The union of Scotland and England illustrates why modern assumptions about sovereign finance do not fit earlier states. In this account, Scottish rulers coveted the English throne partly because England possessed a stronger tax base, while light Scottish taxation and failed investments left the government financially exposed. Scotland lacked both a mature taxation system and an institution comparable to the Bank of England as lender of last resort. In that setting, national bankruptcy was a practical political constraint rather than a loose modern metaphor.
Notable Point · 32:19-33:29
Why state bankruptcy meant something different before modern banking
Scotland's weak tax base and lack of a lender of last resort underpin an explanation of its government's limited financial options.