“England expects” flag signal on the rigging of HMS Victory in 2005

This week there will be many people arguing over Britain’s past and future. It is worth bearing in mind that if Britain has a past as a powerful country, then that would not have been possible without European influence. I am reading Benjamin Disraeli’s book Sybil at the moment, and Disraeli reminded me of how the introduction of Dutch methods of finance underpinned British power in the eighteenth and nineteenth centuries. These ideas were introduced to Britain when Parliament arranged for Dutch monarch William of Orange to replace James II in 1688. Disraeli was not approving of Dutch finance, since the acceptance of national debt dates from that time. But all the power that the British empire wielded at its peak could not have happened without Dutch financial ideas.

The economic historian P.G.M. Dickinson writes of the crucial advantage of public borrowing during the Napoleonic Wars: “More important even than alliances… was the system of public borrowing… which enabled England to spend on war out of all proportion to its tax revenue, and then throw into the struggle with France and its allies the decisive margin in ships and men…” Acceptance of debt meant that Britain could outspend France, which was a bigger and essentially richer country. And it was the Dutch with their history of banking and commerce which allowed Britain to do this. These advantages allowed Britain to quickly recover from the huge setback of losing the American colonies in 1781 and become the world’s most powerful country up until the end of the nineteenth century. So even when Britain was at its most dominant, it is salutary to remember that this position would not have been possible without a Dutch king who took the throne in 1688.