Dissecting the sinews of power: international trade and the rise of Britain's fiscal-military state, 1689-1823

We evaluate the role of taxes on trade in the development of imperial Britain's fiscal-military state. Influential work, e.g., Brewer's (1989) Sinews of Power, attributed increased fiscal capacity to the taxation of domestic, rather than traded, goods: excise revenues, coarsely associated with domestic goods, grew faster than customs revenues. We construct new historical revenue series disaggregating excise revenues from traded and domestic goods. We find substantial growth in taxes on traded goods, accounting for over half of indirect taxation around 1800. This challenges the conventional wisdom attributing the development of the British state to domestic factors: international factors mattered, too.