Alfred Marshall was born at Clapham on 26 July 1842, the son of William Marshall, a cashier in the Bank of England, by his marriage with Rebecca Oliver. The Marshalls were a clerical family of the West, sprung from William Marshall, incumbent of Saltash, Cornwall, at the end of the seventeenth century. Alfred was the great-great-grandson of the Reverend William Marshall, the half-legendary herculean parson of Devonshire, who, by twisting horse-shoes with his hands, frightened local blacksmiths into fearing that they blew their bellows for the devil. His great-grandfather was the Reverend John Marshall, Headmaster of Exeter Grammar School, who married Mary Hawtrey, daughter of the Reverend Charles Hawtrey, Sub-Dean and Canon of Exeter, and aunt of the Provost of Eton.

His father, the cashier in the Bank of England, was a tough old character, of great resolution and perception, cast in the mould of the strictest Evangelicals, bony neck, bristly projecting chin, author of an Evangelical epic in a sort of Anglo-Saxon language of his own invention which found some favour in its appropriate circles, surviving despotically minded into his ninety-second year. The nearest objects of his masterful instincts were his family, and their easiest victim his wife; but their empire extended in theory over the whole of womankind, the old gentleman writing a tract entitled Man's Rights and Woman's Duties. Heredity is mighty, and Alfred Marshall did not altogether escape the influence of the parental mould.