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  • Online publication date: December 2014

12 - Mercantilist Institutions for the Pursuit of Power with Profit: The Management of Britain's National Debt, 1756–1815


The Rise of Britain's Fiscal Naval State

In outline (if not in the chronological detail required for a complete and satisfactory historical narrative) the reasons why the United Kingdom evolved, between the Glorious Revolution of 1688 and the Congress of Vienna of 1815, into the most powerful fiscal military state in Europe have become clearer since Peter Dickson inaugurated the modern debate with the publication of The Financial Revolution in England some four decades ago. That seminal book (subtitled ‘A Study in the Development of Public Credit 1688–1756’) directed attention to the economic and geopolitical significance of a political consensus and network of institutions for the accumulation of a national debt required for the rise of British power.

Over the long eighteenth century public debt increased from a nominal capital of under £2 million in the reign of James II to reach an astronomical level of £854 million or 2.7 times the national income when Lord Liverpool's administration returned the monetary and financial system to the gold standard in the aftermath of the Napoleonic War. Up to 85 per cent of the money borrowed as long-term loans or raised as short-term credit between 1688 and 1815 was allocated to fund a sequence of costly armed conflicts against enemies who threatened the security and stability of the realm, as well as the kingdom's rivals who challenged its mission to command the oceans, engaged in mercantilistic competition with British businessmen for the profits of global commerce, or obstructed the nation's ambitions for colonization overseas.

The institutionalization of public debt was but one symptom and sinew of a combined financial, fiscal and naval strategy for the projection of British power overseas. State debts could only be accumulated, sustained and serviced by revenues from taxation assessed and collected with difficulty from the realm's evolving but narrow fiscal base and recalcitrant bodies of taxpayers.