state. Ministers could borrow to finance armaments, warfare, public spending and, in time, welfare. The system underpinned the development of capitalism, the industrial revolution and eventually the expansion of the state, particularly in wartime. It was widely replicated.