Tag Archive | finance

SMH2016 Ottawa sneak-peak

While the official program for next April’s Society for Military History conference won’t be out until early next year, I can report that there will be at least one panel on Louis XIV’s last two wars (or is it William III’s last two wars?).

If I can quote from the brilliantly-crafted proposal overview:

Crossing the Channel: Anglo-Germanic Military Relations in the Age of William and Anne

England has always had a complicated relationship with the rest of Europe. Neither the ‘English’ Channel nor the wooden walls of the Royal Navy have prevented invasions from the sea, yet English self-identity has long prided itself on its separation from the Continent. Historians are well aware of the permeability of the Channel and North Sea: Julius Caesar, Norsemen and William the Conqueror, Lancaster and York are only a few of the early successful examples. Nevertheless, England’s peripheral location generally allowed Tudor and Stuart monarchs a freedom of action regarding continental entanglements. After William of Orange’s successful invasion of 1688 forced the island nation into a full-scale continental commitment, the immediate question arose of how England’s forces would contribute to the two ensuing conflicts against Louis XIV’s France (the Nine Years War, 1688-1697, and War of the Spanish Succession, 1701-1714). English troops, commanded first by King William III and then by the Duke of Marlborough, campaigned across Flanders and Iberia, while English diplomatic attentions ranged throughout Europe. Central to William’s vision of a pan-European anti-French alliance were the Germanic states of northern Europe: his own United Provinces of the Netherlands, the German princes of the Holy Roman Empire, and the crown lands of Austria. By 1714, the coalitions constructed by William had humbled the Sun King, and elevated Britain to the status of a great power. How England incorporated its own forces into this larger coalition effort is the focus of this panel.

The three papers provide complementary perspectives on the resulting military relations between England (Britain from 1707) and these continental allies, the compromises and tensions inherent in such coalition endeavors. Thomas M. Nora (University of Hull, Ph.D. candidate) focuses on the administrative and diplomatic groundwork necessary for the English to participate as full members of the Grand Alliances of 1689 and 1701 – their reliance on German auxiliaries. John M. Stapleton (West Point, Associate professor) examines the English reliance on Dutch operational logistics within a Flanders coalition army. Caleb Karges (University of St. Andrews, Ph.D.) explores the question of how the English sought to shape their Austrian ally’s grand strategy.

Together these contributions illustrate how the multi-national forces of two Grand Alliances crossed not just physical and state boundaries on campaign, but necessarily violated borders often considered sovereign and inviolate – crossing the frontiers of individual states’ fiscal, administrative and command structures. These papers explore the extent to which English exceptionalists were forced to become more “continental” when fighting within grand coalitions against a hegemonic France.

Me? I’ll just be along for the ride to chair and to commentate.

The Eighty Years War just got a whole lot longer

In a comment Averrones pointed out a recent (in historical terms) release of a new publication on the rise of the Dutch fiscal-military state. I like looking beyond the usual 1648 terminus; and if there was ever a case study that required a fiscal-military approach, and an author to do it, this would be it.

Hart, Marjolein ’t. The Dutch Wars of Independence: Warfare and Commerce in the Netherlands 1570-1680. London ; New York: Routledge, 2014.
In The Dutch Wars of Independence, Marjolein ’t Hart assesses the success of the Dutch in establishing their independence through their eighty years struggle with Spain – one of the most remarkable achievements of the sixteenth and seventeenth centuries. Other rebellions troubled mighty powers of this epoch, but none resulted in the establishment of an independent, republican state. This book: tells the story of the Eighty Years War and its aftermath, including the three Anglo-Dutch Wars and the Guerre de Hollande (1570-1680); explores the interrelation between war, economy and society, explaining how the Dutch could turn their wars into commercial successes; illustrates how war could trigger and sustain innovations in the field of economy and state formation; the new ways of organization of Dutch military institutions favoured a high degree of commercialized warfare;    shows how other state rulers tried to copy the Dutch way of commercialized warfare, in particular in taking up the protection for capital accumulation. As such, the book unravels one of the unknown pillars of European state formation (and of capitalism).  The volume investigates thoroughly the economic profitability of warfare in the early modern period and shows how smaller, commercialized states could sustain prolonged war violence common to that period. It moves beyond traditional explanations of Dutch success in warfare focusing on geography, religion, diplomacy while presenting an up-to-date overview and interpretation of the Dutch Revolt, the Anglo-Dutch Wars and the Guerre de Hollande.
Check it out.

Seriously, enough with the fiscal-military state

I kid (sort of). We have another entry in the European fascination with the intersection between war and money. I suppose it helps that there are groups like Contractor State Group to fund such ventures.

