Financial Revolution

Source: Wikipedia, the free encyclopedia.
This article is about the Financial Revolution in England. For the Revolution in the Netherlands, see Financial history of the Dutch Republic.
Sealing of the Bank of England Charter (1694) by Lady Jane Lindsay, 1905.

The Financial Revolution was a set of

government bonds were issued in 1693) and the Bank of England (1694). Soon thereafter, English joint-stock companies began going public.[2] A central aspect of the financial revolution was the emergence of a stock market.[3]

The elements of the financial revolution rested basically on the financial techniques developed in the Netherlands: the bill of exchange, both foreign and inland, which as a negotiable instrument became part of the medium of exchange; transferable shares in the permanent capital stock of corporations that were traded in an active secondary market; and perpetual, government-issued annuities (known as

Civil List
in 1698. This was how Parliament granted the Crown revenues to meet the costs of running the government and royal establishment. From this point, the Crown was reliant on Parliament's control of revenue for its day-to-day running.

There is a strong connection between the Glorious Revolution, the financial revolution, and Britain's rise to global power in the eighteenth century. With the creation of a constitutional monarchy, Parliament had to approve any further government borrowing and any new taxes (to cover the costs of borrowing). Because bondholders' interests were hence directly represented in the decision-making process, they could be confident that the risk of default was low. Having such a "credible commitment" to the public debt, Britain could borrow more cheaply (at lower rates of interest) than could absolutist states (such as France) in which bondholders' voices were not represented in government. Scholars debate whether its constitutional structure alone sufficed to make Britain a credible borrower (this argument, made in a very widely cited article by economic historian Douglass North and political scientist Barry Weingast has been challenged by David Stasavage whose analysis emphasizes the importance of party politics).[5]

See also

References

  1. ^ "The Financial Revolution". UK Parliament. Retrieved 14 February 2015.
  2. ^ Casualties of Credit: The English Financial Revolution, 1620-1720 by Carl Wennerlind (December 30, 2011)
  3. ^ Ron Harris. "Government and the economy, 1688–1850" (PDF). Retrieved 18 October 2015.
  4. ^ Neal. The Economic History of Britain since 1700. Page 151
  5. S2CID 3198200
    .
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