Financial Revolution facts for kids

The Financial Revolution was a time of big changes in how England managed its money and economy. These changes happened after the Glorious Revolution in 1688. That's when William III came to England and became king. Many of these new ideas came from the Netherlands, where William III was from.

New and important things were created during this time. These included a way for the government to borrow money, called public debt. The first government bonds (like IOUs from the government) were issued in 1693. Also, the Bank of England was created in 1694. Soon after, English joint-stock companies started selling parts of their companies to the public. A key part of the Financial Revolution was the start of a stock market, where these company parts (called shares) could be bought and sold.

New Financial Ideas and Tools

The Financial Revolution used many smart money ideas that first started in the Netherlands.

How Money Moved Around

• Bills of exchange: These were like early checks. They let people pay for things without needing to carry lots of cash. They became a common way to exchange money.
• Transferable shares: These were parts of a company that people could buy and sell easily. This created an active market where people traded these shares.
• Government annuities: These were like promises from the government to pay people a regular amount of money forever. They were known as Consols.

The Civil List and Royal Spending

Another big change was the creation of the Civil List in 1698. This changed how the King or Queen got money. Before, the ruler had more control over money. With the Civil List, Parliament (the country's law-making body) decided how much money the Crown (the King or Queen and their government) would get. This money was meant to cover the costs of running the government and the royal family. From this point on, the King or Queen had to rely on Parliament for their daily expenses. This gave Parliament much more power.

Britain's Rise to Power

There's a strong link between the Glorious Revolution, the Financial Revolution, and Britain becoming a major world power in the 1700s.

Trusting the Government with Money

After the Glorious Revolution, England became a constitutional monarchy. This means the King or Queen's power was limited by laws and Parliament. Now, Parliament had to agree to any new government borrowing. They also had to approve any new taxes needed to pay back these loans.

Because people who lent money to the government (bondholders) had a say in Parliament, they felt safer. They were confident that the government would pay them back. This trust meant Britain could borrow money more cheaply than other countries. For example, France was an "absolutist state" where the king had total power. People lending money to the French king didn't have a say in government. So, they worried more about getting their money back. This meant France had to pay higher interest rates to borrow money.

This ability to borrow money cheaply helped Britain pay for wars and grow its power around the world.

See also

• Military Revolution
• Market Revolution