The Financial Revolution

The Financial Revolution was a set of economical and financial reforms in the British society after the Glorious revolution^[1] in 1688 when William III invaded England. The reforms were based on Dutch economic and financial innovations that were brought to England by William III. This revolution was manifested in the rise of taxation, borrowing and financial institutions such as Bank of England in 1694. The kingdom's first government bonds were issued in 1693. Soon thereafter, English joint-stock companies began going public.^[2]

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 annuities issued by a government which made them free of the risk of default.^[3]

There is a strong connection between the financial revolution and Britain’s rise to world mastery in the eighteenth century. A central aspect of the financial revolution was the emergence of a stock market.^[4]

Another piece of Financial Revolution which fundamentally altered the relations between Crown and Parliament was the creation of the Civil List in 1698. This was how Parliament granted the Crown revenues of £700,000 a year 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.

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