ABSTRACT
This chapter provides an overview of the ‘Financial Revolution’ that took place in Britain from the late seventeenth century, a ‘Revolution’ that greatly enhanced Britain’s military and economic prestige. These developments, namely the creation of a permanent National Debt that necessitated ever-increasing levels of taxation in order to meet interest payments on it; the shift in responsibility for the National Debt from a royal debt to one guaranteed by parliament; the development of a market for government debt in London where it could be bought, sold and re-sold with relative ease, and, finally; the establishment in 1694 of the Bank of England, are each outlined. This chapter also examines the often-overlooked role that credit played in these developments, and in government loan-contracting in particular, a role that was greatly enhanced between 1793 and 1815 with the raising of huge government war loans. Specifically, the paradoxical circumstance whereby the lending operations of the British government’s creditors throughout this period were only possible thanks to protection from the government (the ostensible borrower in this process) is examined, and the novelty of this circumstance is highlighted.
