Document Type


Publication Date

Summer 2013


Geographically limited with a small population and few resources, how did England achieve great power status by the close of the 18th century? Scholars have debated whether debt or taxes were the primary determinants of English state building. Using data from the European State Finance database this paper provides a systematic statistical study designed to disentangle the causal relationship between war, debt and taxes as determinants of English state building. The paper finds that debt not taxes best predicts English military expenditures. After demonstrating that war exhibits a strong positive correlation to increases in public debt the paper shows that debt increases provide the most robust indicator of future changes in taxation indicating the causal relationship: war → debt → taxes.