ONE RECIPE , SEVENTEEN OUTCOMES ? Exploring public finance policies and outcomes in the Low Countries, 1568-1795 Oscar Gelderblom and Joost Jonker Utrecht University
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[email protected] First, very preliminary draft, 9 September 2010 Abstract We explore the history of public debt management in the Low Countries from the 16 th to the end of the 18 th century to answer why the Habsburg public debt system produce spectacular results in the northern provinces, but not in the southern ones. The answer lies partly in economic, partly in political circumstances. The revolt against Spain pushed the northern provinces into wresting fiscal autonomy from the cities. This institutional change enabled them to use economic growth and wealth accumulation to assume heavy tax and debt burdens in service of defending the Dutch Republic’s independence and prosperity. By contrast, the revolt reinforced local and provincial particularism in the Habsburg dominated south, resulting in low tax yields and low debts. INTRODUCTION Early modern rulers disliked debt and preferred to meet current expenditure from current income. They were fully aware that growing debts created a political risk in the form of a dependency on creditors constraining policy options. Yet a number of countries in pre-industrial Europe did leap the barrier set by current income to create a funded debt (Neal 2000). The usual explanation for this phenomenon is the rise of representative government, through which economic elites could control public 1 finance and secure prompt debt servicing (North and Weingast 1989; Dincecco 2009). This would appear to beg the question.