State intervention and the national economy, 1688–1815

After the Glorious Revolution of 1688, a stable political order gradually took shape, referred to hereafter as the Hanoverian state. Inside the boundaries of the ancient ‘kingdoms’ of England, Wales, Scotland and Ireland, as well as within the borders of the Empire, over which that state also exercised jurisdiction, private investors took responsibility for all but a fraction of the nation's capital formation. Private businessmen (not servants of the state) organized the kingdom's production, distribution and exchange. Businessmen and investors looked to central governments primarily for the provision of security. They expected to be protected from risks and losses emanating from warfare on British soil or in home waters around the isles. From the time of the Interregnum onwards, an influential minority of businessmen, including traders, shippers, brokers, bankers, insurers, planters, investors, indeed everyone engaged with the international economy, expected the state to go beyond the mere defence of their ships, merchandise and wealth located beyond the kingdom. After King William took the throne they confidently intensified pressures on their rulers to use diplomacy and armed force, whenever necessary, to extend opportunities for British enterprise overseas.

Somehow a succession of governments (overwhelmingly aristocratic in make up and uninvolved in any very direct way with trade and industry) managed to sustain political and legal conditions, which turned out on balance to be conducive to the rise of the most efficient industrial market economy in Europe.