Financial Hegemony: British Empire

Abstract

There is a second example in economic history of hegemony in international finance. After the Dutch Republic established a liberal hegemony in finance in the 1600s, they were replaced in the 1700s by the British Empire, which provided as subsequent stable financial system for international trade. Andrew Sobel wrote: “The British gradually replaced the Dutch as the commercial and financial hegemon, emerging at the center of the global political economy by the middle to late 1700s. The transition was relatively peaceful, at least between the Dutch and the British. The movement of surplus Dutch capital and Dutch financial skills and innovations to the financial markets in London were important contributors to London’s becoming the preeminent international financial and commercial center. The baton of global leadership passed gradually during the 1700s, and British hegemony lasted until the First World War.” (Sobel 2012)