ABSTRACT
In the eighteenth century, debt financing enabled England successfully to muster war resources against an enemy of larger size and set the path towards its empire. This chapter focuses on the debt financing of the War of the Austrian Succession that set the stage for the financing of subsequent wars in the eighteenth century. It is shown that deficits were financed by long-term debt in each year of the war when the interest rate was high. The chapter describes the market instruments that were issued during the War of the Austrian Succession, which came at the end of the period in which both the capital market and the credibility of the government were strengthened. The financing of War of the Austrian Succession set the pattern for the Seven Years War, which deserve separate studies. From the description of the characteristics of the loan issues, people will determine a correct value of the cost of borrowing ex ante.
