Credit, Intellectuals and the English Financial Revolution

The year 1688 marked a watershed in the political and financial trans­formation of England. The replace­ment of Catholic James II by his Protestant daughter Mary Stuart and her Dutch husband William of Orange, a change described by historians as the Glorious Revolution, was surrounded by a series of events that brought about a permanent realignment of power between Parliament and the Crown and wrought a constitutional structure that created credibility for its financial commitments. The introduction of long-term borrowing by the government, leading to the national debt instead of just the king’s debt, the establishment of the Bank of England, and the rapid development of the London financial market were at the core of several institutional innovations generally referred to by economic historians as the “Financial Revolution”.

The different components of the financial revolution have been critically analysed at length by many economic historians. For instance, P G M Dickson in his seminal study focuses on the radical transformation in public finance. The early story of the Bank of England continues to fascinate financial historians. Many see in the events of that decade the beginnings of the strong fiscal-­military state that Britain was to become in the following centuries (as John Brewer highlights in his Sinews of Power). The book under review looks at the financial revolution from an interesting perspective: it is a search for the “intellectual underpinnings” of the English financial revolution, an exploration to support the author’s contention “that the conception of a new financial architecture and the ground for its general acceptance would not have been possible without an earlier revolution in political economy” (italics added).