What’s all this about
the National Debt?
Three Centuries of the National Debt
The National Debt was made possible
shortly after the Glorious Revolution, when
William III arranged to sell debt securities
through a syndicate of London merchants.
The syndicate became the Bank of
England, and the securities founded the
National Debt.
When charted in pounds sterling, in Chart
4.01, the National Debt looks huge.
Looking back over the last century, the
debt back in 1900 doesn’t really register.
But by charting debt as a percent of gross
domestic product (GDP) in Chart 2, you get
a look at government debt compared to the
size of the economy at the time.
Chart 4.02 tells, in stark detail, the story of
the British Empire. It was built on the
National Debt. Throughout the 18th century
the National Debt grew and grew, from
nothing at the end of the 17th century to
about 60 percent of GDP by the end of the
War of Spanish Succession in 1715.
Chart 4.01: National Debt 1900-2020
In mid-century the Carnatic Wars in India,
the Seven Years War against France and
the American War of Independence caused
another ratchet in National Debt up to 156
percent of GDP in 1784.
But that was just the
beginning...
Chart 4.02: National Debt 1692-2020
The Revolution in France and the
subsequent Napoleonic Wars led to
another explosion in military spending and
the National Debt rose to 237 percent of
GDP in 1816 after the battle of Waterloo.
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