the significance of William III's wars in the development of a financial revolution

what wars did William III bring Britain into?

* 1689 - he took Britain and the Dutch republic to war against France - Britain had last been involved in European conflicts during the 100 years war (ending in 1453) - but the nine years war a much larger scale.
* over 70,000 troops were involved in the conflict, and the cost of financing the war was over £5 million a year

how did William finance the nine years war?

* in order to meet the high costs of the war many changes were made to the British financial system
* the changes to the taxation system, and the ways in which govt. raised public lands have been described by many historians as a ‘financial revolution’
* h.er the political and constitutional effect of these developments also had long-term implications for the government of the country and marked a shift in power from the monarch to the government.

what were the changes in taxation?

* customs and excise duties were extended to a wider range of goods, and the rates of taxation were very high. These duties could not be avoided, and provided up to a water of the crown’s income.
* a land tax was introduced in the early 1690s, and quickly became a permanent and lucrative source of income. the rate was set at 20% of the profits which landowners made from their land - by 1700 the land tax alone accounted for half of the income raised from taxation and, along with custom and excise duties was very difficult to avoid.
* the two measures marked a revolution in the system of taxation. They established permanent and efficient ways of raising money which continued long after William III’s wars had ended.

what were the changes in government borrowing?

* the British crown had an unenviable reputation for failing to honour its debts - 1627 Charles II had issued the Stop the Exchequer when he was unable to pay debts totalling £1 million - his default ruined many bankers and made it harder for Charles to raise loans for the rest of his reign.
* Williams ministers introduced two important innovations in order to raise money:
* in 1693 the Million Loan Act was intended to raise a land of £1 million, and repayment was guaranteed out of income from the excise duties
* in 1694 investors were invited to raise a loan of £1.2 million to pay for the war. In return, investors were allowed to establish the Bank of England, which provided banking services as well as raising further crown loans
* as a result if these innovative ways of raising loans, the prestige of the London money markets rose, soon challenging Amsterdam as a major financial centre.

what was the impact of the financial revolution?

* the financial position of the crown improved dramatically. By 1700 around 9% of the nations wealth went towards taxation.
* there was a growing confidence in the reliability of the state and its ability to repay its debt.
* the crown’s ability to raise funds for the war depended on an annual vote in parliament to supply funds. As a result, parliament became a permanent feature of the system of govt.