Harding, Richard, Solbes Ferri, Sergio, and Universidad de Las Palmas de Gran Canaria, eds. The Contractor State and Its Implications, 1659-1815 International Congress, CSG-Contractor State Group, Las Palmas de Gran Canaria, 16th-18th November 2011. Las Palmas de Gran Canaria: Universidad de Las Palmas de Gran Canaria, 2012.
Having trouble finding a table of contents over here in the USA, but it looks like there’s one chapter on Louis XV’s provisioning.

Recent article on military finance

Swart, Erik. “‘The field of finance.’ War and taxation in Holland, Flanders and Brabant, ca. 1572-1585.” Sixteenth Century Journal 42 (Winter 2011): 1051-1071.

Abstract: The Dutch province of Holland has solicited much research in the context of the link between war and political development, an important theme in early modern historiography. During the Dutch Revolt in the late sixteenth century it became the core and financial bedrock of a new, powerful, and very prosperous polity: the Dutch Republic. Why Flanders and Brabant, larger and traditionally wealthier, failed where Holland succeeded and were retaken by King Philip II’s army has never been explained. One difference was the structurally narrower political base in Brabant and Flanders; compared to Holland fewer people had a part and stake in the government. But the main problem in the former provinces was a structural lack of finances. From 1578 the war was right on top of them, which made the collection of newly introduced taxes impossible and attempts at administrative reorganization fruitless. War destroyed the tax base in Brabant and Flanders, while Holland’s taxes were the foundation of its success.

Financing War

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!

Get your lottery ticket here!

Lottery explained

£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.

War, Warfare, Military and Early Modern Europe

New title just released:

Parrott, David. The Business of War: Military Enterprise and Military Revolution in Early Modern Europe. Cambridge University Press, 2012.

This is a major new approach to the military revolution and the relationship between warfare and the power of the state in early modern Europe. Whereas previous accounts have emphasised the growth of state-run armies during this period, David Parrott argues instead that the delegation of military responsibility to sophisticated and extensive networks of private enterprise reached unprecedented levels. This included not only the hiring of troops but their equipping, the supply of food and munitions, and the financing of their operations. The book reveals the extraordinary prevalence and capability of private networks of commanders, suppliers, merchants and financiers who managed the conduct of war on land and at sea, challenging the traditional assumption that reliance on mercenaries and the private sector results in corrupt and inefficient military force. In so doing, the book provides essential historical context to contemporary debates about the role of the private sector in warfare.


Apropos our discussion about logistics, this book will hopefully provide an overarching framework for something early modern military historians have been exploring in their own areas for the past several decades. The broad claim isn’t particularly new (among others, Parrott illustrated it in his earlier Richelieu’s Army) but hopefully he’ll have a detailed argument that integrates more than just France in the mid-17C.

Early modern historians tend to see the late 17C-18C as the period when the central state began to take over (Lynn’s “Army Styles” has been the most recent broad framework). But even then, as we’ve already discussed, combatants still relied on lots of private financiers and companies for credit (secured by future tax receipts), which was then paid to other private contractors and their subcontractors to provide bread and (during winter quarters) fodder for the troops and horses, as well as transport. Even the regiments themselves were ‘owned’ by their colonels and the companies by their captains, which was yet another way the central state could rely on others’ wealth to raise, clothe and feed its troops. The same was true for the navy. Although fleets were increasingly composed of ships dedicated to military service, many of them were still constructed in private shipyards, and in some cases were even lent out to privateers when naval costs became too high, not to mention the permeable boundary between naval service on board a Royal Navy vessel and aboard a merchantman. The war on enemy trade was furthered by recruiting private privateers (full-time as well as opportunistic vessels issued letters of marque). Heck, the same was true for diplomacy, as we can find diplomats constantly begging their political masters back home to reimburse them for their expenditures incurred in the line of duty. It really is amazing how much effort was put into fighting these early modern wars, and how successful governments were in getting other people to put up their money towards the venture.

Bibliography: Swedish 7YW Debt

All of a sudden the 7YW is popular.

Winton, Patrik. “Sweden and the Seven Years War, 1757–1762: War, Debt and Politics,” War in History. (2012).

Sweden commenced military operations against Prussia in 1757, following Austria’s and France’s efforts to include Sweden in the anti-Prussian alliance. Swedish politicians hoped that the coalition would lead to a quick victory without having to get too involved in the fighting, but that Sweden still would be rewarded for its support. Swedish military action was thus primarily designed to show the allies that Sweden participated in the war. Despite the low intensity warfare that characterized the fighting, the war was still extremely expensive. The Swedish state used mostly internal borrowing to finance the war, which led to negative economic and political consequences such as inflation and popular discontent. By participating in the war, the Swedish state sought to strengthen its commercial situation worldwide while preserving its military position in the Baltic region.