The Public Creditors

In order to create and maintain a national debt, there had to be a community of people willing to lend money to government. Such a community required certain assurances, most notably a credible commitment on the part of the government to repay loans, provision against deferment of repayment or default, and a secure tax base for financing interest payments and principal repayments. Such assurances could be provided in a number of ways. In eighteenth-century Britain and Ireland, the essential feature was a representative political institution in the form of a bicameral legislature which assembled on a regular basis, controlled taxation, and functioned primarily on the basis of majority coalition groupings that necessitated compromise and concession. Allied with recognizable and accepted procedures and institutions of executive government, ranging from the long-established Privy Council to the recently professionalized revenue collection service, the apparatus of state provided the credible commitment needed in eighteenth-century Britain and Ireland for a community of public creditors to exist. ¹