Partisan Politics and Public Debt in Great Britain,
While the Glorious Revolution of 1688 signaled a major change in the relationship between Crown and Parliament, the same period also witnessed the emergence of another political phenomenon: the formation of two cohesive political parties. During this period, English society was divided over ideological issues such as religious toleration, as well as over an economic dimension of conflict. This involved the cleavage between those who derived their income from agricultural revenues, “the landed interest,” and those whose income derived from finance, “the monied interest.” I argue in this chapter that the conflict over noneconomic issues such as religious toleration had a major impact on the choice of economic policies, in particular with regard to debt. Credible commitment was facilitated by the fact that owners of government debt were part of a larger Whig coalition that took a common stance on multiple issues. In other words, a “bourgeois revolution” was possible in England only because of an alliance between the monied interest and other groups in British society. This helps explain how default risk might be lowered even in the case of a legislature where owners of debt (or their representatives) are in the minority. An alternative interpretation, that government creditors were more an independent lobby, is undermined by the fact that members of the “monied interest” consistently sought election in Parliament and that their fortunes were clearly tied to the Whig party.
As historians of this period have emphasized, the cohesiveness of political coalitions was reinforced by the development of political party organizations. An understanding of partisan politics is critical for explaining trends in public borrowing in Great Britain after 1688. My argument emphasizing party formation can also help explain variations in default