I just caught up with the comments, and as I was trying to make sense of patronage and war finance in a long reply to Erik, I had somewhat of an epiphany, or more accurately, making a connection between two different parts of the whole. I probably should have made this connection far earlier, and undoubtedly others already have, and I’ve probably already read this somewhere else, but academic research often consists of making connections between various bits of once-read information in different contexts. And it usually comes at its own pace.
The question deals with the upper echelons of war finance, i.e. where the governments get all that money to fight. Ultimately it’s based on taxes and other revenue streams, but to get those resources in the short term requires some kind of government debt. Patronage has often been used in this context, with rulers and wealthy financiers using each other to get upfront cash in exchange for longer-term interest payments, and possibly the purchase of social capital. But since even bankrupt rulers always seemed able to secure additional lines of credit (and not just from extending the terms of existing creditors), I wonder what exactly patronage means as far an increased willingness of creditor clients to loan money to their ruler patrons.
While I don’t have a pat answer to that question, what I did realize, however, is that the whole point of creating hybrid private-public institutions like the Bank of Amsterdam (1609) and the Bank of England (1694) is to make it easier for governments to avoid relying solely on patronage networks to borrow money. With a public debt, ministers no longer had to rely only on the big fish creditors (which they continued to do, no doubt). Now they could mobilize the wealth of their subjects further down the socio-economic ladder, as individual investors could easily purchase stock in these private-public partnerships from the Bank, as well as purchasing government debt in the form of annuities and lotteries. This means less work was needed creating, maintaining, and expanding networks among the wealthy, or, more likely, that even more money could be raised by the government by supplementing the normal financial patronage sources with this new public credit.
France lacked such a mechanism to easily mobilize its entire society’s capital. As a result, Louis XIV had to keep working his financiers and tax farmers for more credit every year, his new finance minister Desmaretz had to use ridiculous expedients to shore up France’s finances in 1708 (see McCollim’s forthcoming book), and Louis had to issue a personal appeal to his nobles and subjects in 1709 to melt down their silver plate and otherwise contribute to the war effort. In fact, France would not establish its own public bank until Napoleon, putting itself at a significant fiscal disadvantage in its many wars with 18C Britain. On the other hand, the English had already made patriotic investment in the war effort as simple and as impersonal as purchasing shares in a company like the East Indies or South Sea company (government debt was frequently converted into such shares), or stock in the Bank of England, or buying a lottery ticket. An example from the Post Boy newspaper indicates how widely the government wanted its message spread: Anyone is welcome to invest in the government!
£10 buys you a piece of victory! These lotteries were usually fully subscribed because of their favorable terms, which is an indication of an increasing desperation on the part of the government issuing them. But it wasn’t nearly as desperate as Louis appealing to his nobles to turn in their silver.
Nothing revolutionary, just another piece of the puzzle falling into place for me.