ABSTRACT
This chapter outlines the reasons why the United Kingdom evolved into the 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. The institutionalization of public debt was sinew of a combined financial, fiscal and naval strategy for the projection of British power overseas. Management of the funded debt involved the sale of new bonds, an operation called floating or negotiating a loan, and the redemption of debt through the purchases of bonds from the money market by the Commissioners for the Sinking Fund. As discussions on the Sinking fund under Robert Walpole and William Pitt revealed, only if the government possessed a surplus of tax income over expenditure on resources could effective reductions be made in the size of the national debt. In seeking funds the government always competed with demands for savings for profitable investment elsewhere in the economy.
