War Finance and Austrian Business Cycle Theory: The Netherlands’ Wisselbank in the War of the Austrian Succession and the Fourth Anglo-Dutch War

Robert F. Mulligan; Christopher P. Guzelian; Leonidas Zelmanovitz

doi:10.52195/pm.v22i1.1006

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War Finance and Austrian Business Cycle Theory: The Netherlands’ Wisselbank in the War of the Austrian Succession and the Fourth Anglo-Dutch War

Procesos de Mercado

Volume 22 (2025): Issue 1 (June 2025)

By: Robert F. Mulligan , Christopher P. Guzelian and Leonidas Zelmanovitz

Open Access

|May 2026

Abstract

Austrian business cycle theory attributes recessionary downturns to inflationary credit creation made possible by fractional-reserve banking. We tested this fractional-reserve hypothesis in a previous paper, specifically by examining the 1609-1819 Bank of Amsterdam’s (Wisselbank) balance sheet and money creation. To separate the effects of war and low fractional-reserve banking on the 18^th century Amsterdam economy the present study examines the 1740-1748 War of the Austrian Succession during which the Wisselbank maintained high reserves, compared with the 1781-1784 Fourth Anglo-Dutch War during which the bank’s reserve position progressively deteriorated. We find that the fractal character of price volatility was consistent with Austrian business cycle theory during this expansionary fractional-reserve episode resulting in price inflation and speculative bubbles. It is highly likely that fractional-reserve banking contributed to and aggravated Dutch boom-bust cycles in the period examined.

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Articles in this issue

DOI: https://doi.org/10.52195/pm.v22i1.1006 | Journal eISSN: 1697-6797

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Language: Spanish, English

Page range: 15 - 58

Submitted on: Oct 1, 2024

Accepted on: Jan 14, 2025

Published on: May 29, 2026

Published by: Unión Editorial S.A. in collaboration with the Faculty of Economics and Entrepreneurial Sciences of Universidad Rey Juan Carlos of Madrid

In partnership with: Paradigm Publishing Services

Keywords:

Fractional reserve banking,

monetary expansion,

price stability

JEL:

E42,

E44,

N13,

N23,

N83

Related subjects:

Business and economics,

Political economics,

Economic theory, systems and structures,

Economic policy,

History of economics,

Political economics, other

© 2026 Robert F. Mulligan, Christopher P. Guzelian, Leonidas Zelmanovitz, published by Unión Editorial S.A. in collaboration with the Faculty of Economics and Entrepreneurial Sciences of Universidad Rey Juan Carlos of Madrid
This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 License.

Volume 22 (2025): Issue 1 (June 2025)