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Money Talks: Finance, War, and Great Power Politics in the Nineteenth Century

Published online by Cambridge University Press:  05 May 2020

Patrick E. Shea
Patrick E. Shea*
Affiliation:
Department of Political Science, University of Houston
*
Email: pshea@uh.edu
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Abstract

Finance is often considered a constraining or compelling force in war. This article examines an alternative role of finance in war, asserting that investors can inform states about adversarial intentions and resolve under certain conditions. This signaling mechanism can reduce information asymmetry between states and decrease the probability of conflict. In the context of these theoretical expectations, I examine the case of Austria and the Rothschild Bank in the nineteenth century. I find that instead of being a constraining force on Austrian foreign policy, the Rothschilds helped inform Austria and other European powers during interstate crises. The information provided by the Rothschilds helped Europe avert war in several cases during the nineteenth century.

Keywords

warfinancecrisis bargainingsovereign credit
Type
Research Article
Information
Social Science History , Volume 44 , Issue 2 , Summer 2020 , pp. 223 - 249
Copyright
© Social Science History Association, 2020

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